Lexus focussing on Quality in China

“The company’s current priority is to promote brand value among Chinese customers by offering high-quality imported products and services.” 

Whilst most manufacturers race to build manufacturing capacity in China as a way to capture their share of the world’s largest car market - a policy that has seen the likes of BMW, Audi and Mercedes reach ever higher sales volumes in the territory - it would seem that Lexus, the luxury end of the Toyota empire, is setting a slightly different course.

According to recent announcements from Tetsuya Ezumi, VP for Lexus in China, “the company’s current priority is to promote brand value among Chinese customers by offering high-quality imported products and services.”

Lexus is quite distinct from its German rivals in that it is not manufacturing in China, preferring to import a quality product chiefly from its factories in Japan. Ezumi did say in his recent press release that local production was something that they were discussing at board level, but as of now, the company is not convinced that local production will dramatically increase their sales, whilst attention to detail, product quality, prices and services would account for more than where the cars are from.

The Chinese market has developed dramatically in recent years and the consumer has become increasingly discerning, with foreign brands and imported products being able to command a significantly higher price than that of local brands or locally manufactured goods, due to perceived higher quality.

The Lexus brand is famous for the spirit of Takumi or artisan spirit, and the automaker has always striven to be known for quality throughout its entire value chain, from manufacturing to sales to aftersales services. Chinese consumers like to believe that they are amongst the toughest in the world, particularly when it comes to driving a hard bargain but this Lexus attention to detail is already winning in the country where the company sells 10 fully imported models, racking up sales of 87,000 units in 2015, a 14% growth over 2014.

Of course these sales figures do fall well behind those achieved by the German Trio of BMW (463,000 units) Audi (570,000 units) and Mercedes (373,000 unit), most of which are locally produced. But if Lexus continue to hit their sales growth figures, it could soon be snapping at the heels of its European rivals and in a market that most predict will overtake the US as the world’s largest market for luxury cars by 2020. 

Ezumi has a “Golden-Rule” apparently, which demands a step-by-step approach to attract more customers and boost brand value. According to his rule, Lexus must provide high-quality new cars and provide high-quality aftersales services to customers. For the long term, this will result in a higher resale value of the cars when they hit the secondary market, providing a long-term benefit to the notoriously difficult Chinese customer.

image: AP via cleveland.com