By on June 6, 2018

Image: Toyota Motor Corp

Ever since Ford announced its abandonment of traditional passenger cars that aren’t the Mustang, automakers have been very clear to specify whether or not they plan to do the same. The majority seem to feel as if cars have a place in the market. That said, very few manufacturers are increasing sedan output when crossovers and sport utilities are presently so lucrative. For example, Lexus owes the majority of its volume to higher-riding liftbacks, but recently made the promise to maintain a diverse production portfolio.

Accounting for roughly one third of its total volume, cars aren’t the brand’s biggest money maker anymore. But Toyota’s luxury arm believes ditching them now would be an imprudent strategy. Perhaps Lexus is keeping an eye on fuel prices, or maybe it just realizes it can’t play the game in the same manner as the already truck-focused Ford. 

According to Lexus’ vice president of marketing, Cooper Ericksen, the official reason for staying with cars has everything to do with the customer. “The fact is there is and will continue to be a very important role for sedans,” Ericksen told The Detroit Bureau during a press event for the 2019 ES model in Nashville, Tennessee. “Half the buyers of SUVs also own a sedan.”

Presumably, this was an issue Ford also had to come to terms with. While a Ford shopper is probably more likely to own a pickup truck and an SUV, Lexus competes in the luxury (or entry luxury) segment where the odds of sedan ownership is quite a bit higher. Lexus’ cars also sell in more markets than the F-Series and at lower volumes, too. The brand can’t afford to paint itself into a corner or stray too far from Toyota’s lead.

However, that’s not to suggest things won’t change if crossovers and SUVs continue growing in popularity. If conventional cars become so niche that they’re entirely unprofitable, no manufacturer will bother building them. That’s not a dystopian future we’re looking forward to and, thankfully, not an idea we have to entertain too seriously at present — even as domestic brands continue planning scaled-back car lineups.

Lexus hopes to actively counter the consumer trend by aggressively marketing the seventh generation ES sedan before it hits dealers late this summer. There’ll be an internet campaign and national television spots leading up to the launch. Ericksen says the model will be priced aggressively to give it the strongest advantage possible, and estimates the sedan should account for roughly 15 percent of the brands’ total sales within the United States.

[Image: Toyota Motor Corp]

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17 Comments on “Lexus Says It’s Sticking With Cars, Despite the Scorching SUV Market...”


  • avatar
    stars9texashockey

    But Ford is smarter than all the rest, because they bought a train station to fill with hipsters.

  • avatar
    tonycd

    This decision came more naturally to Ford (even though I disagree with it) because Ford’s franchise product, indeed the #1 selling passenger vehicle of any kind in America, is Ford’s pickup truck.

    While Lexus’s bestseller in America is the RX two-row midsize SUV, its heritage is much more rooted in cars than Ford’s. Walking away from sedans would make much less sense for them, especially because their best-selling ES sedan is so cheap to engineer as a Camry variant anyway.

    • 0 avatar
      Mandalorian

      Ford cars just don’t have the margins Lexuses do. Completely different segments. Luxury sedans may be losing an edge to luxury SUVs, but they still have decent numbers and more importantly decent margins. Mainstream sedans have very minimal margins and have long relied on volume to get by. Well, now that volume just isn’t there.

  • avatar
    gtem

    Not surprising, as others have stated. What I do lament is just how sporty and low slung all of the Lexus sedans have gotten (feel free to extrapolate that to all sedans across all makes). With our midwestern roads it’s a non-starter IMO. I guess Lexus will gladly direct you to one of their CUVs or BOF SUVs in that case. But my old ’96 ES had a cushy ride, 65 series sidewall tires, and somewhere in the range of 6.5 inches of ground clearance, enough to clear most curbs. I’d genuinely be worried and uncomfortable piloting the car in the lead photo down our roads, in fear of pinching a tire and/or bending a rim. That and how poor paint has gotten not just on Toyotas but on Lexi, rock chips appear if you so much as look at them wrong. Again, the ’96 had remarkable resistance to stone chips and those that did get through the paint seemed to never get through the e-coat to actually cause rust.

  • avatar
    Ion

    So Lexus says as they kill off the GS. I understand the case for having the ES live over the GS, but if they were really committed to making sedans they would have kept the GS.

    • 0 avatar
      Menar Fromarz

      Bring back the CT. There must be five of us that care.

      • 0 avatar
        Mandalorian

        I can count the number of new GSs I’ve actually seen on the roads in the last 5 years on 2 fingers. The GS may just be a myth like the Acura RLX and Equus.

        For every 1 GS, I have probably seen 10,000 ESs.

        • 0 avatar
          Lightspeed

          I am surprised at the number of 4th-gen GS I see here in Alberta, and even more common is the 3rd-gen. I bought a 2nd-gen (2000) GS eight years ago and never saw another, until two-years ago when there seemed to be a sudden influx, weird. My goal is to own at least one more V8 Lexus sedan before I have to buy a V6 or 4-cyl something or other. There’s just something grand about driving a car with an engine designed to run essentially as long as you want.

  • avatar
    gasser

    I’m not surprised that Lexus is still in the auto business as opposed to the truck business.
    1. As above, a lot of development cost is amortized over Toyota shared lines (like platform, engine, transmission.)
    2. The average transaction price is higher, allowing a lot more profit per unit.
    3. The average customer age is higher, and in my neighborhood, this skew to more cars than SUV/CUV, so the chance to sell another car is there.

  • avatar
    28-Cars-Later

    Smart move.

  • avatar
    V16

    “The fact is there is and will continue to be a very important role for sedans.”
    At least ONE auto executive isn’t interested in eliminating models along with potential customers.

  • avatar

    Toyota is paranoid about future. Thats all. Ford does not care. For Ford future is the stock price next quarter.

  • avatar
    aajax

    It’s not as if Lexus is unique among luxury brands in staying with sedans. Kia and Hyundai even keep adding luxury sedans.

  • avatar
    vvk

    They are so breathtakingly ugly!

  • avatar
    bd2

    Remains to be seen if Toyota kills off the GS; there’s a new Crown (series) so one possibility is transforming the next GS into a lower volume “4-door coupe” (basically a CLS, 5 Series GT and A7 competitor).

    However, none of the Lexus sedans sell particularly well in Japan, nor do they do so over in Europe, so it’s basically the US and China markets.

    And here, sales volume of the LS and GS are way below what they once were for previous generations of those models.


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