By on July 31, 2014

1024px-LEXUS_CT200h_Japan_2011_front

Mercedes and Audi all have a sub-$30,000 entry in their American model ranges. BMW’s cheapest model is just a few hundred dollars above that price point. Infiniti will likely have their own model in that space. So why not Lexus?

Speaking to Automotive News, Lexus boss Mark Templin said

“We could go down and build a car under $30,000, but it would be decontented, and you’d be cutting corners. It wouldn’t be a Lexus…To be honest with you, you can’t build a Lexus with the quality, the durability, the reliability, the craftsmanship, the content that we put in a Lexus and sell it profitably under $30,000. You just can’t do it.”

Templin’s comments are about as clear a swipe at the Audi A3 and Mercedes-Benz CLA as one can get. While CLA sales have been big for Benz (as much as 11 percent of the brand’s total, by AN‘s count), reviews have been mixed.

Mercedes-Benz, like other European luxury brands, face an additional dilemma beyond the usual matters of scale, volume and profitability requirements associated with those issues. In many mature markets, their buyers are getting older, while a new generation of buyers is both moving away from cars, and arguably less able to afford a new luxury car. Products like the CLA and A3 offer an affordable entry-point into the brand, while also appealing to the aesthetic, environmental and economic tastes of the Millennial generation. Lexus doesn’t necessarily have this problem in the same way that the Germans do, but they also don’t have much of a presence in Europe either.

What Lexus is doing, as AN pointed out, is attempting to stake out the “high ground” by keeping the price floor above $30,000 (the entry-level CT hybrid starts at about $32,000), which will ostensibly further entrench their “luxury” position. But Lexus, for all its success, has never achieved true global success as a luxury brand, which is something that only the Germans have managed to earn. And as we all know, it’s easier to reach downmarket than try and move up. The A-Class was a hit for Mercedes, but Volkswagen didn’t fare well with the Phaeton. And Audi is just finally turning the corner after a decades long climb to Tier 1.

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126 Comments on “Generation Why: A Sub-$30k Car “Wouldn’t Be A Lexus”...”


  • avatar
    DeadWeight

    Speaking to Automotive News, Lexus boss Mark Templin said

    “We could go down and build a car under $30,000, but it would be decontented, and you’d be cutting corners. It wouldn’t be a Lexus…To be honest with you, you can’t build a Lexus with the quality, the durability, the reliability, the craftsmanship, the content that we put in a Lexus and sell it profitably under $30,000. You just can’t do it.”

    Hey, Lexus boss Mark Templin, I have some breaking news for you; Lexus already sells two vehicles, at minimum, that reek of a lack of quality, lack of durability, and a lack of craftsmanship, to wit, the front wheel drive Lexus ES350, and the rear wheel drive Lexus IS250.

    The former is a much worse Lexus ES330, and the latter is just a pathetic excuse for a so called “luxury-sport” vehicle bearing a “prestige” badge (where Lexus managed to squeeze 1980s level horsepower out of V6, in a car that is dead dog slow, and also happens to ride like $hit).

    But Lexus boss Mark Templin – at least you’re correct inasmuch neither of these vehicles are sub-30k; they’re much, much more than that.

    • 0 avatar
      vtnoah

      I’ll agree with you on the ES350 since it’s a prettied up Camry. My in laws have one and after driving it I felt like I just popped a few xanaxes. However, everything I’ve heard about the new IS is that it’s a pretty great car and bests the new 3 Series in just about every metric except for size. YMMV.

      • 0 avatar
        philadlj

        The latest ES is actually the first to be based on the Avalon, not the Camry.

        Personally I think the Avalon is prettier, however, so I can’t say it’s a prettied-up Avalon.

        • 0 avatar

          The Avalon is itself a long-wheelbase Camry, and has been for a while. But I agree with you that the Avalon is much prettier, inside and out. It also feels sportier. It has a gentlemanly look that I really like, and would be my choice in full-sized cars if I were in that market.

    • 0 avatar
      28-Cars-Later

      The last gen ES300 was just as disappointing as I had an MY02 for a while in 2006. No. Fracking. Power. I pined for the MY95 Riv we had just sold at the time at a slight loss. I don’t understand why in some aspects Lexus is a class leader, and in others they can’t seem to get it together.

      • 0 avatar
        CoreyDL

        You know those last of the ES300’s aged well. I think they still look tasteful today. I hope yours was a two-tone or a Coach version!

        I thought my GS430 (though never all that popular) was a good car, and you could really feel the solid engineering. Even at 12 years old, I was never worried about faults or being stranded.

        • 0 avatar
          28-Cars-Later

          Actually it was a two tone, black/grey and it looked very sharp. This one was a real oddball though, we got it from Rohrich Lexus for I think 20K, and it had 19K otc but it came without a moonroof, and without leather [!]. Who orders a Lex without leather? Bob (the owner at the time) was doing half decent business on RX300s as we could not keep one on the lot for long, so he bought most of what the Lexus dealer offered him. This thing sat for two months before I was able to weasel my way into it as my dealer car. The previous summer I had an early LS400 for a spell and aside from occasionally moving around one of the RX300s I really had not experienced another Lexus. After they sold the Riv (after I dropped it back off for the weekend) I was quite livid because I was back to driving my own car for a time. But eventually I manipulated Bob into letting me have the ES300 since it just kept sitting there with never an interested party. Then I understood why, despite its good looks it didn’t feel or drive like a luxury car. I remember hooning it on the hills where I grew up and thinking WTF where is the power? I’m stretching to remember here but I don’t even recall it being that quiet. After about 1200 miles on it in maybe two months running around to BAA and Tri-State I switched to another eyesore on our lot, a forest green MY93 Lebaron Convertible V6 (with leather and Pac-Man digital dash!). I think Bob finally retailed the ES300 to a women who did not like leather and traded a white 92 Deville 4.9 90K with blue velour interior, a blue carriage roof, and the gold package (which I also later drove for a brief time). I think after the generous trade (like 3K) he was out money on the Lex, as the Cadillac might have been worth $1200 at the time. Bob had Alzheimer’s like problems though, in his mind an early 90s car at that time was very desirable for retail (which was not reality). He would make money on specialty items such as Z3s, Corvettes, RX300s, Infiniti’s Pathfinder (whatever it was called), Navis etc, but then lose it buying really old stuff for too much money and then end up having to fix it in order to sell it (emissions, safety issues etc).

          • 0 avatar
            CoreyDL

            You’re referring to the also two-tone QX4, one of my favorites.

            I never liked those DeVilles with velour, it just cheapens the interior somethin awful. I have seen ONE ES with cloth. I happened to notice it as I was walking by, and I think I pointed it out to my mom. She said “Isn’t that a Lexus though?” Don’t think I’ve seen one without a sunroof though. Sort of like the I30, I think those were available with cloth initially as well, for like one year.

            Is that dealer guy still alive?

          • 0 avatar
            28-Cars-Later

            I felt the same way on the Deville, especially with the roof and gold emblem trim package (although it may have just been a base Deville with dealer installed accessories). The A/C did not work so I didn’t mind the cloth as much when I drove it. Just before Halloween they sold it to an old drunk and made slight money on it (PA welfare pays up to 2K for used cars for the privileged). I think we had $3200 on it at that time. But to answer your question about ol’ Bob, he’s been dead since November 2006 (although there were rumors of him somehow faking his death, closed casket and he had mob ties).

          • 0 avatar
            CoreyDL

            If it had a real factory gold package, it would’ve had a gold tone key as well (or at least started out that way).

            Oh Bob is probably still out there then!

        • 0 avatar
          Lightspeed

          My GS400 is now 14 yrs-old and feels and drives like new. I really think Lexus quality dipped from about ’09 to ’12. The new GS brought the bar back up. I don’t get why they even sell the IS250, Inifiti tried to sell a 2.5L G-series, it failed. I still think the CT should have been badged as anew Celica, it would have been a chance to revive a beloved name in a new, modern context.

          • 0 avatar
            Maymar

            I can’t speak for the US, but the vast majority of IS’s in Canada seem to be the 250 (usually with AWD).

            If I had to hazard a guess, even with merely adequate straight-line performance, the IS still feels like a Lexus (reasonably solid and well-finished), while horsepower was one of the main selling features on the G37, rendering a low-po version sort of pointless.

      • 0 avatar
        geeber

        Based on what I’ve seen, the current Lexus ES sells to affluent, older people who, if they had been around in the 1960s and 1970s, would have bought Buick Electras.

        During those decades, people bought an Electra to announce that they were THIS CLOSE to owing a Cadillac, or could afford a Cadillac, but thought that they were too pretentious.

        • 0 avatar
          CoreyDL

          If that was the story between Electra and Cadillac, what was the relation to Oldsmobile buyers?

          • 0 avatar
            geeber

            The Ninety-Eight sold to people who, after owning a few Delta 88s, decided to reward themselves with the top-of-the-line, full-size Oldsmobile.

          • 0 avatar
            CoreyDL

            They didn’t consider an Electra or DeVille then?

          • 0 avatar
            28-Cars-Later

            Olds people were a different breed.

          • 0 avatar
            CoreyDL

            How did Olds manage to attract this different sort of customer? I’m sad I missed out on all this by about 40 years birth age.

          • 0 avatar
            28-Cars-Later

            Don’t know exactly, but we knew “Olds families” growing up. Olds is just what they bought, almost always new, and passed through the family. Similar to the “Toyota families” you see today. I could see “Olds” people going for the Ninety Eight after years of Cutlass or Eight Eight just as Toyota people lunge for Avalon after years of Camry or Corolla. Oldsmobiles also still had standalone dealerships in the 80s at least, whereas Buick dealers were already being consolidated with the other GM marques at that time. So if you did business with McMinn Olds in Dormont (as many did) you went back for your next Olds because of the relationship you or your family had built up with them.

          • 0 avatar
            geeber

            There was much more brand loyalty to various GM marques in those days, particularly among Buick, Cadillac and Oldsmobile buyers.

            In the 1960s and 1970s, Oldsmobile did have a more youthful image than Buick, particularly with cars like the Cutlass Supreme. At the same time, many people who could afford a Ninety-Eight or an Electra considered a Cadillac to be too “pretentious.”

            My parents were Oldsmobile loyalists who bought a steady stream of 88s until GM killed the division. I remember my father saying that Cadillacs were bought by people who were trying to “show off.”

          • 0 avatar
            MrGreenMan

            There’s a lot in the Oldsmobile bundle:

            1. They were performance, or had been at one time. The Rocket 88 had ousted the Hudson Hornet as the fastest production car in North American racing of any volume.
            2. They had their own engineering; people who believed in it believed they were just a little superior to the other boys. (They lost a lot of sales when they were forced to take “Corporate” engines.)
            3. They were probably the lowest level GM car you could get that was an “acceptable” car to drive to church without looking poor, but they would not make you look rich, either. (Kind of like a Volvo.)
            4. They had some Lansing in them. They weren’t Deeeeeeeeeetroit. If you grew up on the right farm, you could see them driving in and out of the factories all over the farther counties of Michigan.
            5. For a while, GM let them be different, and that’s what everybody remembered.
            6. They were, to the right eye, so much more attractive than the upscale offerings without looking plebeian or pedestrian.
            7. The Oldsmobile Faithful will always believe that Roger Smith gutted Oldsmobile for that waste of everything known as Saturn and the death knell for Oldsmobile the brand (as Oldsmobile the car company was long gone) was when the Eighty Eight was put to rest.
            8. The Alero, Intrigue, and 2nd Gen Aurora will always have limited acceptability as real Oldsmobiles; too much Pontiac in them.

            If you considered the landscape of performance, features, appearance, fun, and pricing, Oldsmobile lived at an inflection point, at least in everybody’s hazey, nostalgia-filled memories.

            …and because they killed it, that’s why my Oldsmobile family and extended family all bought Ford products.

            Note: Purely anecdotal, but I always heard around the Oldsmobile types: Pontiacs were poorly engineered and couldn’t achieve the same performance and reliability (and had rust problems). Cadillacs were overpriced, pretentious, and lacked reliability. Buicks were too tame apart from the real Grand Nationals (there was always an Olds performance element). Oldsmobile buyers never considered Chevrolets.

          • 0 avatar
            NoGoYo

            Well I agree with #7, Roger Smith ruined Oldsmobile (and arguably did quite a bit of damage to Buick and Pontiac as well) with his restructuring of divisions. No V8 engines and looks that were far too similar to Buicks and Pontiacs most definitely hurt the Oldsmobile faithful, there’s no doubt in my mind about that.

    • 0 avatar
      turboprius

      My neighbor had an ES300, and she traded it in within the past year for a certified pre-owned 2010 ES350. Haven’t been in it yet, but the exterior looks fresh. The new one beats it out in styling, sure, but the 2007-2012 ES350 is much more attractive than the Camry of that time.

      Even with the 2010 refresh, that generation of Camry wasn’t really a looker. The new ones, oh yes, even if they’re LE models with “Enhance Your Drive: Scan Now” stickers on the driver’s window.

    • 0 avatar
      pragmatist

      Because a sub 30k version would be perceived as a Toyota (the CT is a slightly tarted up Toyota anyhow)

      MB and BMW in the US don’t have a low cost brand to contend with.

    • 0 avatar
      Quentin

      How much power should a naturally aspirated 2.5L make? Cadillac’s 2.5L ATS makes 200hp. BMW’s 320i makes 180hp out of a 2.0L turbo. Being a 6 cylinder doesn’t mean anything as far as power potential. Displacement is more indicative of power potential than cylinder count until you start getting to exotics that had a 3.6L V8 making 400hp because they could rev it to the sky (like the Ferrari 360, for example). The cylinder count just changes the way it is delivered. The IS250 is prices more in line with the ATS 2.5 and BMW 320i than the ATS 2.0T and BMW 328i when you consider content on a site like truedelta, for example.

      • 0 avatar
        30-mile fetch

        Quentin, it’s really no use arguing with Deadweight on this one. People who hate the IS250 really f*ing hate the IS250. They hate it for the engine and refuse to address the handling, seat comfort, interior quality, and refinement that honest reviews have applauded, or acknowledge the price parity with the lower-powered cars you mentioned.

        Notice how he used the criteria “lack of quality, lack of durability, and a lack of craftsmanship” but doesn’t explain how any of those are violated by the low output of the 2.5V6.

        • 0 avatar
          DeadWeight

          Yeah! Especially those ‘tards @ Consumer Reports (who are only qualified to review toasters & water filters)!!!

          The IS 250 had “the worst road test score posted by any Lexus sedan in recent memory.” Other competitors posting higher overall road test scores include the BMW 328i, Mercedes-Benz C250, Lincoln MKZ 2.0 EcoBoost and Volvo S60 T5,” CR says.

          CR says it “found the Lexus IS 250 is neither sporty nor luxurious.”

          Optional, weight-adding, all-wheel-drive and the modest, 204-horsepower of the Consumer Reports test car meant that “acceleration lacks punch,” while gas mileage was “disappointing at 21 mpg overall in CR’s own tests”

          CR also criticized IS 250’s handling and ride as “short on finesse, with vague-feeling steering that doesn’t telegraph much feedback. Road noise is elevated, and the ride is neither plush nor tied-down.”

          It found the car cramped. “The interior is very tight, even when considered against the modest standards for sports sedans, with a narrow cabin, wide center console and large overhanging dashboard.”

          And it did not like the console-mounted controller for the infotainment screen: “The IS 250’s controls now include the fussy, distracting mouse-like controller found in other Lexus models.”

          http://www.usatoday.com/story/money/cars/2013/10/22/lexus-is250-infiniti-q50-fall-short-consumer-reports/3146525/

          • 0 avatar
            30-mile fetch

            Uh-huh. Considering the Impala is the highest rated sedan in their test history, I’ll be sure to view Consumer Reports and only Consumer Reports when shopping for a compact sport sedan.

            They also didn’t like the Toyota Tacoma’s ride quality (apparently it rides like a truck), so I’m not sure they have yet perfected how to judge a vehicle on its intended audience.

            FWIW, not a single CR gripe you listed falls under the “lack of quality, lack of durability, and a lack of craftsmanship” you claimed isn’t present in this car. I haven’t so much as set foot in one, so I don’t know, but reviews outside of CR largely do not support your opinion outside of the power deficit.

            Which actually brings me to something I’m curious about. Have you actually driven this car, Deadweight? Can you compare the FSport vs. decaff or tell us how the 3.5 liter V6 stacks up against, say, a 328i since they are priced on top of each other? Comment boards are FULL of the wisdom of folks who haven’t driven this car yet still hate it, so I’d love to read the opinion of someone who has.

          • 0 avatar
            NormSV650

            The IS 250 is so bad that Toyota swapped in a 350 while Motor trend was doing a long term uupdate on the IS250.

          • 0 avatar
            NormSV650

            http://www.motortrend.com/roadtests/oneyear/sedans/1405_2014_lexus_is_350_awd_update_3/?fullsite=true

        • 0 avatar
          DeadWeight

          The Lexus LS430 was the highest sedan in CR’s road test score history, scoring 99 out of 100 points in the luxury sedan category.

          The Impala in the large sedan category (not luxury sedan category) recent tests scored a 95 out of 100.

          Yes, I test drove the Lexus IS250 and IS350 recently, and found the IS250 to be as bad as CR deemed. I’d go further, and state that there are few sedans 30k and up that I would NOT rather have than the IS250; whereas at least the IS350 had a far better motor to match the powertrain.

          Lexus is slipping badly whether Lexus fanboys want to concede it of not, and in much the same way Acura began its slipping approx 8 years ago.

          From drivetrains, to interior material quality, to NVH levels, there are few Lexus predecessors that are NOT superior to their successors.

          • 0 avatar
            wmba

            Well said, DW.

            Plus, the 2.5l V6 doesn’t get the D4 dual port and direct injection. Just direct, and it doesn’t take much of an Internet search to find bewildered owners having exactly the same sort of carbon coking up that VW is famous for. They thought they bought a Lexus, a ticket to decades of trouble-free motoring.

            Your lead off comment on this blog post is exactly what I wanted to say, expressed better.

    • 0 avatar
      dwford

      So true. I just road in a new Lexus ES350 today. Plenty of hard plastic throughout the interior.

    • 0 avatar

      The IS 250 has a dreadful engine, but the rest of it is pretty solid. Chances are that they’ll replace the 2.5-liter V6 with the 2.0-liter turbo from the upcoming NX. And while the ES doesn’t represent good value at all against the Avalon and has plebeian underpinnings, it doesn’t feel cheap. The interior definitely feels like a luxury car.

      My pick of Lexii would be the GS 450h, especially if it’s available in an F-Sport package.

      • 0 avatar
        bd2

        And yet, 90% of IS sales is for the 250 – does this mean that Lexus buyers tend to not care about performance?

      • 0 avatar
        Tim R

        Totally agree with Kyree above. I actually test drove a new IS250 today (the dealer was out of IS350s until the 2015s hit the lot in a few months). The lack of power is terrible, but otherwise, it’s a sporty little sedan with a cool cockpit like cabin. It’s small inside, but serviceable for four adults. Usually I swear by Consumer Reports, but I think they missed the mark on this one.

        • 0 avatar
          Quentin

          Yeah, I usually agree with CR as well, but my test drive of an AWD IS350 F sport left me very impressed. The chassis and interior are light years better than the old IS which was just way too stodgy for me. I haven’t driven an IS250, but I’d be surprised if an engine swap made it so much worse.

          • 0 avatar
            DearS

            The 2.5 makes 205 HP and 185 lb/ft torque, which is pretty well in line with the Hp/lt most engines make.

            Its the same HP/TQ cars had 10 or 20 years ago, and still do today. Not that I like it, but its entry level HP.

            My 1990 BMW 525i had 170 Hp from a 2.5 I6 and with the 5 speed it was always enough, my 2.8lt 528i also has enough power at 190hp and 206lb/ft of torque. both stick. I dont imagine the engine being the problem.

      • 0 avatar
        NormSV650

        Toyota is to worried about cafe to include the 2.0T in the rest of the lineup.

        http://www.autoblog.com/2014/08/01/why-american-lexus-nx-uglier-than-rest-of-world/

  • avatar
    anti121hero

    Bullshit. Leather seats in a camry shouldn’t cost you over 30000

  • avatar
    Pch101

    Almost all of the Lexus vehicles are built in Japan, whereas the Germans have diversified their manufacturing to include other locales with lower labor rates and weaker currencies.

    The solution isn’t to decontent the car, but to move the factory.

    • 0 avatar
      CoreyDL

      You say that, but aren’t their volume models (ES, RX) built here?

      I do believe Infiniti has the most “Japan built” lineup.

      • 0 avatar
        Pch101

        The ES is built in Japan. The RX is built in Ontario.

        • 0 avatar

          ES is moving to Georgetown, KY.

          • 0 avatar
            Pch101

            ES production is going to Kentucky. It isn’t there yet.

            The point is that decontenting isn’t really the issue for TMC; the lack of production diversity has been a disadvantage for Lexus when faced with German competitors who have been embracing it.

            The heart of the matter is closer to what Psar is talking about: TMC has a mainstream brand to cannibalize that Daimler and BMW lack. TMC needs to be more wary of conflicting price points in the US market than do any of the Germans.

          • 0 avatar
            CJinSD

            The decontenting thing could hold some truth too. Nothing is as barren as a cheap German car with no options. Ever notice how the low option German cars that force magazine editors to suffer through unheated manual seats still have $7K in options?

      • 0 avatar
        th009

        And currently Audi builds everything in Europe, at labour costs that exceed the Japanese ones.

        • 0 avatar
          bball40dtw

          Hungary and Solvakia have higher labor costs than Japan?

        • 0 avatar
          Pch101

          When were India and Indonesia relocated to Europe?

          And I’m pretty sure that the Audi workers in Hungary, Slovakia and Spain are not so costly.

          In any case, Audi doesn’t have to grapple with a strong yen. The Japanese auto industry developed at a time when the currency was much weaker and offered a competitive advantage.

        • 0 avatar
          onyxtape

          Japanese labor costs are not as high as one thinks. They’re actually almost comparable to American costs.

          I remember reading that 1/3 of assembly line employees at Toyota City were temps and made $13/hr, with the remaining permanent employees at around $20-$25/hr. Auto and aerospace assembly line workers in South Carolina make around $15/hr.

    • 0 avatar

      Their volume models (ES, RX) are built in North America, aren’t they? And I’d imagine that trend will continue.

  • avatar
    psarhjinian

    Toyota realizes that, well, they have another brand for near-luxury cars under $30K.

    That brand is “Toyota”

    • 0 avatar
      NormSV650

      I was thinking the same. I do know someone who replaced their ES with a guessed up Carry as the new ES was too expensive.

    • 0 avatar
      CoreyDL

      This.

      The German marques are stretching down to sub-30 because that’s as low as they can go without being ridiculous. They don’t have a different brand (per say, as Mini/Smart don’t really count). Toyota can sell cheap crap under their name, and push their even older cheap crap to Scion. They don’t need to take Lexus downmarket.

      That being said, using the word “craftsmanship” in regards to Lexus is stretching it too far. The only Toyota vehicle to which that term would apply is the Century.

  • avatar
    danio3834

    >A Sub-$30k Car “Wouldn’t Be A Lexus”

    Right, it would be a Toyota. Mercedes and BMW don’t have a separate low end brand to market such cars under and decided to stretch their existing brands lower. Lexus doesn’t have to because Toyota.

    • 0 avatar
      psarhjinian

      So what’s Audi’s excuse? Or Cadillac’s? And in theory, BMW has Mini for this purpose.

      Because the exercise in brand creep seems to be a pursuit in quarterly growth, damn the torpedoes.

      • 0 avatar
        danio3834

        They’re looking to conquest more volume of course, some of which will be at the expense of their volume brand models. The existence of the volume brand cars won’t allow the luxury marque cars to live up to their sales potential either. There’s probably some in-fighting among brands going on, not all carmakers think alike.

      • 0 avatar
        bumpy ii

        I think in Audi’s case, VW is enough of a niche player in North America that there aren’t any toes for them to step on. Cadillac starts off the ATS around $35k in the US and goes up from there. Down from there is Buick’s job now.

        • 0 avatar
          psarhjinian

          “I think in Audi’s case, VW is enough of a niche player in North America that there aren’t any toes for them to step on.”

          I would believe that were the A3, A2 and A1 not sold in Europe as well.

          • 0 avatar
            bumpy ii

            In Europe, I would assume the Audis are selected as company cars by folks who are higher up in management than the dregs riding around in Golfs.

          • 0 avatar
            th009

            For the most part, the A1 is not competing for the same buyers as the Polo — but it will be fighting with the Mini and other premium superminis.

    • 0 avatar
      CoreyDL

      JINX!

    • 0 avatar
      krhodes1

      Trouble is $40-50k+ Lexus are Toyotas too. Which is why they will never really play in the big leagues.

      • 0 avatar
        CJinSD

        The car with the highest demographics and landed gentry appeal is the Toyota Land Cruiser. If Lexus, or Mercedes-Benz, or BMW could achieve that level of play, they wouldn’t need to offer lease deals.

        • 0 avatar
          krhodes1

          And how many Land Cruisers does Toyota sell in the US? Oh yeah, almost none. And in my neck of the woods, they are mostly know for rusting as fast as a wet ’70s FIAT.

          Those lease deals allow BMW and MB to effectively sell an awful lot of cars for full MSRP, and laugh all the way to the bank.

  • avatar
    Steve_S

    I’d have to agree with the stand Lexus is making. I can see BMW and MB doing this as they do not have a mainstream brand to fall back on. Audi I presume is doing it because it can and badge whores will buy it.

    Infiniti, Acura, Buick (and Lexus to a degree) are near luxury brands without the same cachet as the Germans.

  • avatar
    CoreyDL

    Interesting! It’s not even sold in Japan, and is on the very American Avalon chassis. Yet made there.

  • avatar
    stars9texashockey

    Wasn’t there an article a couple of days ago regarding the GX460’s price being cut due to DECONTENTING?

    • 0 avatar
      Quentin

      Yeah, they got it down to $50k… a far cry from $30k. They offered a synthetic leather and got rid of some of the wood and rear passenger climate control to get the price down to $50k. Leather, wood, and rear passenger climate control were standard before.

      • 0 avatar
        stars9texashockey

        Yes, I understand that. My point is that in this article Mark Templin states that decontenting would be cutting corners and the result wouldn’t be a Lexus. How does he reconcile that with what they did with the GX460?

        • 0 avatar
          Quentin

          Decontenting it to cloth seats, no moonroof, part time 4WD transfer case, no rear air at all, etc would be “not lexus”. Lexus offers synthetic leather and no wood trim on many other models, so I wouldn’t call real leather, rear climate control, or wood interior part of the Lexus DNA.

    • 0 avatar
      bball40dtw

      Is “decontenting” short for, “We really f*cked up the front of the GX?” Because that may explain it. Horrible.

  • avatar
    FormerFF

    I haven’t shopped Lexus lately,but when we bought my wife’s RX, I remember that it didn’t need any options to be very well equipped. I have shopped Audi recently, and I can’t say the same for them.

    I looked at two dealers’s CLA inventory, there was one car at around $34,000, all the rest were in the upper 30’s. I assume that the base CLA needs a lot of options to have a luxury car’s level of equipment.

  • avatar
    bd2

    Toyota/Lexus doth protest too much.

    The CT sans the hybrid powertrain is sub $30k and the bulk of Lexus sales is made up of cheaper FWD models (plus, the CLA’s ATP is higher than the CT’s).

    I mean, really – was the HS a good representation of even entry-level luxury?

    This is like Toyota/Lexus poking fun at the Germans for diesels and for 4-bangers when Toyota will be using BMW supplied diesels (in Europe) and has already started introducing 4-bangers to its Lexus lineup.

  • avatar
    Ihatejalops

    There’s a giant hole in the market since all the “luxury” marques are making cheap, everyday transportation. It’s funny that no one can even figure out how to take advantage of this downmarket trend. A few brands could profit and advertise against the cheapening of luxury, but nope, not going to happen and it’s a shame. Anyone got few spare billion so I can start my own company?

    • 0 avatar

      That’s a bit of an oxymoron, isn’t it? We already have companies that do luxury without any cheap shortcuts.

      You’d just have to pony up $100k or more just to get your foot in the door (hint-hint: Rolls Royce).

      • 0 avatar
        Ihatejalops

        Actually there are a few companies that do without getting into the Rolls-Royce territory. You don’t have to make a 100K plus car to be premium and don’t have to stoop below 30K and compete with Hyundai’s. There’s a middle ground that’s out there from the 50-100 range that can really do well and stick it to the other ones.

    • 0 avatar
      th009

      It’s not “luxury”, really. Few BMWs or Audis have ever been about luxury. Even a 5-series is not really a “luxury car”, nor is an A6 — nor have they been marketed as such.

      If you use the word “premium” even the smaller cars make sense. Premium materials, premium fit & finish, premium interiors, premium dealership experience etc — all of that can be done just as well in a small car as a large one.

      • 0 avatar
        Ihatejalops

        Yes they haven’t really been luxury, but that’s because they’re scraping the bottom of the barrel to drive sales and destroying their brands in the process. My point was about how “premium” brands are pushing downmarket to the point that there’s a wide hole for a company to exploit. Alas, they all do go down not up. There’s a way to make money without having to make 6 million cars. How’d companies do it before?

  • avatar
    mikedt

    Lexus doesn’t need a sub-$30 grand car because they’d be just as happy to sell you a $29 grand Camry.

  • avatar
    Fred

    In my caase I paid $22,000 in 2008 for an A3. In 2014 to get what I wanted meant a special order A4 with a manual and that was above my budget. My point is you can get people in one but can you keep them? If not then maybe Lexus has the right idea.

  • avatar
    Steinweg

    In 1989, who could have predicted that Lexus would be lecturing Mercedes-Benz about the evils of decontenting and corner cutting?

    • 0 avatar
      CJinSD

      Anyone that dug into an LS400? From day 1 they were built to a standard the Germans never even thought about. The difference was that Toyota didn’t need to make money on the LS400. They were dumped for the first year, leading to Mercedes-Benz decontenting their cars to the point they were making self-recycling crap with SOHC engines a few years later.

      • 0 avatar
        bumpy ii

        I once looked up the prices on the circa-1990 LS400 and similar-grade Celsiors (there wasn’t an exact match in content), did the currency conversions, and both cars sold for about the same price in the US and Japan.

      • 0 avatar
        bd2

        It’s not that Toyota didn’t want or need to make $$ with the LS400 (altho, US Toyota sales subsidized the launch of Lexus), but they priced the LS400 so aggressively (the Germans thought that it was under cost, but probably at cost) since they thought they needed to with a new, unknown brand.

  • avatar
    SoCalMikester

    Lexus already has Toyota for their sub-30k cars, and Scion for the monoprice/monospec/quirky/thrifty demographic. They really should add a kei-car to the lineup.

  • avatar
    Buford T. Justice

    I have a 2001 IS300 with 177,000 miles. Great car. It’s only needed regular maintenance. It’s recently developed a bit of an oil leak, but that will be an easy fix with the timing belt soon. We had a new IS loaner last year, and our 13 year old car drives just like a new one.

  • avatar
    Freddie

    Another discussion that begs the question: “Who needs luxury cars?”

    For under $30K there are a lot of great vehicles to choose from, with performance, comfort and features to satsify 99% of anyone’s reasonable needs and desires. For the extra money, “luxury” cars are mainly selling snob appeal, or gimmicks and gadgets that are increasingly peripheral to the driving experience.

    • 0 avatar
      Jacob

      Guys and gals who want to show off that they can buy a 40,50, or 60 grand car with a “nice badge”. Seriously. 90% of time it’s people who just want to show off. Having said that, if you go much below 30 grand, the car certainly will have some serious drawbacks. Want to a 10-way heated driver seat with memory? Leather seats? Navigation with a premium sound system with a subwoofer? It’s hard to get this below say 30 grand.

  • avatar
    Lightspeed

    I seriously think that a 8-10 year old Lexus (LS, GS, GX, SC), if well kept, is the biggest bargain in the car world. For the price of a new Hyundai you get something built like a cross between a bank vault and a Rolex.

  • avatar
    Glenn Mercer

    Also, Lexus already has lower-priced cars that are not decontented at all: their very successful CPO program. Certified Pre Owned is a great tool in at least two ways: 1) saves millions or billions on new model development and 2) does not damage the brand (a CPO Lexus may cost half what a new one does, but no one can tell that by looking at it when it drives by on the street; a down-market new model is very visibly just that). MB and BMW have very active CPO as well… Audi for some reason doesn’t push theirs much. And while CPO robs the OEM of new-build margin, it generates plenty of profit for the dealer, which is crucial to Lexus’s business model (where sales are driven as much by customer satisfaction with the dealer as with the car; the German business model relies much more on satisfaction with the car; Polk has published data on this).

    • 0 avatar
      sckid213

      Interesting to hear that Audi doesn’t push CPO as much. I thought the opposite based on what I’ve seen here in LA. Seems most every “new” Audi I’ve seen is wearing very non-subtle “Certified Pre-Owned” paper plates. Which always amuses me, because you’d think that those who buy Audis for the rings wouldn’t want to trumpet around the fact they had to buy used. Like when you see CarMax decals on BMWs or Cayennes.

  • avatar
    redav

    When the CT200h was first introduced, it started at $29,995, but there wasn’t a single one in this part of the country in that configuration. To an extent, that makes the comments a ret-con.

  • avatar

    I plain don’t like the CLA’s styling, so I haven’t paid it much attention…but I have looked at and sampled the 2015 A3. You can tell that there’s some cost-cutting…from the base 1.8-liter TSI engine to some of the materials choices. But it’s done in a very pleasant way. You know you’ve only bought the entry-level product in Audi’s product portfolio, and you’re okay with that. The design is clean but sophisticated, and the fact that the wheels are pushed to the corners definitely helps with handling. It kind of reminds me of the first-gen TT, which if you recall also wasn’t that luxurious.

    • 0 avatar
      wmba

      Spot on. Hate the CLA, had to help the salesman back out, because he couldn’t see, no backup camera. As a drive, it matches the Mazda3 with a bit more pep and less outward vision. The Audi A3’s interior I really like, just suits me, I guess, but no 2.0t AWDs to sample yet on the road – also no rearview camera standard. Will pit against the GTI with front LSD sometime soon.

      You seem to have encyclopedic knowledge on recent cars. Here’s a tidbit. Because I need AWD (or real 2WD a la GTI Performance Pack), I sampled a new Chrysler 200 AWD yesterday. Lovely engine, far too loud exhaust, far too many gears for tootling about town leading to hunting driving up hills at 30 mph, poor driver’s seat at shoulder level with zero support, and not one sporting bone in its body. Disappointing.

      • 0 avatar
        DeadWeight

        The CLA is the best example in the automotive context, by a wide margin, of the adage that “fools & their money are easily parted.”

        I found one competitive feature/aspect in the sample CLA that I drove: the motor was at least as powerful, and for the most part, more powerful, than competing vehicles, assuming one believes that much better vehicles (i.e. Accord, Fusion, Camry, Altima, last gen Malibu) sold at $10,000 to $15,000 less than the disjointed, unrefined, plasticky, cheesy, cynical CLA are actually competitors to it, rather than a class (or two) above it (for much less money).

        The CLA is a absolute pile of $hit that serves as the perfect example of the ephemeral, fleeting, disposable crap marketed as a fashion accessory that Jack Baruth spoke of in his Magnus Opus, ‘Avoidable Contact: the watery Big Bang, the 32-step power steering fluid check, disposable faux-ury.’

        http://www.thetruthaboutcars.com/2012/10/avoidable-contact-the-watery-big-bang-the-32-step-power-steering-fluid-check-disposable-faux-ury/

  • avatar
    sportyaccordy

    If only the CT did away with that weird C pillar treatment and went with the Prius’ kammback, and got the Camry’s 200HP powertrain, they’d have something to talk about that was actually worth $30K. As is though the CT is kind of a joke.

  • avatar
    walker42

    I don’t disagree with Templin’s opinion that Lexus doesn’t need to reach down but do find his logic weak. Take the CT, leave everything the same but replace the hybrid with a high output gas, lower the price $4k and that car wouldn’t have Lexus quality? Of course it would and I would purchase that. I believe there are gas-engined CTs on sale in other markets so it can’t be too expensive to develop one for N.A., considering the high margin and volume potential.

    The CT has the most natural proportions of any hatch in the business and makes the Mazda 3 look totally forced. I’m not sure Audi would see the value in reaching down were it not for the failure of VW to attract buyers. Templin should have said Lexus isn’t following Audi because Toyota is no VW, but those would have been fightin’ words.

  • avatar
    DrGastro997

    It’s all about the margins. Toyota used to make ¥1,300,000+ (approx $12-15,000) per Lexus sold, except for the LFA. Part of the Toyota Way, as written in the book, is to make that amount no matter the obstacle. Hence the extreme pressure put on its suppliers to cut costs 3-6% per year on most parts. Toyota is a bully in Japan, and it’s clearly happening here in the US. For example, Porsche makes $23,000 per car sold. The highest margin within auto makers. Porsche was able to achieve this margin after inviting Honda and Toyota engineers to Stuttgart. Porsche adopted many parts of the Honda and Toyota’s factory automation techniques and quality controls to produce even a higher profit. Toyota is the Henry Ford of Japan. In any case, I highly doubt Toyota will ever produce a Lexus for under $30,000. The quality of Lexus cars is far above Toyota badged cars. When I toured Toyota in Japan, an engineer showed me a US made Camry verses a ES model. The tight tolerances on the many seams and the amount of detail on hidden parts was extraordinary. The comparison he showed me was a bit shocking. If Toyota decides to produce a cheap Lexus, I’d be a bit puzzled because it goes against the Toyota Way and “kaizen” philosophy.

  • avatar
    Glenn Mercer

    I should probably type more carefully: Audi might actually have as RELATIVELY active a CPO program as the others, but because its new retail sales are lower than the others, it is smaller in ABSOLUTE terms. Through May of this year MB did 38,000 CPOs, BMW 30,000, Lexus 24,000, and Audi 14,000. I’m too lazy to look up whether in proportion to new retail sales Audi is high or low. My apologies!

  • avatar
    Hemi

    I actually saw one of these with “F Sport” badging and it looked nice, though a “sporty” hybrid? Dude was driving like a douche and kept zig zagging and was driving in typical moronic NYC behavior. Got on my ass and started tailgating me while I’m in traffic with cars in front of me. We came up to a busy intersection and I stop, he went across 2 straight lanes to get in the right turn only lane, except to try and jump and cut me off on green. It was funny watching his pathetic attempt to outgun a big V8 by the false confidence inspiring “F Sport” hybrid. I went upto 30mph and laughed at his expensive sporty car…

    I will add the new Avalon is gorgeous and better looking than the ES. I read plenty of complaints of very overboosted steering. Never driven one so can’t say much about it. My father does have a 05 LS430 and that thing is still quiet and very smooth to this day. The older Lexus cars were nice, soldier and smooth boring cars. The current ones seem to look way better on the inside and outside finally.

  • avatar

    Lexus is right here. A luxury brand SHOULD be aspirational.

    The 320i gets you the proper 3 frame, but with less power and no gadgets, you know, the ones you expect in a 30-40k car. Add gadgets and you get a 40k car….

    The CLA is another approach. Build to a price, slap badge on, profit. The CLA isn’t up to the normal MB standard, though….

    The A3 may be the best approach. It looks like a 5/8 A4, you can’t really tell it is built on the Golf frame unless they are side by side and you speak A pillar. Inside it looks like a “real Audi”. Sat in one at the dealer recently and came away impressed-it is BMW like though as if you add options, boom, 40k.

    Much like the $29k BMW, the $29K Audi exits for the sunday ad circular, they won’t have many on the lot.

    We all want free, or cheap. Some things aren’t. You get what you pay for, usually. My 03 e46 wasn’t cheap but eleven years later still provides good service with 300k on the clock. I had a Mercury Mystique (Ford Contour with all options) and at 120k, it was worn out…it was half the price of the BMW.

    Lexus is right. Keep the badge for cars that deserve it.

    • 0 avatar
      psarhjinian

      “The 320i gets you the proper 3 frame, but with less power and no gadgets, you know, the ones you expect in a 30-40k car. Add gadgets and you get a 40k car….”

      This isn’t a bad thing, and does speak to BMW’s roots as a peer to the likes of Volvo or Saab, rather than Mercedes.

      I bought (and am in the process of fixing on a shoestring) a very cheap, rather ratty E46 325i, and having at least the option of the fundamentals without the icing was helpful. It’s probably the easiest car I’ve had to work on since my father’s ’76 Dodge Aspen, and it’s a fun car to drive (or will be, when I get the f&^*% back together again)

      But it is spartan for a luxury car, and I can see some people’s concerns with that.

      The A3 really just a better-executed take the A3 and CLA (or for that matter, the Lexus RX and ES). BMW’s direction is different.

      Neither approach is really wrong; it depends what the consumer want; the trimmings or the steak?

      • 0 avatar
        krhodes1

        I am VERY glad that BMW will still sell you a car without all the crap. I chose to lightly spec my 328i wagon when I ordered it, and will do so even MORE when I order my 228i. M-Sport, track package, white paint and black vinyl. Options will probably be limited to the cold weather package and the better stereo. And a stickshift, of course. Maybe I will spring for leather, but only for the colors, I actually prefer the vinyl, it lasts forever.

        But, IMHO, below the level of the 6/7, a BMW is not nor has ever been a “luxury car”. Premium, certainly, but not luxury. There was nothing luxurious about my Mother’s long-lived ’83 528e, nor is there anything particularly luxurious about a current 528i. My 328i is a lovely thing, but it is not a luxury car.

  • avatar
    YotaCarFan

    “We could go down and build a car under $30,000, but it would be decontented, and you’d be cutting corners. It wouldn’t be a Lexus”

    Sadly, much of what they build for over $30K and over $40K is already decontented. The truth is, they want to keep their profits at the current level, which I assume are quite handsome. I drive a Lexus HS250h that retailed over $40K as equipped, and it has halogen headlamps, standard audio, and hard plastics galore (but, hey, it’s enviro-friendly plant-based plastic!). ES350s come with horrible sounding speakers unless you get the ML upgrade (I’ve owned several). I watched Alex Dyke’s review of the 2014 Ct200h, and it’s interior is chock-full of drab hard black plastic reminiscent of the 1960’s Simca my mother took me to elementary school in. The IS250 loaners I’ve experienced have had a similar budget-feel interior. Lexus needs to pick an assortment of attributes (luxury features and enhanced versions of user-facing components found in Toyotas) and make them standard in all Lexus branded models, so there are tangible and obvious differences between “Lexus” and “Toyota” products. Potential examples: rain sensing wipers, joystick/trackpad equipped GPS versus touchscreen (they already have this distinction), smog sensing auto recirc climate control, auto dimming outside mirrors, more upscale instrument clusters (already a distinction), HID/LED headlamps and LED tail lamps and license plate lamps, advanced power window controller that slows motor as window hits top/bottom, a couple extra dB of soundproofing, more comfortable seats (generally already a distinction), quality audio system standard, etc.

    • 0 avatar
      DeadWeight

      Your observations are consistent with mine.

      I don’t see the world in binary; when I experience Lexus vehicles as of late, and compare them to their predecessors, I “feel” the decontenting that has, beyond a shadow of a doubt in my mind, already started to take place, Lexus USA’s Boss Mr. Templin’s generic denials notwithstanding.

  • avatar

    At a risk of sounding dull, here’s my (very european) view on this. About 7 years ago, I bought a ’93 Lexus LS400. Outside it wasn’t perfect, but technically it was almost perfect, en the interior was pretty much new.
    Being in the EU, a few things are important to understand: 8 cil means you’re an asshole with too much money to spend. Even if it’s that old. Traffic is a nightmare, mostly, so auto and huge quantities of plush and silent motoring is a big plus. It takes the edge off your long day of challenges, as well as the traffic around, where ego’s try to cut you off so they can enter the traffic jam just a few meters before you can. I understood the car. I understood its existence in the world. I understood why this is what busy people often like, because they need to de-stress. Even though I loved it very much, the car seemed to have no spirit. It was all too soft. Later, I’ve heard other Lexus owners say this. Maybe that means it’s not me. Anyway, when Lexus came out with these horrible as well as butt ugly toyota’s, I was horrified that these cars were to carry out the Lexus tradition. They are a shame to the brand and to Toyota. The LS400 was designed from the ground up, which made it a unique vehicle, one could say, a real Lexus. The other model lines do not. They’re a cheap and badly executed attempt to capitalise on what is popular: hybrid “quality but affordable” motoring. It should be a crime.

    Not too long ago, I bought a ’00 Jaguar S-Type. It took some time to get used to this baby, quite a difference when compared to my ’00 v70 (obviously). But when I started to understand this car, I started to appreciate it. And I recognised its similarity to the LS400 I had. In some ways, these cars are in the same territory, yet the S-Type manages to combine the super smooth experience with a very sporty feel, great handling with a lot of feedback from the road, and a great look, better than the LS400, which is, in my opinion, not a bad looking car. But even though I see similarities, the Jag surpasses the Lexus in many ways. And I fell in love with this S-Type, something that never happened with the Lexus.

    It has taken a lot of words to say something simple: Anything less than a Lexus LS is no real Lexus to me. Call me crazy. It’s a free world.

    • 0 avatar
      CoreyDL

      You’ll fall in love with your mechanic as well – sounds like you’re sitting in a low mileage example. They simply do not age well as the miles go up, and generally become quite unreliable.

      And for someone preaching “real,” you may want to check the provenance of your (not real) Jaguar. It’s a Ford platform, which was shared with the equally awful Lincoln LS, and the pretty bad Thunderbird.

      • 0 avatar

        As for “real”, I was talking about the Lexus:

        “Anything less than a Lexus LS is no real Lexus to me.” The S-Type shares quite some bits with Fords, especially also shared with the Mondeo, which isn’t a bad car. I’ll keep doing the maintenance, take it from there. So far, 10k flawless kilometers. Daily driver.

  • avatar
    boogieman99

    They could jazz up the new Corolla or Scion Tc platform. I’m surprised they haven’t done that already to create a 1.6/EL/CSX/ILX “killer”


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