Talk about a bad time for bad news.
Lexus, already struggling with limited supply and weak sales is finding itself wrestling with two big problems: rebuilding its inventory after the earthquake hit Japan and fighting off other automakers who are aggressively going after luxury car buyers.
Toyota is intent on overcoming both hurdles, but for now, both are putting the squeeze on America's #1 luxury brand.
Toyota deciding to halt production in Japan through Tuesday, March 22nd means an already tight supply of Lexus models will become even tighter. As I talk with dealers they tell me Toyota probably has 40-45 days supply of Lexus models. A more normal supply would be 60-65 days. Compounding the issue of a tight supply is the fact 75% of the Lexus models sold in this country are built in Japan. Sure, the popular RX models are built in Canada, and production there is going as scheduled. But all the other Lexus models are Japanese made.
Luxury Competitors Targeting Lexus owners
After a decade long run on top of the U.S. luxury, Lexus finds itself starting 2011 trailing its traditional rivals. Sales this year according to the research firm Autodata:
- BMW (up) 14.4%
- Mercedes (up) 9.5%
- Lexus (down) 9.0%
Sure there's a lot of time left this year, but Mercedes and BMW are aggressively going after sales. According to Truecar.com, incentives right now look like this:
- BMW $3,450
- Mercedes $3,000
- Lexus $1,750
On top of that, BMW and Mercedes are both pushing volume sales programs with their dealers right now. To quote one dealer, "BMW and Mercedes are intent on winning over buyers and the business is coming from Lexus."