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Next step for Lexus

Date: 15 August 2014   |   Author:

The revised CT200h has given Lexus a refreshed product line-up, coming off the back of the GS300h and the IS to form a three-pronged attack on the fleet sector for the first time. And there's more to come, as Paul Barker discovers

Revising the lower medium CT200h, just weeks after adding the 109g/km GS300h executive model to the range, has given Lexus a renewed impetus to push into the fleet sector - especially as the firm will also reveal the NX small crossover next month, which arrives in the UK in 2015.

"The substantial volume will bring Lexus to the next step in Europe," the brand's European boss Alain Uyttenhoven tells BusinessCar. "This year we will grow by 20% [in Europe] and next year as well, and the NX will be a big part of that." But before the new crossover, to sit below the RX and compete with BMW's X3 and the Audi Q5, the growth will come from a full year of the upper medium IS model and the revised CT200h, a rework Uyttenhoven describes as "a big minor change. It's not just bumpers and chrome but a major improvement, so we expect a lot from it."

"The CT is critical as it's the gateway to the brand," explains Toyota and Lexus fleet boss Neil Broad, who claims three-quarters of buyers so far are new to the brand. "It's anacquirer to get new customers in and hopefully move them up the range as their circumstances change."

The updated product range gives the Japanese brand an unprecedented opportunity to impress the business sector, contends Broad. "We've got the new CT, the IS with fleet-centric engines and space, GS300h gives us an opportunity we haven't had before, and the RX is still pretty young," he says. "We've got a cohesive set of vehicles so we can market a range."

Lexus's European arm could be helped by an increased focus on the continent and its emissions-based priorities as the Chinese and Japanese markets also come to place a greater emphasis on CO2.

"The great news. is that the Japanese market has come to the party and China might become the biggest overall market for premium," declares Uyttenhoven. "They have the same CO2 priorities, so Lexus development might rebalance and be a better fit for the European market, so it should help us grow." That's a shift from a previous prioritisation of the American market that last year contributed 250,000 of Lexus's worldwide 520,000 sales.

"We don't have the same market level as the G3 - the three big German brands - we are challengers to them, but in the US we are at eye level with them," says Uyttenhoven.

Looking further ahead, Uyttenhoven speculates that one European-angled development could be a move downwards in size terms, below the lower-medium CT200h: "A small Lexus? In western Europe, 60% of the premium sector is below ?40,000 (£33,365). Premium in the past used to mean big cars but not any more, so the question is, could you go down with the brand? If you look at the B-segment [supermini] today, it's growing very fast."

He highlights the Audi A1 and Mini, and even the Range Rover Evoque, as examples of brands successfully downsizing, and highlighted a gender-related reason.

"The question in the next few years is the purchasing power of women, they are 44% of car purchasers and getting into more powerful jobs," he says. "Women like to drive premium cars but don't need big cars so the question is how to address that? It probably won't be in the next six weeks but in the future why not?"

New Coupe offers image boost

The next new Lexus will be the RC Coupe, which is due in the UK in just under 12 months. A cousin of the upper medium IS model, the RC is designed to tap into the BMW 4-series and Audi A5 market, and will come with the same hybrid powertrain as the IS300h, although emissions aren't yet confirmed.

The IS is at 99g/km, but the impact of larger wheels countered by a more aerodynamic shape is still to shake out.

While not a volume product, the RC will bring some welcome glamour to the range. "The RC will be a few thousand cars in Europe. It won't change the volume for Lexus, but from an image point of view it's the first time we have had a coupe, so it will change the perception of the brand," says Lexus Europe's boss Alain Uyttenhoven. "The car is very dramatic so it could do a lot of good on the reputation side."