Fifth-Gen Lexus LS500 Contends In A Segment Battered By Waning Sedan Interest

Toyota Motor

Lexus LS500 sets bar for stylish, polarizing design language.

Trouble is, the premium sedan segment itself looks like the victim of a tempest, shrunken and battered by mass defection of affluent consumers away from sedans and toward SUVs. So far, none of the leading makers of premium sedans is backing down, certainly not Toyota which brings to market an all-new design, architecture, engine, transmission, safety features and a host of aesthetic refinements meant to spark interest in the model.

The Toyota Motor Corp. 2018 Lexus LS500 vehicle sits on stage after being unveiled at the 2017 North American International Auto Show (NAIAS) in Detroit, Michigan, U.S., on Monday, Jan. 9, 2017. Last January, the 2016 NAIAS featured 61 vehicle introductions, a majority of which were worldwide debuts, and was attended by over 5,000 journalists from 60 countries. Photographer: Daniel Acker/Bloomberg

Toyota also is taking a page from its playbook of 28 years ago, when the LS400 first appeared, by pricing the new model well below its direct competitors. The car will start at $75,000; and the company estimates that 70% of LS500s sold will transact at less than $80,000. Cooper Ericksen, vice president of Lexus marketing in the U.S. said the new model’s retail price represents roughly 10% that of comparable German luxury sedans.

“You might ask, ‘why would customers buy a sedan when everyone is buying SUVs?’” said Ericksen.  “Well, for this income bracket, it’s safe to say they probably have an SUV in their household fleet already. The LS plays a different…more luxurious…role in their lives and they’re anxious to park it in their garage.”

The Toyota Motor Corp. 2018 Lexus LS500 vehicle sits on stage after being unveiled at the 2017 North American International Auto Show (NAIAS) in Detroit, Michigan, U.S., on Monday, Jan. 9, 2017. Last January, the 2016 NAIAS featured 61 vehicle introductions, a majority of which were worldwide debuts, and was attended by over 5,000 journalists from 60 countries. Photographer: Daniel Acker/Bloomberg

That said, Lexus expects to sell only about 1,000 LS500s a month in the U.S., equipped with the standard 3.5-liter V6 and the gas-electric hybrid and a ten-speed automatic transmission.  In 1990, its second year in the market, Lexus was selling 4,000 LS400s a month. The first generation sedan was the launching pad for the Lexus brand in the U.S., transforming believers out of skeptics who had predicted Toyota would fall on its face with its luxury franchise.

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Toyota Motor Corp.’s new flagship Lexus LS500 looks very much like a contender to take the premium luxury sedan segment by storm, a segment filled with some of the world’s most impressive sedans like the Mercedes S Class, Cadillac CT6 and BMW 7 Series.

Toyota Motor

Lexus LS500 sets bar for stylish, polarizing design language.

Trouble is, the premium sedan segment itself looks like the victim of a tempest, shrunken and battered by mass defection of affluent consumers away from sedans and toward SUVs. So far, none of the leading makers of premium sedans is backing down, certainly not Toyota which brings to market an all-new design, architecture, engine, transmission, safety features and a host of aesthetic refinements meant to spark interest in the model.

The Toyota Motor Corp. 2018 Lexus LS500 vehicle sits on stage after being unveiled at the 2017 North American International Auto Show (NAIAS) in Detroit, Michigan, U.S., on Monday, Jan. 9, 2017. Last January, the 2016 NAIAS featured 61 vehicle introductions, a majority of which were worldwide debuts, and was attended by over 5,000 journalists from 60 countries. Photographer: Daniel Acker/Bloomberg

Toyota also is taking a page from its playbook of 28 years ago, when the LS400 first appeared, by pricing the new model well below its direct competitors. The car will start at $75,000; and the company estimates that 70% of LS500s sold will transact at less than $80,000. Cooper Ericksen, vice president of Lexus marketing in the U.S. said the new model’s retail price represents roughly 10% that of comparable German luxury sedans.

“You might ask, ‘why would customers buy a sedan when everyone is buying SUVs?’” said Ericksen.  “Well, for this income bracket, it’s safe to say they probably have an SUV in their household fleet already. The LS plays a different…more luxurious…role in their lives and they’re anxious to park it in their garage.”

The Toyota Motor Corp. 2018 Lexus LS500 vehicle sits on stage after being unveiled at the 2017 North American International Auto Show (NAIAS) in Detroit, Michigan, U.S., on Monday, Jan. 9, 2017. Last January, the 2016 NAIAS featured 61 vehicle introductions, a majority of which were worldwide debuts, and was attended by over 5,000 journalists from 60 countries. Photographer: Daniel Acker/Bloomberg

That said, Lexus expects to sell only about 1,000 LS500s a month in the U.S., equipped with the standard 3.5-liter V6 and the gas-electric hybrid and a ten-speed automatic transmission.  In 1990, its second year in the market, Lexus was selling 4,000 LS400s a month. The first generation sedan was the launching pad for the Lexus brand in the U.S., transforming believers out of skeptics who had predicted Toyota would fall on its face with its luxury franchise.

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