After a product offensive involving five models in a year of kick-starting its India operations, Japanese luxury carmaker Lexus is sharpening its focus on brand building. It aims to carve out a space for itself within India’s growing luxury vehicle segment (which stood at an estimated 39,000 units, up 18 percent, in 2017) on the back of strong aftersales and customer experience, as it goes up against the German rivals Mercedes, Audi and BMW.
Lexus India chairman, N Raja, said the luxury brand intends to leverage Toyota’s strong presence and offer a suitable alternative to its customers, who are keen to upgrade. “Lexus has given us a varied product portfolio. My role now is to deliver the product to the customer and further build the brand in a competitive market like India. That’s our focus for 2018,” he told Autocar India. "Our focus right now is frankly not numbers. We are looking at delivering that customer experience Lexus is famous for," he added. Interestingly, Lexus says 80 percent of potential buyers already own a Toyota.
The carmaker today commemorated its first year of sales in India with the commencement of deliveries of the NX 300h in the country. Raja said the NX, launched at Rs 53.18 lakh (ex-showroom, India), is an important part of the range, since it brings Lexus a step closer to mass luxury and allows a younger segment to experience the brand. “The NX is a first stepping stone for us in India, given the surging demand for SUVs and crossovers.” said the chairman, underscoring the importance of the model for Lexus in India.
Hybrids key to electrification
Lexus today reiterated its focus on hybrid vehicles in the country. Raja said "maintaining our focus on hybrid electric vehicles" is one of the priorities for the coming year.
Demand for hybrids – which account for a major chunk of its line-up – took a hit last year and the carmaker was forced to raise prices following the government’s decision to impose a 12.7 percent hike in tax on such vehicles. Raja admitted that popularising hybrids was the biggest challenge for Lexus at the moment and has sought the government’s support in making them attractive.
“Apart from the high cost of EVs, generating clean energy is also an issue. We still use fossil fuels and coal for generating 70-80 percent of electricity, so the purpose gets lost. With EVs, we are only moving the problem somewhere else,” he said.
Evaluating local assembly
Lexus was able to price the NX competitively despite it being a completely built unit (CBU), but other models in the range have to contend with being priced rather steeply.
However, the Japanese brand is studying the possibility of selling vehicles in India via the completely knocked down (CKD) route. "We need to focus on CKD because hybrid is a challenge due to the high duty," Raja told Autocar.
Newly appointed Lexus India president, PB Venugopal, further added, “Yes (it is an eventuality), but we’ve still not taken any decision yet. We have a dedicated team that is studying this and it’s still in a project phase.” Interestingly, Toyota has begun readying its plant in Bengaluru for local assembly. It is preparing to shift to water-based paints, which are also used by Lexus models.