Sunday, March 27, 2011
Why Lexus Doesn't Lead the Pack in China
Lexus has become one of the leaders in selling luxury model cars within the U.S. automobile market. The Toyota owned company cannot seem to find the same success in China. Lexus sold just a fifth of the percent competitors Audi sold last year. This is due to two different issues. For one, Lexus imports all its cars into the Chinese market. Within the Chinese automobile market, importers must pay a 25% custom duty and a 17% value-added tax. Another issue is the late start Lexus got off to introducing Lexus-model cars into the Chinese market. Lexus was introduced in 1995, whereas competitor Audi introduced itself in 1985, giving Audi more time to solidify itself within the market and understand consumer preferences. To combat its faulty sales, Lexus has tried to increase its customer service options within the Chinese market. Lexus has also introduced cars that have smaller engines, tapping into the Chinese preference of owning smaller cars. Lexus hopes that by adjusting its approach to the Chinese market, it can increase car sales within the Chinese automobile market within the near future.
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2 comments:
I agree more with the second point - the Chinese have grown up knowing that owning an Audi is the ultimate goal in financial success. I think this weighs a lot more on the consumer preference than does price. Anyone in China that has enough money to purchase a luxury car is going to have a LOT of money, so the status symbol of an Audi is more important than paying slightly more for import taxes for a Lexus.
This is interesting considering Toyota is still the leading auto manufacturer in the world. Its efficient plan for manufacturing and sales of their vehicles will in my opinion, over time bring them to the top in the Chinese market.
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