Lineup strong, inventory shortage over for Lexus dealers
Dealer since: 1983
Dealerships: Lexus of Manhattan, Lexus of Queens, Bay Ridge Lexus, New York
Other brands: Toyota, Honda, Nissan, Infiniti, Acura, Audi, Chrysler, Jeep, Hyundai
Average monthly Lexus sales in 2012: 300 new, 195 used
Quote: "There's a difference in what we want to feel versus what the consumer feels in being No. 1. As a dealer, No. 1 means sales volume. As a consumer, they don't care about the number of cars we sell; they care about the one car they are buying — and it's about the experience."
Lexus dealers have seen inventories return to normal levels after more than a year of recovering from the tsunami that ravaged their inventory supplies. But the damage done to Lexus sales meant the brand has not won the top-selling luxury brand title for two years running.
Does Lexus want the title back from BMW and Mercedes-Benz? Could it do it, even if it wanted to?
John Iacono, chairman of the Lexus National Dealer Advisory Council, spoke with Staff Reporter Mark Rechtin about 2013 prospects.
How was 2012 for Lexus dealers?
It was a good year for us in spite of all the challenges that have come our way. We had a great rebound in sales and good increases versus the prior year. It's not as good as it was before the economy and tsunami, but it was very much an increase that we were happy with. Ending the year at 240,000 units, we were on target. Our sedan lineup is where it needs to be. The RX is a leader. The new IS is coming. The new LS was a shot in the arm, and we sell them as quick as we get them.
What about you, specifically. Were any of your stores hit by Sandy?
We had inventory that was affected. We were flooded in our Brooklyn location. Our Toyota store in Brooklyn lost 280 cars, but we were able to get inventory and be back in business a couple days after the tragedy came our way. We did the best we could. We had great help from manufacturers.
Does it matter if Lexus is the No. 1 luxury brand by sales?
There's a difference in what we want to feel versus what the consumer feels in being No. 1. As a dealer, No. 1 means sales volume. As a consumer, they don't care about the number of cars we sell; they care about the one car they are buying -- and it's about the experience.
Over a decade we held that [volume] spot. Sooner than later we'd like to get back to that. But does that sell more cars to people considering the brand? It's not as important as retailers make it out to be.
What major issues do Lexus dealers face this year?
The major issues are behind us. The lack of inventory, the lack of new product that has now started to come to us, those were the issues. The new GS started the trend toward a different type of vehicle that will be a new perception of Lexus. That was followed by the IS, the new ES and a refreshed RX. The bad days are behind us. Other than the unexpected economy and what might happen with the way consumers perceive spending their money, as a brand the worst is behind us. I see it as a positive year for us.
What do you hope to accomplish as chairman of the dealer council?
I've been part of the dealer council process prior to this year, for four years. This is my second time around. It's never been where you sit in on meetings and you have canned issues. You look at your business, and Lexus is very open to making things better and is more in line with the challenges we face as a retailer. Whatever initiatives we think are prudent to embark upon, Lexus is open to giving us the latitude to make the changes we need. We look at it as a partnership. If I rate Lexus versus everyone else we represent, Lexus is one of the better manufacturers willing to let us make recommendations to make the process better.
Are Lexus dealers profitable?
Very much so. It's a good franchise to have. But it's in our culture to reinvest in a major way, to have the edge with our competitors, whether it's in facilities, or doing the things you need to do for our customers to feel like it's special to own a Lexus.
Are you making money on new-car sales?
Yes we do. Even though margins are compressed in a big way, Lexus dealers really have respect for the product we are selling and have a sales process that is less oriented toward the transaction, and more toward the presentation and value attached. It's not about pricing. It's about the product fitting the customer's needs. The transaction is limited in time; we focus on the ownership experience.
Do you think Lexus still is the leader in customer service?
It started back when the brand was established in 1989. We had no experience at being a luxury brand. What differentiated us was just treating customers as if they were guests in our home. The concept of listening, being courteous and being reactive, has set us apart. With all the challenges that came our way, Lexus is still in the forefront of the shopping list. The customer treatment is so good, if you own a Lexus, you don't want to gamble and go elsewhere, because their customer treatment isn't as good as ours.
What are some more recent customer service initiatives?
There's a new initiative at Lexus dealerships. We are hiring new roles for Lexus Delivery Specialists and Lexus Technology Specialists, which will take us to the next level of customer satisfaction. With the delivery specialist, the customer gets to focus on what parts of the car he wants to know more about, and the time he wants to spend on the delivery. Then we follow up a couple days later with a phone call and a visit at the customer's home or office to go over some other things. We've had customers tell us they would never buy any other brand because of the delivery specialists, because of their patience, professionalism and knowledge of the vehicle. When customers react that way, when you take on the expense of adding a position, it gives you a return that you can measure in goodwill over and over again.
What about the technology specialists?
The technology specialist is engaging on the service side, where the consumer is coming in needing some technical information, and we have all these transactions coming into the service drive. Now there is someone dedicated to being there in the service drive answering customers' questions in a quick way, when maybe the service writers don't have the time to do that.
A customer had an iPhone they had bought from an independent provider, and they couldn't pair it to the car. We took the time to diagnose the problem. We found out that the phone was defective, so that when the consumer got a replacement phone, we paired it to the car at their home. It brings the Lexus experience to the next level. We were made true believers in training and putting these people in place. The customers are just blown away with what we're able to do.
How would you grade Lexus' dealership facility improvement program?
Not many dealers are pushing back on the upgrades. We are all anticipating that it's probably a time when our facilities need to be upgraded. We're looking to make a good first impression. We're all concerned about investing money, but we're wide open to moving forward.
What does the factory need to do to help you sell more vehicles?
Build cars that are more emotional, and have driving dynamics that are different than the Lexuses of prior years were known to be. If they stay on course with how vehicles are designed and built, we'll be able to sell more cars. Also how we communicate to consumers that that is what Lexus is all about. Our new marketing strategy has a fresh approach and a new look that is much different. We need to stay on point from what we've seen in the last 12 to 18 months
What's missing in the product lineup?
A smaller SUV would be great for the entry, younger buyer who needs the utility. Also possibly a third-row-seat type of crossover. We've seen some great concepts, and we hope they translate into production cars. We would love to see a car like the LF-LC coupe making its way here; it just adds a very dynamic look to the car line. That vehicle would put us at a different level to the perception of Lexus.