CHALLENGING OF LEXUS IN INDIA

CHALLENGING OF LEXUS IN INDIA

A lot of us German car owners simply can’t wait for 2013 when Lexus arrives on Indian shores. After all, Lexus’ cars are known to offer stupendously high reliability, and are as hassle-free to own as a Corolla. That’s saying a lot when the direct competition – Mercedes, BMW & Audi – inexplicably suffers from poor reliability ratings & expensive upkeep costs. I mean, when a humble Maruti Alto can offer years of reliable service, what reason do the Germans have for their failure? We even have a thread on the love affair between European cars & flatbed

Then, Lexus is also known to provide unparalleled refinement levels, matches (or beats) the Germans on spec & features and has established itself as a luxury car marque in only 25 years since introduction. Lexus’ service quality is the stuff of legend; the brand has frequently topped customer satisfaction rankings and is known to bend over backward for its clientèle. No surprise then that Lexus has been the best selling luxury brand in North America for a majority of the last decade.

Personally, I'm a fan of Lexus' clean designs as well. This is definitely an advantage in my book, compared to the quirkiness of recent Mercedes cars. Of course, BMW studios have returned to churning out the timeless look, while Audi has always had some of the greatest looking cars.

The understated nature of Lexus could work in its favour, with the rich customer who doesn't necessarily want to draw attention to his wealth. However, Lexus is going to face more than its share of challenges in our extremely unique market. Reasons:

   

Late Entry : The 3 German biggies are well-established in India. Arriving last at the party does have its own set of disadvantages, chief amongst them being that your competitors are well-entrenched in the mindset of the Indian customer. The competition's dealership network & brand visibility are formidable too.

     

    Diesels : Lexus has a shockingly limited range of diesel engines. The GS is sold only with a petrol. Chief competitors – the E Class & 5 series – offer two diesel engine options (a 4 & 6 cylinder) each. The Lexus IS220d (C Class competitor) does have a 2.2L diesel under the hood. But then again, the flagship Lexus LS hasn’t ever been powered by an oil-burner. This is one of the main reasons that Lexus hasn’t been able to make a mark in Europe. The brand is too dependent on the petrol-only USA market to be bothered with diesels.

   

           SUVs? : Not having a strong lineup of SUVs will affect Lexus’ India aspirations at a time when our market cant seem to get enough of them. Just ask Audi whose sales for the initial years in India were driven primarily by SUVs. The compact Lexus RX is a petrol-only SUV, a breed that simply doesn’t make the cut in India. The bigger GX & LX are basically rebadged, spiced up versions of the Prado & Landcruiser (respectively). Seeing not too many people are buying a 1 crore Landcruiser, I doubt the more-expensive Lexus variant will make any impact.

     

        Lacks excitement : Lexus' are supremely refined & comfortable, yes. Equally, they are known to be boring to drive. This immediately takes the brand off the list of the enthusiasts. In addition, being perceived as boring can affect brand perceptions. The Lexus LFA is one exception, albeit it's a niche product that will probably never see Indian shores.

   

            Speed & Response time : BMW entered the market in 2007; yet, it has become the No.1 luxury car marque in India, continuously beating Mercedes & its 10 year lead. BMW has proven that a fast, extremely aggressive strategy is key to market penetration. On the other hand, Toyota is known to be a slow, steady mover. Consider how many years it took the Fortuner to enter India, even though it had a market ready and waiting. Can Lexus match the speed of its super-aggressive German rivals? Audi recently stated that it will overtake Mercedes in 2 years. Obviously, the VW group company has no intentions of slowing down.

    

           Brand : In the 20+ lakh segment, brand is everything. The badge can make or break your product. While Lexus is well-established in North America, it doesn't quite enjoy the same appeal in other markets. Building the Lexus brand & image in India will be an extremely delicate exercise. Will Lexus be able to build the same aspirational value that the three-pointed star or blue/white roundel enjoy?

  

        Local Assembly vs CBU : Mercedes (especially) and BMW already assemble their volume cars here, giving them a crucial cost advantage. Audi is also in the process of locally assembling its popular cars & SUVs. Initial rumours suggest that Lexus will be brought in via the CBU (completely built unit) route. I hope the rumours are wrong, as this move will give Lexus a severe price disadvantage. In North America, Lexus undercuts the Germans by a noticeable margin and that's exactly how things ought to be in India.

Source - teambhp