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How Lexus & Toyota Motors’ Relentless Pursuit Help Them Go 0 To 60 in the Global Luxury Car Market

How Lexus & Toyota Motors’ Relentless Pursuit Help Them Go 0 To 60 in the Global Luxury Car Market

“The president and CEO of Volvo North America, Bjorn Ahlstrom, said … the Japanese attempt to enter the luxury market … would be a ’marketing flop.’”

It took 24 engineering teams, 1,400 engineers, 2,300 technicians, 220 support workers, 450 prototypes, six years and $1 billion to produce the first Lexus.

“’Getting the Lexus out of Toyota, whose forte is rolling out wheels for the world’s millions, is like producing Beef Wellington at McDonald’s’ sniped Fortune.”

Within two years, Lexus beat rival Mercedes to become the top selling luxury import.

“As much as resale values are factored into a car-buyer’s decision, few on Madison Avenue would contest that unique advertising is what put Lexus on the map in the first place.”

Lexus has been the best selling luxury car in the U.S. (import and domestic) for four years.

“What Toyota does best is the antithesis of outsourcing, with which much of corporate America seems so enamored.”

The original Lexus prototype was developed not only to be the best car in the world, but also to have the best individual parts of any competing car.

“Rather than seeking to outmaneuver Detroit with larger engines and gimmicks, for example, Toyota Motors did it one better by selling best-of-class quality cars that – while not cheap – still undercut the prices of the competition.”

Toyota’s market capitalization makes it bigger than Ford, General Motors and DaimlerChrysler.

“Cutting corners to cut costs has never been part of the Toyota Motors game plan.”

Toyota’s operating margins increased from 2% in 1993 to 8% in 2003. Most of those gains are attributable to Lexus sales.

“The engine in a car is like the sauce in classic French cooking – it separates the excellent from the merely good.”

GM and Ford make more money from auto financing than from car sales.

“Squeezing a lot into a little package became the Japanese mantra – something which allowed it to retain its hold at the leading edge of engine design years after the war ended in ignominy.”

Profit margins on luxury cars are twice those of ordinary compact sedans.

“If Toyota Motor was to succeed in the crowded luxury car market, it would need to impress customers with something more than a firm handshake and a decent car: cappuccino and black armchairs in the showroom would also become a prerequisite for success.”

Toyota’s mantra was to “squeeze water from a dry washcloth.”

“To this day, the single biggest fault of the Lexus line has been its relentlessly conservative styling, along with a glaring lack of a true sports performance model to help enliven the brand.”

The name “Lexus” is a combination of “luxury” and the name “Alexis.”

“Lexus prevailed over more established players by obsessing about quality and service. At every juncture, long-term goals trumped expediency.”


Lexus Book Cover Lexus
Chester Dawson
Business & Economics
John Wiley and Sons
April 19, 2011
Editor at BusinessWeek and has been a frequent contributor to auto industry coverage since he joined the magazine in 2000. He spent 10 years in Tokyo covering Japanese corporations for BusinessWeek, The Far East Economic Review and Bloomberg News.

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Chester Dawson is a Senior Correspondent at The Wall Street Journal.

Currently based in Calgary and covering Canada's Pacific maritime & prairie provinces (with a dash of Klondike whimsy to boot), he formerly worked in The Journal's Tokyo bureau and reported on the 2011 tsunami and Fukushima Daiichi nuclear crisis.

Previously, Mr. Dawson was International Finance Editor at BusinessWeek magazine in New York after a decade spent in Japan with BusinessWeek, Dow Jones & Co.'s Far Eastern Economic Review, The Associated Press and Bloomberg News.

He graduated with a M.A. degree in Asian studies from Harvard University in 1993 after earning his B.A. in history (with an economics minor) at Ohio University and studying abroad at Sophia University in Tokyo, Japan.

His first book, "Lexus: The Relentless Pursuit," was published in 2004 by Wiley and was reissued in a revised paperback edition in 2010. Mr. Dawson also authored "Frommer’s Japanese Phrase Book & Culture Guide," which was published by Wiley in 2008.

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