Originally published: Jan. 9, 1989Speculation surrounding Toyota's upmarket, luxury division came to an end with the debut of the products behind the Lexus name.
But as Jim Perkins, Lexus senior vice president, described the high-line sales channel's debut as "the day we've been waiting for for quite some time," it was the double entendre of a decision involving trademark infringement that put emphasis on his words.
Still, for Lexus, the emphasis at both the Los Angeles and Detroit auto shows last week was on product -- and the expanding segment that Lexus anticipates.
Though luxury car sales were down in 1988 from previous years, Perkins said he believed the market is ripe for cars in the $20,000 to $40,000 range.
The Lexus line consists of an entry-level, six-cylinder sedan designated ES-250 and a 250-horsepower, 32-valve V-8 flagship sedan called LS-400. The price range is estimated at $25,000 to $35,000.
Target buyers for the entry-level ES-250 are 37 years old with a median income of $65,000. The LS-400 target buyer is 43 years old with a $100,000 income.
Toyota research shows the number of U.S. households with median incomes greater than $50,000 will increase from 10 million to 19 million in the next five years.
Toyota also estimates the market for luxury automobiles will increase from 965,000 units to 1.4 million by 1994.
Perkins said in Detroit that 1,500 dealers made inquiries about a Lexus franchise, and 550 filled out application forms. Thus far, Toyota has signed 89 Lexus dealers in the top 50 luxury car markets. Plans call for 100 dealers to be signed by 1990.
Perkins said 60 percent of the Lexus dealers named currently run Toyota dealerships.
Perkins said groundbreaking has taken place for seven dealerships, with an additional 20 stores to be housed in existing buildings that are being refurbished.
He said the cost of each dealership ranges from $3 million to $5 million, contingent on land values.
Both Lexus cars will reach the showrooms in September 1989.
Toyota expects to sell 16,000 units during the remainder of calendar year 1989 and aims to sell 75,000 in its first full year. The company said it plans to sell between 125,000 and 150,000 in the future.