Lexus is about to lose decade-long lead in luxury car segment

Article by Christian Andrei, on May 8, 2011

For the first four months of 2011, Lexus’ sales trailed BMW and Mercedes-Benz. And since Lexus makes all but one model in earthquake-stricken Japan, it appears that Lexus will fall off its top position in the luxury segment.

Last year, Lexus was barely able to snag the lead with 9,216 cars. When the earthquake disrupted the flow of supplies, Lexus had to temporarily cut production by 50%. New models from BMW and Daimler for the U.S. are expected to boost local production.

They are set to provide higher incentives than Lexus to increase sales as well as to avoid overexposure to growing demand in China. Lexus was hit hard by the recalls last year but before it was even able to recover, the earthquake happened, worsening Lexus’ situation further.

Through April, BMW's U.S. deliveries increased to 71,417 vehicles. Meanwhile, Mercedes sold 71,388 and Lexus came in at third place with sales of 64,932 units.

Eric Noble, president of The Car Lab, an industry research company in California, said that Lexus was already in trouble before the disaster in Japan but if the brand “wakes up” because of it, then “some good may come from it."

BMW is hoping that U.S. drivers will see the appeal of its overhauled X3 SUV (which is longer by 3 inches and wider by 1 inch), enabling the brand to widen its market share this year.

On May 4, CEO Norbert Reithofer said that the company has an order backlog of about four months. This means that some customers will have to wait “as long as half a year” to get the $36,750 SUV.

Topics: lexus

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