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For Lexus, the India journey is just about beginning

Murali Gopalan | Updated on October 31, 2019 Published on October 31, 2019

Yoshihiro Sawa, President of Lexus International Co, unveiling the new LF-30 electric vehicle concept car at the Tokyo Motor Show (file photo)   -  EDGAR SU

President Yoshimiro Sawa sees a lot of growth potential for this premium brand

Yoshihiro Sawa pauses for a brief while before replying to the question.

The President of Lexus is at a roundtable with over a dozen journalists of which two are from India and the balance largely from countries in the ASEAN region. The venue is the Tokyo Motor Show where the LF-30 electrified concept was unveiled earlier in the day.

The question posed by this writer is how luxury brands like Lexus can straddle the challenge of affordability in emerging markets. “Emerging markets…well, it takes time to grow the luxury space in the beginning,” responds Sawa.

High on quality

Clearly, the key is to offer the right value proposition in order to draw more customers. Yet, he reiterates, one needs to be “very careful”. The implication is to steer clear of any attempt at affordability since a Lexus owner will not be satisfied with something that compromises even marginally on quality.

This could work with a mass brand with a much larger customer base but not in the case of Lexus where volumes are not the criterion to gauge success. Hence, any attempt at changing the core Lexus DNA could lead to complaints from customers.

According to Sawa, they are more likely to say: ‘We do not want this to happen!’ As he repeats, it is fine to offer higher additional value with a mass brand but not with something niche like Lexus where “this kind of mistrust can be risky”.

The solution, in his view, is to offer something that is “somewhere in between” which effectively means reasonably expensive for want of a batter definition. This could be the ideal sweet spot but “we cannot go very reasonable either”.

Sawa admits that attempting anything like this for a brand like Lexus becomes a “difficult exercise” and one needs to go in for the right solution. While being reasonable (in pricing), this should not translate into a basic solution that could rob the brand of its premium feel. “This is is not where we would want to be,” he insists.

It is only logical to throw up a question on the India story for Lexus which began two years ago. The models are being imported right now which obviously means a higher price tag (they range from nearly ₹60 lakh to ₹2.4 crore). Additionally, there is still a long way to go in terms of growing the dealership network.

Betting big on India

“We expect further growth and India’s future will be bright. With our premium strategy, we will see good things happening as time goes buy,” says Sawa. According to him, India is “one of the most important markets globally” and has great potential for a premium brand like Lexus.

There is still sometime to go before local assembly can be contemplated since it boils down to volumes by the end of the day. “We are laying the foundation now and will think of it later. We also try to provide a different unique experience for Lexus compared to other luxury brands,” adds Sawa.

Asked if the current trend of mobility disruptions (where youngsters are not so kicked about owning cars) could impact luxury brands, Sawa says it is but inevitable that shared mobility options could take up some portion of the luxury space. Yet, there is still something special about owning a top-end brand.

People would still want a “customised, lovable product” like Lexus for ownership. This effectively means that luxury car buyers will stick to their favourite models “and it is our job to provide the best to them”. This is where an initiative like electric will also do the trick and explains why the company is betting big on models like the LF-30.

For now, says Sawa, only a few countries are prepared for electric and there are other options like hybrids etc for the rest of the world. “We will try and provide all sorts of powertrains to meet different requirements,’ he responds to another query.

Earlier in the day, Sawa was recollecting to a packed house at the Lexus pavilion the time in 2011 when a journalist had commented that Lexus was a boring brand. Toyota’s President, Akio Toyoda was so shocked by this that he swore, “We will never let anyone say Lexus is boring again”.

The renewed challenge

As Sawa said, the Lexus team realised that its entrepreneur’s challenging spirit was disappearing over time and this was a renewed challenge for everyone.

“The challenger mindset is the foundation of Lexus,” said Sawa.

According to him, the vision of automobiles and mobility for a better society were being redefined. “We try to offer a luxury brand that provides unique values,” he added.

In Japan, a car is sometimes referred to as Aisha which means a beloved car. “For Lexus, Aisha refers to our central philosophy for crafting vehicles that people are not just merely interested in and passionate about, but something that people can actually bond with,” said Sawa.

As for the LF-30 which was unveiled at the pavilion, Lexus is developing hybrid, plug-in hybrid (PHV), fuel-cell and electric vehicles to meet the needs of various regions and markets. “We will launch such models immediately to markets like Europe and China where the needs are particularly high,” he added.

The first Lexus EV model will debut in November and sales will kick off in 2020. The PHV and pure EV versions will follow in the early half of the 2020s. By 2025, Lexus expects to offer an electrified variant of each model in its lineup.

Published on October 31, 2019
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