Lexus to Compete in Small SUV Market

　　“Being late is better than absence."

　　On August 24, Lexus announced it would introduce three models with smaller engines, including the new urban luxury SUV RX270, luxury sports car IS250, luxury hardtop convertible coupe IS250C. Lexus's decision reflected its determination of entering the small-displacement auto market, according to the Nanfang Daily.

　　Now China' auto market is becoming more mature. Due to the influences caused by new consumption tax project, the market of luxury cars with engines that are smaller than 3.0 liter is becoming much stronger.

　　The rapid growth of small-displacement luxury vehicles

　　The sales price of RX270 is from 533,000 to 598,000 yuan. The high-end sports car IS250 sells for 369,000 to 528,000 yuan. The luxury hardtop convertible car IS250C is priced at 645,000 yuan. All of the three models share one thing in common. Their engines are smaller than 3.0 liter. RX270 is equipped with 2.7-liter inline four-cylinder dual overhead engine with dual Variable Valve Timing Intelligent control system. IS250 and IS250C are equipped with all-new 2.5 liter direct injection V-6 engine with dual Variable Valve Timing Intelligent control system. For the first time, Lexus introduced the advanced direct injection technology to IS series in China’s market.

　　Masahiro Kato, the General Manager of Toyota China said, ES240 which was introduced into China by Lexus in 2009, had already become the most popular model of Lexus. ES240 was the first small-displacement model introduced to China by Lexus. The introduction of three models will help Lexus expand its sales. In fact, among luxury brands, Lexus was lagged behind regarding the introduction of small-displacement cars. Zeng Lintang, the Deputy General Manager of Toyota China once said, "Being late is better than absence."

　　According to Takayuki Fujita, the Chief Engineer of RX series, the goal of introduction of RX270 is to expand targeted consumers. Lexus can attract upgraded consumers of non-luxury cars, consumers of small-size luxury SUV and upgraded consumers of luxury cars. Zeng Lintang estimated that the sales of RX270 could account for over 50% of RX series, becoming the most popular SUV of Lexus.

　　Zeng Lintang said, after the implementation of new consumption tax in 2008, the sales of cars with 3.0-liter or smaller engines surged. The market share jumped to 83% in 2010 from 69% in 2007. With the introduction of new luxury models in 2009, the share of small-size SUV increased to 16.1% from 4.4%. In 2010, along with the release of BMW X1, Audi Q5 and other new models, the share of small SUV kept growing. Based on the registrations, in June the market share of small SUV is 36.3%.

　　Competing with medium and high-end vehicles

　　Zeng Lintang said, “Currently the ownerships in non-luxury medium car market are quite large. Those customers will become an important source for small luxury SUV. ” From the point of displacement, 95% of small SUV sales are models with engines which are smaller than 3.0 liter. As to the small SUV of Audi and Mercedes, the sales of cars with engines which are smaller than 3.0 liter account for 95% and 85% respectively. For BMW and Volvo, all of small SUV models are equipped with engines that are smaller than 3.0 liter.

　　In this context, the Lexus's strategy is to continuously expand the segments of market which can be covered by its models. Along with the introduction of small-displacement models, Lexus hopes to keep the body size of medium luxury SUV. Moreover, Lexus needs the independent consideration about the price range and configuration level of small cars. Therefore Lexus is able to figure out the accurate positioning of the products.

　　"In the first seven months of 2010, Lexus sold 27,000 units in China, up by 76%. The growth rate exceeds the overall rate," Masahiro Kato said. In 2010, Lexus's target for sales is 50,000 units. He reiterated that at present Lexus had not thought about domestic production. On the one hand, only when the sales of a model reach 30,000 units annually, will Lexus consider the issue of domestic production. On the other hand, manufacturing in China requires training personnel. In that aspect, domestic production has not reached the standard. (Translator: Qinghua/Hanxin)

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　　http://auto.sohu.com/20100827/n274508884.shtml