MONTEREY, Calif. — What is there possibly to worry about if you run Lexus Division and you outsold your nearest luxury competitor by nearly 50,000 units in 2006?
Just this. Lexus looks dangerously out of position when it comes to attracting the younger buyers that demographers and market researchers say will flood the luxury market in a few years.
Lexus has been the best-selling luxury brand since 2000, but the executives who run Toyota's upscale division are worried about the future. The fear is that Lexus will be a one-generation wonder — a baby boom artifact.
"When we look at the luxury market in 10 years, it's going to change so dramatically," said former Lexus General Manager Jim Farley.
(Farley was interviewed before Ford Motor Co. announced last week that it had hired him as group vice president of marketing and communications.)
Sifting through the numbers after taking over at Lexus in April, Farley discovered an alarming trend: Unlike Infiniti, BMW and even Mercedes, Lexus is losing its foothold among younger buyers just as its core Pepsi Generation customers get ready to switch to warm milk. To deal with the problem, Farley formed a team to analyze the product lineup and recalibrate marketing.
The team concluded that Lexus is caught in a demographic vortex — upmarket intenders are getting younger as its buyers grow older.
"This new 30- to 40-year-old customer deserves us to look at them very critically," Farley says.
Lexus owners are older on average than those of its Japanese and European rivals, except for Jaguar. Indeed, BMW, Audi and Infiniti customers are significantly younger, according to the Power Information Network. Besides Jaguar, the only luxury brands with higher buyer ages than Lexus are Lincoln and Cadillac.
"I'm surprised that the Lexus age is above Mercedes," says Power analyst Tom Libby.