Toyota's Lexus unit to open luxury stores in branding push

Bloomberg NewsAugust 26, 2013 

TOKYO — Toyota's Lexus unit plans to open luxury stores offering consumers goods including coffee cups glazed with volcanic ash and Italian leather bags to help boost the premium marque's brand image worldwide.

Japan's largest carmaker will open its first Intersect By Lexus store in Tokyo's Aoyama district on Aug. 30. Lexus will add similar outlets in New York and Dubai, the Toyota City-based company said without specifying a time frame.

Lexus' marketing effort comes as the Japanese carmaker aims to raise its global presence, after losing its luxury sales crown in the U.S. to Bayerische Motoren Werke AG and Daimler AG's Mercedes-Benz for two straight years. Mercedes also leads the Toyota unit by deliveries in the home market.

"Lexus' successful debut in the U.S. hasn't been transplanted to its other markets, and its brand presence still needs a lot of work compared to BMW and other luxury brands," said Takaki Nakanishi, founder of Nakanishi Research Institute. "You can't expect to gain sales from simply opening a cafe, but it's definitely better than not having one."

In the U.S., its biggest market, Toyota's Lexus sales have gained 12 percent to 141,446 units this year, outperforming BMW and Mercedes' growth in the same period, according to Woodcliff Lake, N.J.-based industry researcher Autodata Corp. About half of Lexus' sales comes from the country.

General Motors Co.'s Cadillac marque is also targeting to win upscale U.S. buyers and posted 30 percent unit sales growth in the year through July, making it the fourth-largest brand by volume, according to data compiled by Bloomberg Industries.

In Japan, Lexus posted sales of 27,074 units through the end of July this year. That trailed the 27,828 vehicles delivered by Mercedes in the same period, according to the Japan Automobile Importers Association.

The 331 3,563 square-foot store in Tokyo's Aoyama neighborhood, lined by boutiques of Prada SpA and LVMH Moet Hennessy Louis Vuitton SA, is designed by Masamichi Katayama and will host a café, a garage, a shop and a library lounge serving modern "Tokyo-themed foods," the company said.

The store will provide consumers the Lexus experience "without getting behind a steering wheel," according to Toyota.

In April, Toyota's Georgetown plant announced that it would begin building the Lexus ES 350 luxury sedan in 2015.

Toyota's $531 million investment (offset by a promised $146.5 million in state tax incentives) will create 750 new jobs at the Georgetown plant.

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