[TusharK]

Lexus has announced an organizational restructuring of its India operations. Lexus India has been formed as a separate entity, which will be independent of Toyota in India.



According to a statement released by the company, Akito Tachibana has been appointed as the Chairman of Lexus India. Akitoshi Takemura will assume the role of President and will lead the business, while Arun Nair, who has been appointed Vice President, will oversee operations.

Lexus - the luxury vehicle division of Toyota, was introduced in the Indian market on March 24, 2017. The brand's entry was marked by the launch of three models - the ES300h sedan and the RX450h and LX450d SUVs. The brand currently has showrooms in four cities - Mumbai, Bengaluru, New Delhi and Gurgaon.

[norhog]

Sorry to offend but in my own opinion this car screams ugliness.
Had the good fortune to ride a Lexus LS 460 in Japan on Japanese roads. Good seats and interiors but noisy in my opinion. Too much road / tyre noise inside the cabin.
Must be those fat tyres.

[CrAzY dRiVeR]

Originally Posted by TusharK

Lexus India has been formed as a separate entity, which will be independent of Toyota in India.

Not really understanding the route they are taking.

Logically, using Toyota's facilities to assemble Lexus cars in India would have made sense. Hopefully, 'operating independently' would mean better administration, rather than avoiding the use of common facilities.

Doesn't make sense for Lexus to start fresh in the Indian market, considering the volumes they do, and the strong position Toyota enjoys presently.

[Turbanator]

Lexus India has been formed as a separate entity, which will be independent of Toyota in India.

This may result in some better pricing in my opinion. As of now Toyota does import built up units at close to selling prices elsewhere ( as seen from Import data previously) perhaps they don't want to take any chances of any fines or demands by Government or some other reasons. Lexus, on the other hand, can very well operate as a trading arm of Japan and they can transfer internally at lower costs & then send profits after paying normal Taxes. Also globally Lexus management must be different from Toyota and given the comfortable pace at what Toyota companies move, maybe Lexus guys were getting uneasy and want a direct & fast say in the market. At this point we can only speculate, they will clear the reasons in due course.

[Jeroen]

Irrespective how the inner working between Toyota and Lexus are set up, we have seen over the last decade several moves like this when it comes to positioning of different brands that ultimately belong to the same parent company.

A few examples from Europe. Volkswagen and Audi used to share showrooms and workshops. It just doesn't work. Buying a VW Polo or an Audi A8 requires a different approach and environment. Lexus used to be sold via the Toyota dealers. Same issue, now they have their own dealers.

Jeroen

[gthang]

Why bother adding to Kirloskar's coffers when all the vehicles are CBU?

Makes economic sense more than anything else.

Cheers.

[V.Narayan]

Nice to see they are serious about their brand. Both Tachibana and Takemura have served as heads of Toyota and Lexus in other countries before this. In July Y. Furuya who heads brand positioning globally visited India to see the market for himself. Now Koji Sato who is one of their Chief Engineers for design is visiting India next month to understand design feedback from this market. All good signs. One steady step at a time.

[GTO]

Didn't really understand the purpose of this move. We live in an era of consolidation & 'cost optimisation'. As Crazy Driver posted, Lexus has a lot to gain from Toyota. If they indeed operate independently, there will be a lot of duplication of departments & resources, which will add to the cost. Does this also mean that we won't be seeing CKDs (and hence, better pricing) from Lexus anytime soon? If Lexus wanted to go the CKD route, Toyota's facilities give them a ready solution.

I think there might be financial reasons. E.g. Lexus India is running losses & Toyota didn't want those losses on its balance sheet.

Or, as Turbanator said, it could be because Lexus wants to be fast & lean. Toyota India moves at a painfully sluggish pace.

The press release tries to make it sound like the decision will benefit the brand and customer, but there's more to it than meets the eye. Whatever Lexus does from the administrative point of view, it's still a Toyota brand and the world knows that.

If they want growth, they need to price their cars competitively. The entire Lexus range is grossly overpriced. This will make 10x the difference of any 'independent company' efforts.

Originally Posted by gthang

Why bother adding to Kirloskar's coffers when all the vehicles are CBU?

There are still a phenomenal number of overheads, and Lexus' volumes are still very small. I don't believe Lexus India is profitable. Kirloskar's minority stake is anyway too small for Toyota to worry about its coffers.

[Yeldo]

Originally Posted by GTO

Didn't really understand the purpose of this move...

Originally Posted by Turbanator

As of now Toyota does import built up units at close to selling prices elsewhere ... perhaps they don't want to take any chances of any fines or demands by Government or some other reasons..

This move might be due to Transfer Pricing, Arms Length and Permanent Establishment regulations in context to Toyota's corporate structure.

Lexus operates as a separate entity with no fungibility with Toyota operations in most markets.

A direct subsidiary of Lexus International in India might allow lower unit values and thus lower import taxes for the company. Whether that would reflect on showroom prices remains to be seen.

[OrangeCar]

I believe this is a good movie. For Lexus, that is. Those who know of TKM i.e., Toyota in India's style of working is pretty lethargic, bureaucratic and bogged down by rigid hierarchy. Any new idea by an individual is generally cursed to death & the person who comes up with this idea is pretty much beaten to pieces. How do I know it - lets just say personal experience & continually being in touch with friends over there.

Why is it good for Lexus? -

1. Fresh set of people with a brand new organization culture. (compare it with Toyota's broken culture - which has failed the brand to reap its true potential)

2. Lexus as brand will command high prices & likely to bring in fatter margins. If with Toyota, Lexus cars will end up picking up the losses/subsidizing Toyota's bad decisions (from Etios/Liva & no new immediate product launches)

3. Lexus - given the volumes will be smaller, can & has to be a much agile organization. This is required to take on formidable competition i.e., Mercedes, BMW, Audi, Vovlo and so on. Compare it with Toyota. Innova & Fortuners have virtually nil competition. And in segments where there is competition - Liva, Etios, Corolla - Toyota ain't doing so great!

Being with Toyota will only bring in cost optimizations. But there is much more to lose out. Especially in an era, where even a mass market Maruti is trying a 'premium experience delivery' via Nexa. You cannot expect a Lexus customer walk in to a Toyota dealership, because Lexus & Toyota decided to optimize & leverage existing distribution network.

However, nothing stops Lexus from entering into production agreements with Toyota to produce/assemble cars in the future!