Lexus willing to wait on subscriptions

LOS ANGELES — Lexus is in no rush to run a brandwide vehicle subscription program, but it is open to expanding an all-inclusive short-term lease beyond tests on its new UX small crossover.

Subscription programs across the industry are very much in the experimental phase, with luxury brands such as Mercedes-Benz, Porsche, BMW and Volvo testing varying formats and service tiers. Meanwhile, Cadillac suspended its Book by Cadillac subscription experiment in November as subscriber rolls dwindled, with plans to revive it next year.

As long as the payoffs remain unclear, Lexus isn't going to "panic and jump in just to jump in," said Cooper Ericksen, Lexus' vice president of marketing.

"I think there's a lot of unanswered questions about how you take a depreciating asset and have a revenue model that is good for the consumer and good for the brand over the long term of that asset," he told Automotive News on the sidelines of the Los Angeles Auto Show.

Besides, he said, Lexus dealers and customers aren't really clamoring for it, though some dealership groups are launching their own programs across multiple brands.

"The most consistent feedback we get from dealers on the idea of subscriptions is: 'Please don't take away our ability to have this one-on-one relationship with a guest. We value that, and we want to maintain that,' " he said.

"Some brands are taking the Tier 1 approach of, 'We'll handle everything, and you deliver the vehicle,' and I don't think that's a road we're going to go down," Ericksen said.

That said, Lexus continues to explore alternatives to traditional ownership or leasing, such as the Lexus Complete Lease pilot program that will be offered on the UX in certain markets. It combines a two-year, 20,000-mile lease with insurance, maintenance, tire-and-wheel protection and telematics services in one payment, with dealers setting the final price.

"It comes down to a guest convenience standpoint," Ericksen said. "It's not necessarily a way for a guest to pay less for their car or less for their insurance. It's a way for them to have a more convenient way to have transportation that's simpler and less time-consuming and less stressful."

The UX's younger target demographic makes the Complete Lease a good fit, Ericksen said, because those consumers are more accustomed to subscription-based services and packages in other industries, and they're less likely than Lexus' traditional customers to have longstanding relationships with an insurance agent or provider.

But the convenience of a single payment could easily sell well across demographic groups. "We're doing this with the idea that we would expand it to other models down the road if guests view it as a benefit," Ericksen said.