With the arrival of the Lexus TX, Lexus is finally clarifying its three-row SUV lineup with very distinct offerings. We recently had the chance to sit down with Vinay Shahani, vice president of Lexus marketing, Toyota Motor North America, to talk about the Lexus lineup and how the brand is changing.
The following interview has been edited for length and clarity.
Headlight News: This is certainly long overdue. Is this something that dealers have been asking for? What does this vehicle do that the long-wheelbase RX-L didn’t do?
Vinay Shahani: I would say this is the answer to a question that young affluent families have been asking of our dealers and us for many years now. And unfortunately, to your point about our EX-L, that model never really cut it from their needs. I mean, the third row just didn’t have the utility that you would expect from a three-row luxury crossover. So with the new TX, we have a legitimate player that gives us the ability to conquest and bring people into the family, people that may have been part of the Lexus family before. Maybe they were a young IS owner who had a couple of kids and needed a three-row SUV and rejected the RS-L because it just wasn’t usable. Well, now we have the opportunity to bring those people back. I just use that as one particular example. But you know, we’re looking to from a volume perspective annualized full volume for your volume of roughly 50,000 units. So that’ll create a significant segment for our 244 rooftops in a meaningful way. The dealers are so excited about this model.
But the TX is just this undeniably strong entrant in a segment that our dealers have been so keenly wanting to be able to compete in a better way. We finally have given them this tool and the chance to go after it.
HLN: The utility that boosted the RX’s popularity, making it your number one model, can also work against it because the last thing someone wants is a vehicle just like their neighbor. They want utility, but they want something different.
VS: You know, (we) have now three three-row SUVs in the lineup. That’s more than some of our competitors have, between TX, GX and LX, and each of them have such a different approach to three-row functionality and use cases. I don’t think there’s going to be a whole lot of cannibalization among these three models. You may see TX cannibalize some RX sales. I think there’s some that we would expect to happen, but I think RX will still be number one in the in the lineup.
HLN: With all the attention and focus on trucks and SUVs, and that’s clearly where the majority of the market is, what happens to your car lineup? How strong is that among your clientele?
VS: I think the fact that we’ve stuck with sedans is a testament to the fact that we feel like there’s still a market for that. I mean the IS is a great example. The IS is the youngest in its segment. The average age of an IS consumer is 45 years old. The only reason I say that, Larry is I think we’ve figured out that between IS, ES and LS, we have three very different sedans. IS is a really great entry for young consumers. As an example, when we did our deal with 100 Thieves, 100 Thieves is a lifestyle and gaming organization, the IS was the centerpiece of that initially, it’s kind of evolved where NX has been a big part of it and TX will be a big part of it too. There are 212 million gamers in the United States; the average age of these gamers 35 years-old, and they have dispensable income. We don’t want to give up on sedans when we know that that vehicle, the IS, is such an important vehicle to those people.
HLN: Would you classify sedan buyers and your SUV buyers as very different. Do you see them crossing over or are they hardcore sedan buyers?
VS: I think that there’s clearly some life stage implications. I mean, an IS buyer can eventually be a TX buyer, depending on when life happens. You have a couple of kids and then you look at the world a little bit differently. I think the commonality is the unique characteristics that creates a nimble and dynamic driving experience that gives the driver competence. That is the common denominator between the IS, the NX, the TX and the RX. Yes, your lifestyle life stage may change. But our formula as to how we meet your needs has some level of consistency and how to create that confidence for the driver through suspension dynamics. You know, engineering the car in a holistic way. That I think is pretty evident when you drive.
HLN: Would you say the Lexus customer is changing? Is it any different than the change we’re seeing in the market overall?
VS: I think overall we’re seeing that they’re getting younger. So, we’ve seen the average age of a Lexus owner drop. We’ve seen the average age of a Lexus consider drop even more significantly, which is typically what you see; considers move at a faster rate and then eventually you’ll convert. So yes, they are changing.
You know, again, we have historically over-indexed with Baby Boomers and Gen Xers, but that’s starting to shift now. Based on where the spending is in the market, in five years or less, Gen Y will be the biggest consumer of luxury vehicles in the United States. I came into this job two-and-a-half years ago saying we really need to change the course, put some course correction on so that we can bring these younger guests into the family. Part of that is the foundation, the new products that have happened over the last couple of years, including TX and GX. But also, we’re also looking at partnerships to accelerate that.
One example that comes to mind is earlier this year we opted to partner with Beyonce’s Renaissance Tour along with Tiffany and Co. There was some science behind this, in the sense that you look at Beyonce, she’s larger than life. Just on Instagram alone, she has 370 million followers, the majority of whom are women, who we know tend to make or influence the decision on vehicle purchases. Perfect timing for us with TX and GX on the horizon. So that’s another one where we see the ability to put Lexus on the map with some of these younger consumers who wouldn’t have known that we’ve moved the brand in the direction that we have. We have these new SUVs that are targeted towards young affluent families. So, that’s another way that we take advantage of this momentum that we have from a product perspective, but also go after what we see happening in the marketplace, where the luxury buyers are getting younger.
HLN: So why not update the sports car, the RC? That’s probably one of your oldest products at this point.
VC: Yeah, we understand the importance of performance and having a performance halo for the brand. You know, we have the LC 500, and we have the RC. Those are both vehicles that I think are uniquely tuned and kind of aimed towards the enthusiast. But we understand that there’s probably the need to even be more aggressive in that in that arena. So stay tuned for more.
HLN: Vinay, thanks for your time.
VS: Thank you.