Toyota puts Lexus to global test with Japan debut

TOKYO/FRANKFURT - Some bill it one of the biggest events in the auto industry this year.

Japan's Toyota Motor Corp -- already close to unseating General Motors Corp as the world's No. 1 seller of automobiles -- will usher in the 16-year-old Lexus brand to its home market on Tuesday in what it says is a major step toward taking on top luxury marques everywhere else.

"(Lexus) has been in the United States for almost 20 years," Toyota President Katsuaki Watanabe told a news conference last month to unveil the GS, SC and IS cars -- the first Lexus models to be sold through 143 dealerships in Japan starting August 30.

"It's now time to turn it into a globally accepted premium brand."

That's a tall order for a company primarily known for its reliable but run-of-the-mill mass-market vehicles.

For all its success in the US market, the world's biggest for luxury cars, Lexus is a lightweight elsewhere: global sales of 359,000 units in 2004 pale in comparison to the 1 million-plus sold annually by both Mercedes-Benz and BMW.

Toyota reckons that succeeding in Japan, a tough market with some of the choosiest drivers, could improve its profile in other difficult markets like Europe, where Lexus has struggled to challenge the local juggernauts for the past 15 years.

In 2004, Lexus sold a paltry 25,300 units in Europe, compared with 288,000 in the United States, where it was crowned the top seller of luxury vehicles for the fifth straight year.

Lexus' ambitions in Japan are bold.

As early as next year, Toyota plans to topple Mercedes-Benz and BMW from their top spots in Japan's premium sedan market, which it loosely defines as carrying price premiums on account of the brand's strength.

Sales in that niche totaled 58,400 vehicles in 2004, Toyota reckons, with Mercedes and BMW accounting for 44,400 units.

That's a hard reality to swallow for a company with a staggering 44 per cent of its domestic car market. But Toyota plans to change that, with planned Lexus sales of 50,000-60,000 units in 2006 including the flagship LS sedan due out in the fall of that year.

Longer term, Lexus plans to raise sales to 100,000 annually -- equivalent to a third of Japan's high-end car market.

"Up to now, the premium segment in Japan has been more or less left to the foreigners," said Michael Raab, car analyst at Sal. Oppenheim.

"(Toyota) are making a clear statement that they're not willing to tolerate that any more. You would expect the competitive environment to get a little more hostile."

The Lexus GS350 will sell for around 5.2 million yen, against 8 million yen for a Mercedes E class with a similar-sized engine and more than 7 million yen for the 3-liter BMW 5-series model.

- REUTERS