Kiyotaka Ise, a Managing Officer of Toyota who is also Lexus International President, is reported to have told media representatives that the OEM has “high hurdles” to achieving its Lexus luxury brand’s 2012 global sales target of 500,000 vehicles.
Caution has grown after the recent fall in sales of Japanese car brands in China. Reuters quotes Ise as saying: “There is the issue of China, and the hurdles are very high. But we still have three months left, so we are doing our best to achieve that target.”
Sales of Japanese-brand vehicles have slumped in China since mid-September when sporadic violent protests and calls for boycotts of Japanese products broke out in China over a group of disputed islands in the East China Sea.
Kazuo Ohara, Vice President of Lexus International, also confirmed that Toyota is reducing exports of its Lexus upscale cars to China from Japan to respond to slumping demand. He was quoted as saying: “It is hard to believe sales will rebound anytime soon.” He did not indicate how far exports have been cut.
The executives were speaking at an event in Toyota City, Japan, at which Lexus rolled out its new LS line-up by launching nationwide the partially redesigned LS 460, LS 460L, LS 600h and the LS 600hL.
Toyota acknowledged in late September that it was scaling back Lexus production in Japan to adjust to reduced demand in China. The OEM said that production of Lexus luxury models was being adjusted at its 100%-owned Kyushu subsidiary in southwestern Japan, but declined to give numbers or other details. According to Toyota, production at no other plant in Japan has been affected by the problems in China.
China is the second biggest market for Lexus; North America is its largest. Toyota’s China sales, including Lexus cars, fell 48.9% year-on-year in September. The company does not disclose separate sales figures of Lexus brand vehicles in China.
As well as the more challenging sales situation for Lexus resulting from problems in China, Toyota is also combating the negative impact of the strong yen on the profitability of the brand. Jim Lentz, head of Toyota’s US sales division, recently noted that Toyota was looking into transferring some of its Lexus production to the US, due to the strength of the Japanese yen but also the improved engineering capabilities in the country. Lentz indicated that the Lexus ES sedan was a likely model for transfer to the US and, speaking of the possibility of transferring more production to North America he was quoted as saying: “With where the yen is today, I think it’s only a matter of time.”
