BANGKOK, Thailand - At the Thailand international auto show here in December, SEC Group proudly displayed its Lexus vehicles alongside other car companies' stands.
But SEC is not an automaker or even an authorized Lexus dealer. It is a gray-market importer, one of many that Toyota Motor Corp. will be confronting as it seeks to build its official Lexus sales across Asia.
Since 1999, gray-market importers have been importing about 600 Toyota Harrier and 100 Toyota Land Cruiser SUVs from Japan a year for resale as Lexuses. Both Japan and Thailand are right-hand-drive markets.
With a 3.0-liter engine, the Harrier is sold in Japan starting at about $25,550 at current exchange rates. But in the United States, the vehicle, sold as the Lexus RX 300, carries a price tag of $35,700. The Land Cruiser costs $50,000 in Japan but starts at $63,700 as the Lexus LX 470 in the United States.
The gray-market importers replace the SUVs' Toyota insignia with Lexus badges, and charge Lexus prices - or more.
The Harrier, rebadged as the Lexus RX 300, is on sale here for $92,500 at current exchange rates. That is down from the previous gray-market price of $97,500, due in part to the influence of authorized Lexus dealers' selling the genuine RX 300 for $86,750 since October.
Toyota alleges that the gray-market importers exploit loopholes in laws regulating vehicle imports, and understate the price of the vehicles to customs agents.
But those complaints are difficult to enforce, so Toyota is taking another tack in the battle. The automaker is suing the SEC Group in Bangkok's Intellectual Property & International Trade Court, contending that the rebadging of vehicles violates Lexus' trademark.
The gray market may shrink because of Toyota's attacks, but it is unlikely to disappear completely. Toyota predicts that the gray market for Lexus vehicles in Thailand will drop from almost 700 this year, primarily RX 300s, to between 300 and 500 in 2004, and less then 200 in 2005.
But Thailand's gray market likely will linger because Lexus' full range won't be available from official dealers here until 2006.