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Old 22nd February 2012, 10:05   #1
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Default Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017-lexus.jpg

A lot of us German car owners simply can’t wait for 2013 when Lexus arrives on Indian shores. After all, Lexus’ cars are known to offer stupendously high reliability, and are as hassle-free to own as a Corolla. That’s saying a lot when the direct competition – Mercedes, BMW & Audi – inexplicably suffers from poor reliability ratings & expensive upkeep costs. I mean, when a humble Maruti Alto can offer years of reliable service, what reason do the Germans have for their failure? We even have a thread on the love affair between European cars & flatbed trucks (Link (PICS : How flatbed tow trucks would run out of business without German cars!)

Then, Lexus is also known to provide unparalleled refinement levels, matches (or beats) the Germans on spec & features and has established itself as a luxury car marque in only 25 years since introduction. Lexus’ service quality is the stuff of legend; the brand has frequently topped customer satisfaction rankings and is known to bend over backward for its clientèle. No surprise then that Lexus has been the best selling luxury brand in North America for a majority of the last decade.

Personally, I'm a fan of Lexus' clean designs as well. This is definitely an advantage in my book, compared to the quirkiness of recent Mercedes cars. Of course, BMW studios have returned to churning out the timeless look, while Audi has always had some of the greatest looking cars.

The understated nature of Lexus could work in its favour, with the rich customer who doesn't necessarily want to draw attention to his wealth. However, Lexus is going to face more than its share of challenges in our extremely unique market. Reasons:
  • Late Entry : The 3 German biggies are well-established in India. Arriving last at the party does have its own set of disadvantages, chief amongst them being that your competitors are well-entrenched in the mindset of the Indian customer. The competition's dealership network & brand visibility are formidable too.
  • Diesels : Lexus has a shockingly limited range of diesel engines. The GS is sold only with a petrol. Chief competitors – the E Class & 5 series – offer two diesel engine options (a 4 & 6 cylinder) each. The Lexus IS220d (C Class competitor) does have a 2.2L diesel under the hood. But then again, the flagship Lexus LS hasn’t ever been powered by an oil-burner. This is one of the main reasons that Lexus hasn’t been able to make a mark in Europe. The brand is too dependent on the petrol-only USA market to be bothered with diesels.
  • SUVs? : Not having a strong lineup of SUVs will affect Lexus’ India aspirations at a time when our market cant seem to get enough of them. Just ask Audi whose sales for the initial years in India were driven primarily by SUVs. The compact Lexus RX is a petrol-only SUV, a breed that simply doesn’t make the cut in India. The bigger GX & LX are basically rebadged, spiced up versions of the Prado & Landcruiser (respectively). Seeing not too many people are buying a 1 crore Landcruiser, I doubt the more-expensive Lexus variant will make any impact.
  • Lacks excitement : Lexus' are supremely refined & comfortable, yes. Equally, they are known to be boring to drive. This immediately takes the brand off the list of the enthusiasts. In addition, being perceived as boring can affect brand perceptions. The Lexus LFA is one exception, albeit it's a niche product that will probably never see Indian shores.
  • Speed & Response time : BMW entered the market in 2007; yet, it has become the No.1 luxury car marque in India, continuously beating Mercedes & its 10 year lead. BMW has proven that a fast, extremely aggressive strategy is key to market penetration. On the other hand, Toyota is known to be a slow, steady mover. Consider how many years it took the Fortuner to enter India, even though it had a market ready and waiting. Can Lexus match the speed of its super-aggressive German rivals? Audi recently stated that it will overtake Mercedes in 2 years. Obviously, the VW group company has no intentions of slowing down.
  • Brand : In the 20+ lakh segment, brand is everything. The badge can make or break your product. While Lexus is well-established in North America, it doesn't quite enjoy the same appeal in other markets. Building the Lexus brand & image in India will be an extremely delicate exercise. Will Lexus be able to build the same aspirational value that the three-pointed star or blue/white roundel enjoy?
  • Local Assembly vs CBU : Mercedes (especially) and BMW already assemble their volume cars here, giving them a crucial cost advantage. Audi is also in the process of locally assembling its popular cars & SUVs. Initial rumours suggest that Lexus will be brought in via the CBU (completely built unit) route. I hope the rumours are wrong, as this move will give Lexus a severe price disadvantage. In North America, Lexus undercuts the Germans by a noticeable margin and that's exactly how things ought to be in India.

Last edited by GTO : 26th February 2012 at 18:36.
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Old 22nd February 2012, 11:00   #2
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

Thread moved from the Assembly Line to the Indian car scene
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Old 22nd February 2012, 11:43   #3
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

This is something that I am waiting for very patiently. The concept behind Lexus appears like a "Made for India" concept which combines exclusivity, prestige, powerful cars to the reliability of a Toyota/Maruti. The brand has the potential to do wonders in India where the luxury market is just growing up and I don't see it slowing down anytime soon.

But as you pointed out, Lexus does need to make sure it makes the right moves from the very first step. A CBU will just kill the brand. And so will lack of diesel engines even if diesel prices get deregulated. But I am hoping Toyota will make sure that some of its experience in the market rubs off on the Lexus the right way.
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Old 22nd February 2012, 12:09   #4
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

This is exciting news indeed. Better late than never. The brand though is relatively unknown in India but the mother brand Toyota is well respected and known for its reliability. It is surely give Lexus a head start. I hear from sources too that Lexus would be CBU to start with. This could well be a pilot to test waters. Given that Toyota has an extensive dealership / service network should the pilot work out well, it would be launched with "Made for India" tag sharing resources and reducing start up cost. Though the absence of a diesel will surely be a turn off for most Indian buyers.

Toyota has to look at it from a long-term perspective. The sales numbers in the first year of operations may not be good, but the luxury segment will continue to grow in future.
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Old 22nd February 2012, 12:14   #5
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

Lexus is an aspirational brand, no doubt, and the fact that they are far superior in terms of technology and reliability, will only make the brand achieve cult status and sales targets in India.

I was initially apprehensive about Indians recognizing the Lexus brand and giving it the credit and respect it deserves. But those doubts have been subsided by the growing number of imports that I see in Mumbai and Pune. Indians love Lexus and their SUVs in particular. So, things ultimately boil down to the strategy that Lexus will follow to mark its entry in India.

A comparison with Infiniti is inevitable here as both are super luxury brands of otherwise day-to-day Japanese marques. Nissan is also planning to bring Infiniti to Indian shores and spice up the competition. But Toyota has proved itself in the past decade or so and Nissan has been quite slow in terms of bringing in the right models and its product placement.

All-in-all, the exciting times for car enthusiasts continue as auto manufacturers treat Inidan consumers seriously and at par with the European or American counterparts.
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Old 22nd February 2012, 12:27   #6
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

One thing that can make a difference between Lexus and the Germans, in India, would be ownership experience and costs. If Toyota could make it just say half as expensive to own as the Germans and also reliable and be honest with clients and not rip them off on one pretext or the other, I think it will be a success. I think it should come with a comprehensive ownership package and have parts readily available and car must have a 'rough road package' to cope with Indian roads and also must come with enhanced ground clearance and also the most important aspect a 'stonking and refined' diesel power plant.
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Old 22nd February 2012, 12:47   #7
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

Forgive me if my question is naive team but how important is the Diesel engine in the luxury segment cars? If you can afford to pay 30L for a car, you will most probably be driving it less than 50,000 KM max before you sell it & jump to the next car. Considering the running cost and extra investment for a diesel (also thrown in the expected diesel tax which is coming soon), what is the value of having a diesel?
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Old 22nd February 2012, 12:58   #8
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

Lexus -> Japanese (Toyota) -> supreme reliability -> peace of mind.

Now I am not a big fan of their styling (though I feel Audi is worse - yes I said Audi), they may not be as fun to drive as their German counterparts (from reviews - no personal experience) but for me, reliability is No 1.

For me the big challenges they have - few diesel options and CBUs. They are not going to get anywhere without those.

Quote:
Originally Posted by arup.misra View Post
The brand though is relatively unknown in India
I am not sure that's true. I first heard this brand during the Harshad Mehta stock market scam days. Apparently he had a couple of Lexus's in his fleet of cars confiscated by some department after the scam was unearthed.
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Old 22nd February 2012, 13:08   #9
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

Quote:
Originally Posted by asr245 View Post
I am not sure that's true. I first heard this brand during the Harshad Mehta stock market scam days. Apparently he had a couple of Lexus's in his fleet of cars confiscated by some department after the scam was unearthed.
When I said "relatively unknown", I meant it for the masses (masses = consumers of luxury segment). In strictest sense even the Bugatti is spotted in India doesn't mean they are well known. You get the drift.
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Old 22nd February 2012, 13:13   #10
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

The Lexus SUVs will sell. Contrary to what many are saying, IMO Lexus is well known in the bigger cities, because there were so many imports earlier including the Toyotas which were rebadged as Lexus. Those SUVs managed to get a lot of respect and it was always looked at as an aspirational brand. As for the Landcruiser 200, I can see people paying 10 maybe even 15 lacs more for a Lexus since that price is fine for the Lexus, but Toyota is considered much more downmarket at that price point.

As for their cars, a certain number of people will buy them. Those who want a reliable luxury feature loaded car. But the people who buy a BMW or a Mercedes just for the badge value will not even consider Lexus.

In the US it is now considered equal to the German trio, and a Lexus owner gets as much respect as an owner of a Mercedes but in India I don't see that happening too soon besides for their SUVs.
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Old 22nd February 2012, 13:23   #11
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

The IS which should be the one selling at high numbers may be a little cramped. I remember driving the IS when it was launched and it was a great handler (lacked manual stick though)

Mandatory would be the diesel and would love to see how refined they would have to make it seem to match the Lexus brand.
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Old 22nd February 2012, 13:55   #12
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

One way Lexus can keep off from the boring perception is by introducing the enthusiast models. Lexus LFA is a good pick. Although it wont be a statistics cruncher, but it would be the best bet to start for Lexus.

I have driven the IS and GX in the US, but honestly they are designed for older people. They never had the oomph compared to driving a BMW or an Audi. LFA would be a good bet for their brand recognition in India.
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Old 22nd February 2012, 13:56   #13
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

Brand is not a problem. They just need an ad that says "Remember us? We were Harshad Mehta's ride."
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Old 22nd February 2012, 14:21   #14
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

My 2 cents to the points mentioned by GTO -

1. Toyota Camry - It is a great car with shocking volumes. It doesn't take a rocket scientist to figure out why. Terrible prices due to the CBU route and the lack of a diesel. This country lives, breathes and consumes diesels today. All car manufacturers echo the same thought.

2. Lexus badging for the GS (possibly their mainstay - conjecture here) may simply be confused with the Camry. People at that price bracket may not want their cars confused with Camrys.

3. LS / LX may actually manage decent volumes in my opinion. Lots of NRIs returning to India buy German cars but may choose a Lexus given their stronger brand recall. We still manage seeing more than a few petrol powered Range Rovers so LX could actually manage a few. Also, these cars would compete with other CBUs so would be in the same / marginally lower price brackets (Landcruiser may then actually make way for the Lexus or reduce prices)
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Old 22nd February 2012, 14:40   #15
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Default re: Lexus - The Indian Challenge. EDIT: Launch confirmed for 2017

GTO, I just drove a preowned LS600H last week.
What you said:-
Lacks excitement : Lexus' are supremely refined & comfortable, yes. Equally, they are known to be boring to drive. This immediately takes the brand off the list of the enthusiasts. In addition, being perceived as boring can affect brand perceptions. The Lexus LFA is one exception, albeit it's a niche product that will probably never see Indian shores.

Is spot on. The handling is very very poor, typically Japanese. The refinement and comfort is top class. I decided not to buy it just because of the driving feel, would hate to drive her on the expressway visavis a 7 or an S for that matter.
It still would have an appeal if priced right here.
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