Raising the Bar, Again

Lexus takes its dealers on an amazing journey in Tokyo

November 03, 2016

A New Definition of Luxury -- Toyota Motor Corporation President Akio Toyoda challenged Lexus dealers to take their already exceptional customer service to an even higher level.

Lexus held its National Dealer Meeting last week, gathering at the Kokugikan—Tokyo’s sacred temple of sumo wrestling—highlighting a 2,000-year old culture and a new understanding of omotenashi, or hospitality.
 
And Lexus executives did their part to ensure nothing got lost in translation.
 
“We all know that Lexus invented exceptional customer service,” said Akio Toyoda, president of Toyota Motor Corporation. “But now it is time to take it to another level.”
 
“Lexus has no plans to walk away from all that made the brand great,” said Jeff Bracken, group vice president and general manager of the Lexus Division. “But the changing consumer is looking for amazing experiences as much as they are amazing products.”

To meet if not exceed these more demanding customers’ expectations, the executives said Lexus will transition to a new brand positioning built on:
 
  • A passion for takumi craftsmanship and the values that represents
  • Pioneering engineering breakthroughs that are human-centered
  • Superior quality and omotenashi care that is unwavering
  • Design that is brave and emotional
  • Performance that exhilarates and transports all of the senses
  • Technology that fires the imagination
Moving down this road will give rise to a visionary Lexus that delivers more daring, provocative and authentic experiences for its customers.
 
Strong Product = Strong Sales
 
Still, new products that expand the design and performance envelope will remain at the core of Lexus’ future. Bracken noted that post-Baby Boomer luxury car buyers now rate the brand more favorably when it comes to desirability and prestige. Lexus’ push over the past five years to develop more emotionally engaging vehicles has also garnered more favorable reviews with the automotive media.
 
Strong product and favorable buzz are translating into strong sales. Bob Carter, senior vice president of Automotive Operations, said Lexus—once again the luxury auto retail market leader—is on pace to have its second-best year ever.


Product Push -- Lexus International President Tokuo Fukuichi assured dealers that the brand would continue on its current path to developing ever more eye-catching and performance-minded vehicles.

“We want the performance of our cars to be exhilarating,” said Lexus International President Tokuo Fukuichi. “We want our technology to be imaginative. And thanks to the new autonomy of Lexus International, we are able to turn our ideas into reality at a rapid pace.”
 
‘Great Customer Service is no longer enough’

But breakthrough products, on their own, won’t be enough to usher in this heightened sense of omotenashi. Bracken cited market research that points to a fundamental shift in attitude among luxury consumers. To remain at the forefront, the Lexus brand must shift as well.
 
“We call these new customers ‘experiential masters,’” he said. “They’re a new breed of affluent consumers who have extremely high expectations for brands. They’re more adventurous. They’re storytellers who want to share. They believe the entire world is their playground.”
 
How is Lexus responding?
 
On the retail front, Bracken provided an update on Lexus Plus, now being pilot tested at 11 dealerships. This new approach gives customers a single point of contact and provides negotiation-free pricing.


Retail Revolution -- Jeff Bracken, group vice president and general manager of the Lexus Division, cited the positive customer response to Lexus dealers who've adopted negotiation-free pricing.

“Without exception, the customer response has been fantastic,” said Bracken. “Lexus Plus isn’t for everyone, but it’s definitely working for those who are participating. We do feel that if the current consumer trends continue, this approach may become a very healthy path for auto retailing.”
 
Bracken said many other dealers are experimenting with their own variations on the theme. For instance, he called out Lexus of Glendale for going with no-haggle prices on its pre-owned vehicles in 2015—when it ranked 142nd on the L/Certified sales rankings. A year later, the Southern California store had skyrocketed to 6th nationally.
 
Meanwhile, Toyota Motor Sales President and CEO Kaz Ohara hinted where the next generation of vehicle connectivity is heading. His challenge to the dealers: Think out of the box.
 
“Just imagine a car that knows where you want to go,” said Ohara. “It knows what’s on your calendar for the day. It navigates itself automatically to avoid traffic. It monitors your health and lets you know if you’re running a fever. It turns down the heat in your house. And it automatically schedules a service appointment at your dealership without you lifting a finger. Imagine a Lexus that is your very own digital personal assistant, way beyond what smartphones or any other device is capable of now.”
 
“It’s always been my belief that the experience of driving a car is just as important as the actual car itself,” he added. “How it makes you feel. How it becomes a place you look forward to spending time in. How it can be a kind of oasis from our hectic lives.”
 
And on the marketing front, Bracken said Lexus will embrace creative new strategies. One example: a virtual reality configurator for the much anticipated LC 500. This software made its debut at the Pebble Beach Concours d’Elegance in August, “leading numerous shoppers to immediately call their Lexus dealers to sign onto an LC waiting list.”
 
But there’ll be more. Much more. Akio Toyoda is confident of that.
 
“I have never been more optimistic or more excited by what the future holds for us, by what we can do for our customers and by what we will experience together,” he said in closing. “It truly is amazing.”

To learn more, click on the red links to view these two videos:

Introduction to the meeting -- Akio Toyoda had a conversation with Hakuo, Japan's current sumo wrestling champion, about the parallel values between his success in the ancient sport and Lexus' success in the luxury automotive market.

Highlights of the meeting -- This video gives you a window on some of the meeting's key moments.
 
By Dan Miller

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