MEXICO CITY — In the 17 years since Toyota Motor Corp. started selling Camrys in Mexico City, its executives have been peppered with a constant question from dealers and fans: When is Lexus coming to take on Germany’s big three and a growing number of niche brands?
As it turns out, the executives were asking a question of their own: When will the Mexican luxury market be ready for a big new player such as Lexus to chase a limited number of luxury car buyers?
The answer, Lexus says, is now. Or more specifically, in the third quarter of 2021, when its new Mexico operation will open around five dealerships in the nation’s three most populous markets:
- Mexico City and its sprawling suburbs
- The Monterrey metropolitan area in northern Mexico
- The Guadalajara metroplex in central Mexico.
Top Toyota executives traveled here last week to break the big news to its 67 Mexican dealers, some of whom are likely to submit proposals to be among the first batch of newly minted Lexus retailers.Strong player
Lexus’ move into Mexico comes as Toyota has solidified itself as the fourth largest retail brand here with 7.8 percent of the market and deliveries of nearly 109,000 vehicles last year. Meanwhile, Toyota is set to open its second Mexican factory by the end of the year in the central state of Guanajuato.
It’s time, the Toyota executives told Automotive News, for Lexus’ supply to meet the demand in Mexico for its unique take on the luxury space, including its extensive lineup of hybrid vehicles that are increasingly popular due to rising Mexican gasoline prices.
“They’ve been asking in my neighborhood for Lexus for the last 10 years or longer,” said Tom Sullivan, president of Toyota Motor Sales de Mexico, in an interview.
Bob Carter, executive vice president of sales for Toyota Motor North America, echoed the sentiment, pointing out that Toyota customers who want to move up a category have no choice but to leave the Toyota family.
At the same time, he justified the long wait for Lexus fans in Mexico, who have wondered why the brand’s global expansion to more than 90 countries has bypassed the United States’ southern neighbor.”We’ve been watching the size of the luxury market [in Mexico], because Lexus is really about two things, superior quality and design, and it’s about the customer experience,” Carter said in an interview. “To be able to provide these amenities and have a strong dealer body, we need a good, solid base of luxury market.”
Sullivan said in a presentation that Mexico’s luxury market hit 4.6 percent of the total auto market last year, with deliveries of 65,387 units at the retail level. “2018, in summary, was the best sales and market share ever in the history of luxury sales in Mexico,” he said. “This is the market in which we will compete with Lexus.”Expected models
Lexus said it would import the flagship LS 500 sedan and its hybrid variant to the Mexican market as well as the more affordable ES sedan. The LX SUV and the UX, NX and RX crossovers will also go on sale here.
The Japanese automaker said it expects to be the “greenest” high-end brand in Mexico by using its hybrid technology to reduce emissions and increase fuel economy.
Lexus’ move comes on the 30th anniversary of the birth of the brand and following the rise of the Toyota brand to fourth place in Mexican market share from sixth place just five years ago. Part of that success has come from Toyota’s domination of the hybrid space, initially with the Prius and now with several additional hybrid models.
In the luxury market, Lexus could have a similar advantage with its extensive hybrid portfolio. Not only are gasoline prices higher in Mexico than in the U.S. generally, but local governments in the Mexico City metropolitan area limit the circulation of gasoline-powered vehicles during smog alerts. Hybrids and electric vehicles are exempt from those limits.
Luxury auto sales are a small but growing part of the market in Mexico, which last year saw overall retail and fleet vehicle sales fall 7.1% to 1.42 million. German marques dominate, but their rivals are making inroads.
|2018 sales||% change vs. ’17|
|*Cadillac sales in Mexico not broken out from General Motors data|
|Source: Mexican Automotive Industry Association|
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