Companies & Industries

How Lexus won the war of Japanese luxury cars

Toyota’s premium brand pulls ahead

David Dewhurst/Lexus

David Dewhurst/Lexus

Now that I think of it, the satellite radio in my new Lexus F-Sport GS350 must have been tuned to that ’80s party mainstay 1st Wave when I quit the parking lot of Toyota Canada HQ, ripped off homeward down the highway and found myself lost in thoughts of that glorious decade. Glorious automotive decade, that is, when instead of today’s vigils for car companies dead and gone there were opening-night parties for freshly minted brands.

On the dodgy side there was Delorean, Saturn and Sterling. But there were also three inspired successes, each of them Japanese: Acura, then Lexus and Infiniti.

Honda’s upstart premium brand, Acura, arrived on the scene with some clear advantages. It got there first, in 1986, and was cloaked in engineering cachet because Honda F1 engines were then clobbering the Italians, Germans and British at their own game. Acura’s pricing was friendly too, targeted at the low end of premium ($19,893) rather than the top. Its most luxurious car—the Legend—even packed a sensible V6 rather than a sexy V8.

Toyota’s Lexus instead designed and priced its introductory 1989 LS400, at $35,000, to compete directly with flagship sedans from BMW and Mercedes. Nissan’s Infiniti tried something similar, pricing its quirky Q45 at $38,000—although hardly anyone could tell, thanks to an ad campaign that focused on fuzzy pictures of trees and other abstractions rather than the car. By 1990, Acura cars outsold Lexus two-to-one, while Infiniti languished in distant third place.

Today Infiniti is still in third place—but no longer languishing. Infiniti’s lineup is now the most stylish of the three, and it is on track to sell over 9,000 vehicles in Canada this year—a 10% improvement from last year.

Annual Canadian Acura sales should reach 19,000 cars, which is a good showing. Except that no one I know thinks of Acura as a luxury brand anymore. They’re seen as mildly worked-over Hondas with cheap plastic nosepieces pasted over the grilles.

Last year, intriguingly, Lexus tore a page from Acura’s book and introduced an entry-level, $31,000 CT200h hatchback—a mildly enhanced Prius—to help boost it’s luxury sales on the sly. It appears to be working: Lexus outsold Acura in Canada last month, 1,580 cars to 1,515.

Twenty-five years ago, the Lexus brand was built on a dull but sensible mix of good engineering and luxury. The first person I knew with an LS400 was very clear on why he bought it to replace his BMW 7 Series: “It drives the same but looks like a taxi,” he confided to me back in the day. “And when my employees want to negotiate a raise, it’s better for me that they have no idea what I spent on my car.”

But the $61,000 GS350 F that I drove was a different Lexus entirely. It had a flashy big grille, pronounced front and rear spoilers, big rims and garish LED lights. It also has active four-wheel steering, piles of torque, a six-speed automatic with paddle shifters and a V6 that loves to go. A less somnolent pursuit of perfection perhaps, but nonetheless well matched to its 1980s soundtrack.

Proposed names for Toyota’s new Lexus brand: Calibre, Chaparel, Vectre, Verone and Alexis (a brand manager pointed out that Alexis Carrington was a character on Dynasty)