Fleet News

Lexus deliberately slows growth to protect residual values

LEXUS will restrict its new car sales next year to protect and build residual values.

This year, Lexus sales are 31.66% up on 2000, in a market up 4.32%, but director Stuart McCullough said Lexus would increase its 2002 volumes by no more than 200 units so the marque 'can catch its breath', before growing again in 2004 with new models.

These fleet-conscious moves contrast strongly with a general new car market where manufacturers boldly forecast ambitious growth targets.

But there is clear logic behind the Lexus strategy that aims to ensure the company and its dealers have the time and resources to cope with used car sales after a lengthy period of dramatic growth.

'A dealer network tends to sell to a ready demand which can lead to relatively easy new car sales, but then you do not get the focus on used car sales which you need,' said McCullough.

'Unless the network has developed a used car capacity you find ex-contract hire and company cars stacking up, with a negative impact on values.'

While Lexus is too discreet to 'name names' the experience of Audi springs to mind, enjoying runaway success with the new A4 in 1994 and 1995, and subsequently experiencing remarketing difficulties in 1997 and 1998 when the same cars hit the used car market.

'Our long-term aim is to achieve a position similar to the United States where we outsell BMW, Mercedes-Benz, Lincoln and Cadillac,' he said.

Dealers are being encouraged to establish independent showrooms, rather than share with Toyota, and 25 Lexus outlets have already set up individual premises.

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