TONBACH, Germany - Toyota Motor Corp. plans to replace at least 25 percent of its Lexus dealers in Europe with retailers that are more experienced in selling premium brands.
The underachieving luxury division wants to put more franchises into multibrand dealerships rather than the dual Toyota-Lexus stores it has in most of Europe.
The European strategy is far different from the approach in the United States, where 155 of 200 Lexus franchises are exclusives.
By year end, many Lexus dealers will be replaced by dealers who sell another premium brand such as Jaguar, Land Rover, Volvo and BMW, says Filippo Bellanti, Lexus marketing manager for Germany.
He won't say how many dealers will lose their Lexus franchise. But another Toyota source, who asked not to be named, says a substantial number of dealers, probably between 25 percent and 30 percent, would be fired.
The majority of Lexus franchises are held by Toyota dealers who operate separate Lexus showrooms and service departments.
In Germany, only one Lexus dealer out of 50 sells Lexus exclusively without also running a Toyota dealership.
Only two of the 20 Lexus dealers in Italy are not combined with Toyota. Just five of 50 in the United Kingdom and two of 15 dealers in Spain are exclusively Lexus stores.
Lexus marketing executives say they welcome Europe's new block exemption rules because they encourage multibrand franchises.
"The new rules give us the chance to recruit new dealers who already have experience with another premium brand," Bellanti says.
Dealers of other luxury-brand franchises are showing interest in adding Lexus because the block exemption rules that take effect in October allow them to do so, Bellanti says.
"We need dealers who understand the whole idea of a premium brand so they can provide a premium brand experience to customers," Bellanti says.
"There is a big difference from selling Toyota vehicles."