The shift to a full lineup of electric vehicles at Lexus is underway with the RX 450e coming this year, and more electric vehicles are on the way. What do these electric vehicles mean for Lexus dealers?
I think what we saw on stage with the announcement that Akio [Toyoda] fact is for me, and I believe for all Lexus dealers, what we’ve all been waiting for is knowing that if customer demand is going to be just this EV on the luxury side – if that’s what ‘they ask you, that we are ready in a very short time to receive our product.
That being said, I’m very excited that we finally got a statement from the boss that we’re good to go and could go all-electric by 2030.
Will the market demand this type of inventory to satisfy consumer demand? I do not know. If that’s, in fact, what the market will say about demand, it’s great to know that we’ll be able to have a range that fits whatever it might be.
So were you excited or disappointed that these Lexus vehicles that were featured didn’t have giant spindle grilles?
I think the pin grid is one of those design elements that intentionally biases. It’s either you love it or you hate it. I don’t think we lost any sales because of the giant grille.
When it comes to having a Lexus, we know consumers can tell it’s actually a Lexus, and what will it look like tomorrow? I do not know. But I’m happy with what I saw on that stage. It’s really great to see a program like the one we were shown.
Was there something about that scene that you wanted in your showroom immediately?
There were a lot of products there. You must be wondering which side of me you are looking at: the side that wants the vehicle I can make money on by selling it by volume? Or the side of me that wants the halo vehicle that will bring more people into the brand? And luckily, there were products on this scene that ticked both of those boxes, but I can’t pick just one.
If and when the microchip shortage subsides, which practices of the past 18 or so months should be continued and which should be discontinued?
I don’t know if any of them should be dropped altogether. I think the auto industry has really made a positive transition. I believe the transparent transaction that is consumer-driven has forced us all to adapt and adopt the way we do business every day. And I think that has to stay because it has surely given us a different respect from the consumer about how we do business today compared to before the pandemic.
We have an advantage as Lexus dealers; we have Monogram (Lexus’ digital retail tool) which we will now transition to. I think as we move beyond the pandemic and the microchip shortage, we will have a process in place that will be better than most. I think it’s an element of our business model that needs to stay forever because it takes so much anxiety out of the process, whether it’s sales or service. It’s the process we currently use not only to buy a car; it’s every transaction that is done in the dealership is now done in a very different way. Whether it’s pickup and delivery, whether it’s a new or used vehicle, the customer is the one driving the process, not so much the dealership.
Walk me through how your business process changes as you transition to Monogram, what your stores are doing now.
I think it’s just a process that every employee will have to adhere to. You don’t depend on who wants to adapt the new system to their way of doing business.
The truth is that everyone has a percentage of how they do business that they are willing to change or not. But when you have a process in place with a tool like Monogram, it no longer gives everyone their own definition of how well it’s going to fit their way of doing business. It’s going to be done from start to finish, and it’s going to be done with a process using a tool that I think takes away any anxiety as a dealership that everyone at the dealership is doing things the same way. This will bring you closer to a certainty that everyone at the dealership is doing things the same way from start to finish.
Will this change your relationship with third-party providers?
I hope this is the case, because it means that our tool is then complete and has everything it needs. And I think the transition happens, once you’re on Monogram, to take third-party vendors and compare what Monogram is and does to what you have. Lexus and Toyota always give us the ability to always have a winning process in place – that they will give us everything the third party is giving us right now in a very consolidated tool that ultimately protects our owner base information , which is very important. And I think that’s part of what makes it special.
That should save money, right?
It’s always good to save money. I don’t need to tell you that third-party vendors have monetized their investment. And because the tools are so good for what we use them for, they justify us paying them very handsome payments on a monthly basis to use them. And it’s not a bad thing to have a complete tool that also brings savings to your dealer. And again, keeping this consumer information confidential is essential, to keep it within your own family, so to speak.
How much pressure do Lexus dealerships feel from Tesla and the way it treats its customers?
I think my answer before the pandemic would have been very different from what I’m going to give you now.
Before the pandemic Tesla did business in a digitally seamless way where what you see is what you get and the transaction was very clean and that was pretty much everything the consumer said they wanted when they were buying a new vehicle. But we’re at it right now, and we’re getting better as we go.
The one thing where we now have an advantage is when it comes to vehicle maintenance. You know, the direct sales model is great, but the reality is that when it comes to service and the lack of available locations to service all these vehicles in service, it’s very different at Tesla than it is at Lexus. We are organized to meet the customer’s needs in terms of vehicle maintenance. Our model has been proven and refined over the last three decades, and it gives them pause and I think a reason to scratch their heads, that once we have these vehicles that directly compete with them, our best consumer now has an option. And our customers have a service and customer experience advantage over what they currently get from Tesla.
We’re now starting to see customers who own Teslas coming in and we’re hearing these stories about the service experience and that’s everything we would have hoped it would have been going direct and everything we probably expected . .
The only thing we are missing right now is a replacement vehicle for the vehicle they are looking to trade in. Once we have it, I think we come full circle and we have everything we need.
Last year we talked about how much Lexus needed a new infotainment system for its vehicles, and one is coming, starting with the NX now in showrooms. How are customers reacting and what is your long-term forecast?
We sold the NX in quantity. When you look at who our buyers were, they were happy with the vehicle, the reliability, the reputation, and the infotainment system was probably not what we were selling. It’s a big problem.
But we try to sell by age, and I think that means we’re going to be very effective in that area, because when we brought in the younger buyers and they looked at what we had, they were very impressed. And the new LX has the same now. So we’re finally taking the fight to the guns that everyone had when it comes to technology which, unfortunately, wasn’t all we wanted it to be in the previous generation vehicles.
The race for luxury vehicle sales has been quite upside down in 2021, with Tesla rising hard to second place behind BMW and Lexus falling to fourth place behind Mercedes-Benz. Do you think that was an anomaly or the new normal?
There was a lull in the cadence of Lexus products, which prevented us from continuing that dominance that we had, which made us number 1 in the luxury car segment.
There was no doubt that our competitors had fresher products that hindered our ability to win over, and perhaps even retain, our customers in some cases. That’s something that disappointed us, because a lot of consumers were just saying, “Hey, I’ve been in your vehicle. It’s awesome. It’s bulletproof, doesn’t break — but I want something new and something fresh and something exciting.” And we’ve lost some customers there.
I think the future is going to give us the ability to retain and conquer, like a long time ago when it was Lexus that had the fresh product.
I think when you see everything we have to come, the future of Lexus is bright, and it’s going to get us back to where we were.
Comments are closed.