Lexus has been a bit of a niche player in the Indian luxury car market. Are there plans to become more mainstream?
Yes, we have been a niche player, but we have grown. It took the first few years to seed the brand, after which we established a few guest experience centres (dealerships). With that, we have seen an expansion of demand for our cars.
After the pandemic, people have come out in huge numbers to buy cars, especially at the higher end of the market. They are willing to experiment and try out new things. We like to call this the ‘YOLO’ (you only live once) effect. These customers want a new experience, which, I think, Lexus can offer.
Lexus is coming out with new models. It has launched the latest-gen NX, but that seems to be sold out already. Limited supply is a challenge. How are you managing that?
The demand is very robust. It’s only the supply side where we have some challenges, primarily because of the semiconductor crisis. But this is not unique to Lexus. It is affecting the entire car market. Still, I think, we have seen the worst of the chip shortage.
We are sold out for the next few months. Customers have been so comfortable with the brand that they placed their orders (for the new NX) even before we announced the price.
We are now talking to our head office because they have a huge production capability, and we are asking for a fair share of that. Hopefully we’ll get it, especially since they have already shown confidence in us – they allowed us to make the previous car, the ES sedan, here in India.
Could the NX potentially be your second CKD (completely knocked down) model in India?
From the point of view of the custom duties in place, there is a benefit of localisation here. But if we don’t have the volumes, our vendors will charge us more, and then the benefit of lower duty will get offset.
Who is a typical Lexus customer? How do you draw buyers away from the mainstream German brands?
Even though the Indian luxury car market is very small, it is fragmented in a manner that there are different sets of customers with different priorities. So, the people who are interested in Lexus have generally seen our vehicles overseas. They like Japanese craftsmanship, design elements and engineering.
There is also a positive effect of our mother brand (Toyota). Eighty-one percent of the customers who drive a Lexus already have a Toyota at home.
Except the LX, all Lexus vehicles on sale in India are hybrids. Will that continue, or will you also launch more pure petrol models?
Ninety-seven percent of the products, which we sell in India, are hybrids. We are very proud of the fact that we have a very sustainable range. Today, the biggest reason for customers to purchase a Lexus is its self-charging hybrid technology.
Moreover, we have been testing our battery electric vehicle (UX) in India, and are trying to figure out customer acceptance. So, we are currently showing this vehicle to Lexus owners, and evaluating their expectations on the price and usage patterns, and whether it will be the first, second or third car in the household.
Can we expect the Lexus UX battery electric vehicle to be launched in India?
We’ll like to study the prospect because India has many unique situations and weather conditions. Battery life and range depend a lot on such factors.
Last December, Lexus International had said that it will go 100 percent electric by 2035, and there are various products in the pipeline. So, we, in India, too, need to get ready for that, and the UX is the first step towards that.
We also have a hybrid version of the UX and we’d like to evaluate customer expectations on price, type of usage, and so on, for that too.
In 2022, what sort of growth are you looking at?
The last quarter of 2021 alone accounted for 37 percent of our annual sales. Of course, half of the year before that had the various COVID-19 restrictions in place, but, as soon as that was over, there was huge demand. And in the first quarter of this year, we are on track to do the same business which we did in all of 2021. There is a very positive push in the market and we would like to capitalise it.