Lexus is a brand acknowledged for its build quality and comfort. With the IS F sedan, the company is aiming to extend the scope of its marketing into more sports-oriented demographics -- younger buyers, in other words. 'F' will be to Lexus what 'S' is to Audi and 'M' is to BMW.
Are the German marques concerned by the newcomer? 'No' would be the short answer to that question.
In spite of the IS F's startlingly low price of $129,000 (more here), the respective heads of PR at BMW and Mercedes-Benz told the Carsales Network that the Lexus was unlikely to draw buyers in substantial numbers away from the two German brands.
"I thought the price was going to be about $135,000," admits Senior Manager Corporate Communications at Mercedes-Benz, David McCarthy.
"They've made a decision to price it there... I suppose that's their call. It reflects where they want to be in the market."
McCarthy believes that the Lexus will not affect sales of the C 63 AMG. By implication, the Lexus lacks the history and cachet of the German car.
"I think the strength of Benz is heritage," he says.
"That's what people like, whether it's the heritage of safety, whether it's the heritage of luxury, of prestige. That comes through in all the customer feedback we get -- that heritage is what it's about."
As the PR & Corporate Communications Manager at BMW, Toni Andreevski is similarly nonchalant about any erosion of the company's M3 sales, as a consequence of the IS F's local launch. But Andreevski's reasoning is somewhat different from McCarthy's, maintaining that the M3's continuing sales success stems principally from its competence in the dual roles of track car and daily driver.
"For us and our customers, 'M' is always a product that can be driven on the track," he said. "It's what gives an 'M Car' a lot of its appeal."
Reading between the lines, Andreevski, who has been reading foreign reviews of the IS F, doesn't expect the Lexus to be as accomplished on the track as the M3 is.
He also maintains that the extensive range of customisation options available to the M3 buyer places the BMW at an advantage over its Japanese opponent in the market.
"Outside of Germany, Australians are the biggest buyers of BMW Individual models, per capita -- bigger than the US," he explained, before taking a mild swipe at the Lexus with a remark targeted at the IS F's almost total lack of options.
"Sometimes, I think it's a bit of PR spin where they say: 'nothing to choose, no options, it's all in there', is another way of saying 'no, we can't offer that'.
"That to us is a sales advantage -- the ability to offer different things. Some brands claim [a short option list] as a virtue, but if you look at their overall total sales, it's perhaps hurting them more than it's benefiting them.
Neither spokesman considers the IS F's pricing will be much of an issue to buyers in the market for a C 63 or an M3.
"It's no C 63," says McCarthy.
"It's a softer car. Now that might be what a lot of people like, but the C 63 has the heritage. It's got the safety car heritage from F1, the engine is a bespoke engine -- it's not an engine out of another car that they've slotted in and had a fiddle with..."
"The price itself is always a reflection -- in our view -- of the product substance in the car," says Andreevski.
"And we have no problem with a higher price, because we know that our customers value what we've put into the car."
Andreevski also points out that if price is an obstacle at this level, you can buy other alternatives that are cheaper than the Lexus, as well as alternatives that are more expensive.
"Why not buy an HSV, which is cheaper again?" he asks.
"There's a spectrum of cars in the marketplace that satisfy different requirements. There are even more affordable, very good performance cars, so it's about identifying what your target market requires."
Furthermore, according to the head of PR at BMW, there are other aspects of owning a car that need to be taken into account, if the purchaser is going to buy from the head as well as the heart.
"Price is only one aspect of the true ownership cost. Resale value is important, running costs are important. When you take into account what you get in return when you dispose of a car, it can have a greater impact than the initial purchase price."
The implication there is that resale for the Lexus will be an unknown quantity, unlike that of the two German cars.
BMW and Mercedes-Benz point at their sales and advance orders to illustrate what a fight the Lexus has ahead of it, if Lexus plans for the IS F to compete directly against M3 and C 63 AMG.
"The good thing about the IS F is that it brings more attention to the segment -- but we can't satisfy demand now," says McCarthy.
"You order a C 63 today and you're looking at May/June [for delivery]."
BMW doesn't believe in making customers wait that long, says Andreevski, but there's conversely an element of 'pre-planning' the purchase process that could delay delivery of a new M3 for up to three months -- and buyers are willing to wear that, within reason, to get the specification they want. Supply can more or less keep up with demand because the factory is supplying the Australian arm at a higher rate than originally planned and buyers don't expect immediate delivery of the M3.
"Most customers will not spend $160,000 odd and just take what's available," Andreevski told us.
"And we don't build cars to just sit around. Obviously there are no cars sitting around, given that sales volume.
"Customers order their car to their specification, so they're already up for a three-month wait anyway. People don't just suddenly decide today 'Oh, I meant to buy an M3'... these are people who have more than one car in their garage typically -- and people who pre-plan their purchase.
"The concept of waiting -- it's not so much that they're waiting, they're pre-planning their purchase in any case.
In spite of the Luxury Car Tax rigmarole over recent months, the new M3 has well exceeded BMW's local sales forecast, Andreevski says.
"If you have a look at M3 sales over the last 12 months, we've delivered close to 500 M3 coupes -- so we've sold that car at roughly twice the rate of the predecessor model," says Andreevski.
"We've outsold the C 63 AMG this year, so we're pretty comfortable with how M3 sales are going."
Of course, Benz is supply-constrained, as mentioned already.
McCarthy touched briefly on the potential for the IS F to conquest sales from lesser models of C-Class (and 3 Series).
"There is a finite market for luxury-car buyers, but [there's] also the reach of where our product range is," he said.
"Wolfgang [Schrempp, President of Mercedes-Benz Australia/Pacific] said that there might be people who draw back their expectation a little. I don't know that I'd say the others are a threat. I think the biggest challenges we face are retaining and attaining customers -- and making sure that we've got the finance options that they need, the service options that they need, there's the models that they need.
"The economic environment in which we're operating is a bigger threat, a bigger challenge than anything the competition can throw at us."
Andreevski was more optimistic on the subject of the economy, but agreed with McCarthy that, given the differing 'camps' of Audi, BMW, Lexus and Mercedes-Benz buyers, the strongest future threat to profitability lies with the economy and prevailing market conditions rather than the endeavours of individual importers.
"Despite a large economic crisis globally and the introduction of an unfair luxury tax, year-to-date, we're still up on where we were last year," he said.
"Obviously we've taken a substantial hit in the last three months, but I think that's going to slowly iron itself out, now with the interest rates reducing.
"With interest rates being reduced by a per cent last week, we've already seen stronger enquiry at our dealerships over the weekend, and now that the stockmarket seems to be rebounding -- or at least stabilising -- that will give a lot of people confidence. And particularly [so, now] that the government has announced a package to inject close to $10 billion into the economy, I think people will feel a bit more positive about life, going forward."
Neither McCarthy nor Andreevski suggested for a moment that the IS F would be a marketplace failure, merely that it would not take sales from the C 63 AMG and M3, since Lexus buyers are different from Audi, BMW and Mercedes-Benz buyers.
Which leads to the question: In an unclear future, can Lexus convince prospective buyers that the company is now a determined purveyor of high-performance sports sedans in the mould of the German cars?
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