Lexus poised to take on European luxury leaders in High-End territory

Lexus will challenge European luxury brands by offering more performance, technology and high-end vehicles, says General Manager Bob Carter.

Lexus LS 600h L

“It's small potatoes from a volume standpoint, but it is the profitable end of the segment and important for setting halos for the brand,” Carter says. “At the same time, you have to be very cautious, because that consumer is looking for more.”

Lexus has been striving to outgrow its staid image

Vehicles such as the IS 350 sedan are giving styling credibility to Lexus. Its lead in hybrid technology – expected to be boosted by next year's launch of the flagship LS 600h L sedan – Is designed to enhance its image as a high-tech innovator.

Meanwhile, Lexus continues to study a performance subbrand similar to Mercedes-Benz's AMG and BMW's M. Said Carter: “We will do high performance in a Lexus way.”

Having a car like the LF-A high-performance concept or putting a V8 in an IS sedan “would bring emotion to the Lexus brand,” Carter says. “But we are not going to change the Lexus brand to a performance brand. These vehicles would deliver performance with a Lexus feel.”

Lexus sold a franchise-record 302,895 vehicles in 2005, the sixth straight year it has been the best-selling luxury brand in the United States. Sales through March this year are up 7.8 percent compared with the same period of 2005.

Carter sees the American consumer's desire for luxury goods continuing into the next decade

Lexus predicts the luxury-vehicle market will grow from 1.9 million units in 2005 to more than 2.4 million by early next decade. It defines the luxury market as vehicles sold for more than $30,00 by a traditional luxury brand.

Much of Lexus' growth is expected to come from the 74 million baby boomers, who are expected to purchase after age 50 an average of seven new vehicles. The generation born from 1977 through 1994 is likely to have high expectations and the greatest disposable income of any generation.

“Gen Y could affect the car business more than the boomers,” Carter says. “We have never seen demographic forces coming like we are seeing in the next decade.”