Lexus Losing Sales To Tesla, Admits Lexus US Marketing VP

JUL 25 2014 BY ERIC LOVEDAY 59

Tesla Model S

Tesla Model S

2014 Lexus LS 460

2014 Lexus LS 460

Brian Smith, vice president of marketing for Lexus US says that, despite sinking sales of the Lexus LS, the automaker isn’t concerned:

“We don’t feel it’s a problem with the car.  Many of the buyers in that segment want what’s new and they’re trying it.”

Want what’s new…that’s the Tesla Model S, apparently.

Smith admits that the Tesla Model S is bringing in buyers in the Upper Luxury Car segment in the US, stating:

“They’re right behind Mercedes in volume.”

But Smith doesn’t seem convinced that Model S buyers will stay loyal to the Tesla brand:

“I think the question remains to be seen how many people will buy a second Tesla.”

According to Smith, Lexus is probably losing some buyers to Tesla, but as he says:

“They’ll probably come back [to Lexus].”

Doesn’t sound that convincing now, does it?

According to Ward’s Auto:

“Sales of the LS, which was all-new in ’07 and last refreshed in ’13, were down in the same period, 19.7% to 2,149 units.”

“WardsAuto estimates Model S sales tallied 4,600 units through May, down 6.2% from the same period year-ago.”

So, the Model S is easily outselling the Lexus LS through the first 5 months of 2014.  The Upper-Luxury Car segment is seeing improving sales too

“…sales rose 4.0% through May to 23,818 units.”

Meanwhile, Lexus LS sales are sinking.

In its launch year of 1990, Lexus LS sales (few competitors existed at the time) hit 42,980 units.  Of course, LS sales have no chance of ever returning to that lofty mark, but could it be true that electric automaker Tesla is already stealing sales from some of the most established luxury automakers?  We think so, but as Smith asked, will Model S owners “buy a second Tesla?”  Of course they will.  Lexus is in trouble and by not acknowledging that most current Tesla owners will be loyal to the brand for life, Lexus is setting itself up for disaster.

Lexus could solve this problem with ease by making a 200-mile luxury EV, but that isn’t gonna happen anytime soon.  It seems that Lexus/Toyota just doesn’t get it.  Electric is the future.  It’s time to join the EV train for real.

Source: Ward’s Auto

Categories: Tesla

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59 Comments on "Lexus Losing Sales To Tesla, Admits Lexus US Marketing VP"

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Once you go EV….

Lausbub

Right! Once you have driven an EV…

People are buying new, expensive cars because they are just curious. And most probably the will come back to us and won’t buy a second Tesla??????????
What is he thinking? Is he thinking?

Mikael

And it’s only getting better and better… For the same price their next Tesla might be a 150 kWh version with 200 kW fast charging.

Steve

People are buying the Model S because it is a BETTER CAR. The Lexus guy just can’t say that out loud. He’s doing his best to put a positive spin on it.

Lensman

What is he thinking? He’s thinking he wants to keep his job, at least as long as the company can last.

“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” –Upton Sinclair

But yeah, he’s clearly whistling past the graveyard. Consumer Reports shows Tesla Motors with a higher customer satisfaction than -any- other auto maker. Tesla Motors car owners aren’t merely going to buy a second TM car, they’re trying to talk all their neighbors into buying one too!

Boris

Exactly, and in a few months Model X is coming. I would bet that a lot of households with a Model S will also get a Model X and never ever go back to ICE. I just love how these car companies live in a bubble and it will so burst one day…

TomArt

That is where it will really hurt – SUVs/CUVs sell well in the US, and often outsell their sister sedans, particularly in the luxury segment. If the luxury brands are losing sedan sales to Tesla, then they will really stand up and notice the Tesla bite out of their higher-volume (and often higher-margin) SUV and CUV sales.

The only thing that can mitigate that is the falcon doors – there are people that will stick with the traditional luxury brands in order to carry stuff on the roof…assuming it is necessary. We shall see from the new prototype, or alpha test model, what the space is internally as well as above and behind the vehicle.

Mike I

It will be really interesting to see what Lexus RX450h sales do in 2015. I think it will be really hard for them to avoid a 10%+ hit year over year. In Silicon Valley, people buy that car because they want a luxury crossover and want the best possible gas mileage. Those customers could easily stretch to buy a Model X. Look out Lexus…

Spec9

Especially with a Tesla . . . no range issues, free supercharger usage, charge up at home every night, no fill-ups, low maintenance, no drips, no smog check, no oil changes, etc.

Why would you go back to gas?

I can understand short-range EV owners going back . . . they can definitely be a pain or impractical if you have lots of long range driving to do and/or there are no good quick-chargers.

But with a Tesla . . . why would you go back? Sure, it is missing a few high-end luxury nit-picky things . . . but Tesla will add those in due time. But a gas car will always need fill-ups, oil, smog checks, exhaust, etc.

Bonaire

No range issues is debatable. Even Tesla owners say they use their other car(s) for longer trips.

Al S

I used my Model S to go from Quebec to California and back.

True, it would have been tough to do with my other car, a LEAF.

Mark H

+1

Bonaire

Lexus should just make a nice new EV.

Oh wait…. Toyota. Nevermind.

Anton Wahlman

… apparently you don’t stay EV. According to Insideev’s US sales chart, Tesla’s US sales fell from 10,050 in the first half of 2013 to 7,400 in the first half of 2014. Meanwhile, Lexus US sales grew from 118,000 vehicles to 139,000. So: Tesla down 26%; Lexus up 17%.

Stephen

Lexus is the perfect brand for Toyota to introduce a premium EV, if they wanted to.

Spec9

Toyota seems to have opted for the fuel cell route. Good luck to them . . . I think they’ll need it.

anonymous

This battle reminds me the Blu-Ray versus HD-DVD and we all know what happened with the HD-DVD… Toyota/Lexus is the kind of company that will stay with the HD-DVD. All major brands are going to full electric (Tesla, Nissan, BMW, VW, Ford, Renault) and they are choosing the full cell, a product high flammable, expensive to be produced, expensive to be purchased and with a high pollutant production process… let’s figure…

Anthony

I keep seeing people say this like it’s a religious conversion. It’s not.

Toyota went with the technology available to them. They’re further along with FCs than batteries (way further). So that’s what they’re doing.

I think that eventually they’ll have EVs in a serious meaningful way too (not just paying Tesla to make them). It’s ok to have both. I think that Toyota will just wait until they can offer a 200 mile car on their own. If that means 2018-2020 timeframe then so be it.

Spec9

That’s a dangerous game though . . . they may end up having to license a lot of technology from their competitors.

Bonaire

Double battery density and cut the price of them and toyota will see the benefits of more PiHV solutions. It doesn’t have to be BEV. It has to be high lifetime mpg. Like many Volt owners who are over 200 and 300 lifetime mpg as they drive 80, 85, 90 percent or more on electricity. And at prices now about $23-24 k out of pocket.

anonymous
I don’t believe that is the answer. BMW was researching hydrogen powered cars since 78 using ICE (literally burning the hydrogen) and full cells and they gave up because the costs and the impracticality – to setup a network to fuel hydrogen cars is much, much more expensive and engineering task consuming than charge points. Daimler was researching fuel cell vehicles too since the 80. In the middle of the 90 they had a fully functional Mercedes A-Class van (the first generation not sold in US). The reason Daimler gave up was the same in my opinion as the BMW did. The battery technology is evolving fast, in its second generation the Tesla Model S is capable of 300 miles and to be charged at 80% in less than 30 minutes. Is relevant to notice too that the Model S weights less than a Mercedes S-Class even with 300Kg in battery pack. Imagine where things will go in the 5th Tesla vehicle generation in 10 years? I beat that we will have 500 miles range cars with battery packs that will weight less than 150Kg. Invest in fuel cell today is to lose the path for the future as is… Read more »
James

Here is one good reason to get off our duffs, do our best and buy a car that gets it’s energy from the sun, or clean grid ( say states like mine with hydropower and wind )or even coal-fired electric plants, which are still much cleaner than refined gasoline from crude oil.

http://news.msn.com/us/obama-opens-eastern-seaboard-to-oil-exploration?ocid=ansnews11

How many more reasons do you need?*

*speaking to those of us still on the fence to purchasing a electric or electric-enhanced vehicle.

I’d like to see stories like this reviewed on InsideEVs, even though I’m partially preaching to the choir here.

This story emphasizes that the battle against the evils of oil is not over, and it’s not partisan ( only Republicans ). In fact, it’s just started.

Please share this link with Facebook friends, associates and family.

Thanks!

TomArt

Good point – these are issues dear to the heart of the EV and plug-in transportation issues. It probably wouldn’t hurt to cover things like this.

Richard C,

Buyers aren’t buying Tesla because it’s new, but because it’s better.
Kdawg is right, once you go EV ….

TomArt

Well, both, really…but yeah, I get it. 🙂

anonymous

is the same mentality when the iPhone was launched. And we know what happened with Motorola, Nokia, BlackBerry…

Mikael

Hmm… that must make BMW/Volkswagen the Samsung of phones…

Yolo Pascual

I hope Tesla won’t be like Apple someday, charging premium to their next gen product with a little to no improvements.

MTN Ranger

HAHAHAHA! Keep thinking that Lexus (Toyota).

krona2k

I wonder if he’s driven a Model S. Also he didn’t explain why people wouldn’t stick with Tesla.

TomArt

Yeah – anecdotally, even those who have had drive unit replacements still love the car…very few, that I’m aware of (which doesn’t say much, really), have sold their Model S in disgust over replacements and bought a Lexus (or Mercedes, etc.).

Or hired the Lemon Law King, LOL.

I wonder what that person is driving now?

TomArt

Probably a Toyota FCV.

Lensman

Well, the guy has already sued Volvo and Tesla Motors, apparently claiming pretty much exactly the same problems.

I guess he’ll buy a car belonging to whichever auto company he thinks is the next-easiest mark for his next frivolous lawsuit.

At least the guy suing didn’t actually get any money out of Tesla Motors, other than a refund on the car. Sadly, though, his lawyer did get paid his fee by TM.

Mikael

There are still no Japanese deliveries of the Model S. Even though Japan is the country of Kei-cars I’m sure a few hundred Teslas in Japan and the response from owners and other test drivers will make them work harder on EV’s. 😛

Rob Stark

Sounds like Cadillac VP of Marketing from the 1980’s.

In its launch year 1990 Lexus LS400 competed against MB E Class,BMW 5 Series,Audi 100, and Infiniti Q45.

Lexus LS460 has grown and now competes in the full size luxury segment but there is no longer a comparable Infiniti model. There is the Hyundai Equus and of course Model S.

Spec9

What happened to (Honda’s) Acura?

Anon

Second vehicle for many, will be Model X… Then watch the automakers freak out.

Bonaire

Yes, 170 kWh of batteries in the garage and owners will mainly drive a few dozen miles per day. Wish they would spread the batteries out over more cars.

Brian Smith clearly needs better intel. Tesla owners are not going back to Lexus. Who does he think those 5,000 Model X reservation holders are?

What our family misses least about the Lexus RX350 we parted with a few months ago: $400/mo gas bill.

And it wasn’t because the gas cost $400.

Respectfully suggest Brian Smith follow Steve Blank’s dictum: “get out of the building…”

Bonaire

5000? There are over 12,000 US based MX reservations now. 18,000 worldwide. Sure, some have cancelled but at least 17,000 real reservations. That will cut into Range Rover and Lexus and BMW and MB sales a bit.

pjwood

Yup. Lexus gets BEV, like VW gets EREV.

Some companies will keep doubling down on the “anything but BEV” betting line, right up to the point where they’re getting crushed in the market. Then they’ll try to do a neck-snapping U-turn at full speed and make it sound like they were on the BEV bandwagon from day one.

And I bet that in some cases we’ll see companies go from being vocally anti-BEV to shipping a suspiciously well designed car in record time, indicating that they were working on it while bad mouthing the technology.

I haven’t figured out which car company I’ll most enjoy watching eat crow, Honda or Toyota.

The other outcome is the tsunami will come in too fast, and they won’t have the capacity to replace their ICEs with EVs. They will lose massive market share and not have the ability to turn the battleship around.

I am not saying that a specific OEM or all current OEMs will get damaged in the change in technology. I do expect at least one OEM to be irreversibly crushed by not being prepared.

Phr3d

battleship (aircraft carrier) reference may be spot on..

Alonso Perez

Fiat-Chrysler is a deer in those headlights for sure. Toyota will have the resources to recover, I would guess.

offib

Someone’s in denial…

no comment

Smith is clearly reaching because this stuff about him wondering how many people will buy a second Tesla tells you that he is whistling in the wind: if he had any basis, he would be able to offer a reason as to why someone would want to not buy a second Tesla. after all, that is part of the job of marketing.

where Tesla has a disadvantage is not so much in the technical features of the car, but in the area of commercial viability. unlike Tesla, none of the other companies rely upon the upper luxury segment for this primary source of revenue. Tesla is kind of in a no-man’s land: the Model S is in between the exotics, that are produced in low volumes and sold for stratospheric prices, and mass market, that are produced in large volumes and sold for lower prices.

Tesla has a number of competitive advantages. As costs get driven down, they can compete in mid markets with a premium brand, and premium product.

The Superchargers benefit from “the network effect”.

Their product is fundamentally simpler and cheaper to build at scale.

Musk has vision, guts and a BHAG. People underestimate the value of a BHAG. It’s nowhere to be found in the balance sheet, not even under goodwill or brand value. But it’s one of the most valuable Tesla assets.

Only BMW and Nissan have anything remotely resembling a BHAG, and even theirs looks more like fast follow these days.

EV

I have never seen a lexus that i wanted. They dont have solid designed cars. Would never consider one, ever.

Anon

It warms my heart to see an American Made vehicle outselling high end imports… Especially one that does not directly use oil for fuel.

Bloggin

LS, 7-Series can’t compete with the pure clean power and efficiency of the Model S EV.

What Tesla figured out is that ‘most’ luxury car owners never drive their luxury cars on long road trips over 300 miles, but instead use their big luxury SUV or fly.

Which means going electric not only meets their driving needs, but also eliminates over $300 in fuel costs.

This is the new luxury car sweet spot.

Which is why I expect to see 200+ mile luxury sedans from Cadillac and Lincoln coming by 2017.

Phr3d

ignoring the one-off problems, IF the MS can hold up affordably, he has a couple extra years to wait for those Lexus losses to return to his doors.
Car guaranteed resale value, 1/10th to No fuel expense, (maybe) no maintenance.. oh yeah, I’m sure they’ll be racing back to Lexus, et al.

That’s if it Wasn’t a highly enjoyable car to drive, and money was the Only issue.

It was nice knowing ya’ Lexus, say hi to Saturn for us, ok? Visions of swords-to-fall-on already poised..

Lexus just cant go full EV because Toyota’s best selling cars are the Prius line. A full EV would disrupt those sales and signal the end of their modest Prius philosophy. Car makers like building gas cars with their service and parts infrastructure. Its part of their profit model – EVs disrupt that. Why would Toyota get off the Prius band wagon now? They will ride that horse until it’s sales drop against EV competition. Right now Prius sales are growing as battery technology is increasingly validated. In a couple of years Toyota will burst on to the EV scene acting like they started the whole thing. And, maybe they did. It makes sense to me from a business perspective, but I dislike them for it.

EVger

If my family is any indication, Lexus will lose sales to Tesla and other manufacturers that produce a BEV or credible PHEV. Toyota/Lexus has been a big disappointment to us in this regard. We have been happy driving Lexuses for many years. In 2005, we bought a Lexus RX330 that we traded for a Ford C-Max Energi when it became available in 2013. In 2010, we bought a Lexus RX450h. We currently have a reservation on the Model X and are planning to sell the 450h when the Model X becomes available.

Anton Wahlman

Waaaaiiiiit a minute! In the first half of 2014, Lexus sold 139K vehicles in the US alone, up from 118K in the first half of 2013. That’s an increase by some 17%. According to Insideevs’ own numbers, Tesla sales in the US fell from 10,050 in the first half of 2013 to 7,400 in the first half of 2014. That’s a decline by 26%. So… Lexus was up 17% but Tesla was down 26%, in terms of US sales — first half of 2014 vs first half of 2013. Maybe I’m missing something, but if you actually look at the numbers, Lexus is experiencing strong growth, while it’s Tesla US sales that’s in a horrible tailspin.

EvDeath

Please oh please, every time a sham article like this is printed, the foil head fanboys start to swarm like hornets from a nest.

So Elon built a nice car that costs $100,000, while he’s losing money on it. So what? The model X is just another version of the S and will likely cannibalize S sales. The model E or what ever it’s called today will never exist and could never exist. There is simply no battery technology that will get Elon to that point.

As far as Model S range and the stupid superchargers, the fanboys should just stop lying to the world. Only the S-85 can make it between stations and then only if you hypermile. And oh, by the way you don’t recharge for another 180 miles in 30 minutes, try an hour.

So what’s the point of a luxury car you can’t drive like one? All the other tales of magic batteries, 300 miles of range and so on are only fantasies.

Give it up Elon found a sweet spot, it was good for awhile but obviously the days are numbered.

> Only the S-85 can make it between stations and then only if you hypermile.

Simply and utterly false. Not even close.

I routinely drive 1,500 mile trips up and down the west coast. If you’re not afraid to change your mind, I invite you to ride along with me sometime.

clstudio

Not surprised. Lexus lost my business – twice. An old salesman not welling to negotiate any deal on a SC430 so I walked out. I went to other Lexus dealership and was consider buying the CT instead but no salesman took me seriously because I look young and dress casual . Car shopping is never fun for me until I saw Tesla. A year later, I stopped by the dealership with my Tesla and thanked the salesman because I won’t be driving a Tesla if not because he was being judgmental.