Lexus is a luxury vehicle manufacturer that was founded in 1989 by then-Toyota chairman Eiji Toyoda. The story of Lexus began six years earlier, however, when a team of Japanese technicians, engineers, and designers were part of a secret project to design a new luxury sedan. Toyoda believed it was the right time to manufacture such a vehicle since competitors in Nissan and Honda were already in the process of developing their respective Infiniti and Acura premium brands. The first Lexus off the production line was the LS 400 which offered world-class speed, comfort, safety, dignity, beauty, and elegance. The LS 400, like every Lexus today, is associated with exemplary customer service that embodies omotenashi, or the Japanese spirit of hospitality that seeks to seek, anticipate, and then meet the needs of each customer. In more recent years, Lexus has expanded into SUVs, hybrid vehicles, high-performance sedans, and supercars. The company sold over 760,000 vehicles in 2021 with almost 45% of sales coming from the North American market.
|Products and Services||Lexus is a luxury automotive brand known for producing premium vehicles, including sedans, SUVs, and hybrid models. The company offers a range of models such as the Lexus ES, Lexus RX, Lexus LS, and Lexus UX, known for their combination of quality, performance, and innovation. Lexus also provides hybrid technology in many of its models, emphasizing sustainability.||Lexus’s core products are luxury vehicles known for their quality, performance, and innovation. The brand offers a diverse range of models, including sedans and SUVs. Hybrid technology is a prominent feature, aligning with sustainability trends. Lexus aims to cater to customers seeking both luxury and eco-consciousness.||Luxury vehicles (sedans, SUVs) with a focus on quality, performance, and innovation (Lexus ES, Lexus RX, Lexus LS, Lexus UX), integration of hybrid technology for sustainability, appeal to customers seeking luxury and eco-consciousness.|
|Revenue Streams||Lexus generates revenue primarily through the sale of its luxury vehicles. The company’s models cover various price points, allowing customers to choose based on their preferences. Additional revenue sources include service and maintenance, spare parts sales, and branded merchandise. Lexus also offers higher-performance models and special editions with premium pricing.||The main revenue source is the sale of luxury vehicles catering to diverse customer preferences. Service and maintenance, spare parts sales, and branded merchandise contribute to supplementary revenue streams. Higher-performance models and special editions with premium pricing cater to enthusiasts and collectors, generating additional income. Lexus’s focus on quality enhances customer loyalty and lifetime value.||Revenue from the sale of luxury vehicles (various models, diverse price points), service and maintenance, spare parts sales, branded merchandise, revenue from higher-performance models and special editions, customer-focused approach enhancing loyalty and lifetime value.|
|Customer Segments||Lexus targets a broad customer base that values luxury, performance, and innovation. Its customers include affluent individuals, professionals, families, and those who prioritize comfort and advanced technology. Lexus appeals to a global audience seeking high-quality vehicles with a blend of luxury and reliability.||Customer segments for Lexus encompass affluent individuals valuing luxury and performance, professionals seeking comfort and advanced technology, families prioritizing safety and reliability, and a global audience seeking high-quality vehicles with a blend of luxury and innovation. Lexus’s brand reputation reinforces its appeal to customers who seek a premium driving experience.||Affluent individuals valuing luxury and performance, professionals seeking comfort and advanced technology, families prioritizing safety and reliability, global audience seeking high-quality vehicles with luxury and innovation, appeal to customers seeking a premium driving experience.|
|Distribution Channels||Lexus distributes its vehicles through a network of authorized dealerships and showrooms located in key regions globally. The company also offers an online configurator, allowing customers to customize their vehicles digitally. Lexus leverages its online presence and social media for marketing and customer engagement.||Distribution channels include authorized dealerships and showrooms strategically placed worldwide. The online configurator provides customers with a digital customization experience. Lexus’s online presence and active engagement on social media platforms support marketing efforts and customer engagement. A combination of physical and digital channels enhances accessibility and customer interaction.||Distribution through authorized dealerships and showrooms globally, an online configurator for digital vehicle customization, online presence and social media platforms for marketing and customer engagement, a hybrid approach combining physical and digital channels to enhance accessibility and interaction.|
|Key Partnerships||Lexus collaborates with suppliers and manufacturers to source high-quality materials and components for its vehicles. Partnerships with technology providers support the integration of advanced features and infotainment systems. The company also works with finance and leasing institutions to provide customers with financing options.||Collaborations with suppliers and manufacturers are vital for sourcing quality materials and components. Partnerships with technology providers ensure that Lexus vehicles feature advanced features and infotainment systems. Cooperation with finance and leasing institutions makes it easier for customers to afford Lexus vehicles through financing options. Partnerships are essential for vehicle quality, innovation, and affordability.||Collaborations with suppliers and manufacturers for quality materials and components, partnerships with technology providers for advanced features and infotainment systems, cooperation with finance and leasing institutions to offer financing options, essential for vehicle quality, innovation, and affordability.|
|Key Resources||Lexus’s key resources include its team of automotive engineers and designers, manufacturing facilities for crafting luxury vehicles, a global network of authorized dealerships and service centers, a strong brand reputation for quality and luxury, a portfolio of renowned vehicle models, and a commitment to advanced technology and innovation.||Automotive engineers and designers drive product development and innovation. Manufacturing facilities produce the brand’s luxury vehicles. A network of authorized dealerships and service centers ensures customer support. Lexus’s strong brand reputation combines quality and luxury, reinforcing its appeal. The portfolio of renowned vehicle models establishes its legacy. A commitment to advanced technology and innovation positions Lexus for the future.||Automotive engineers and designers driving innovation, manufacturing facilities for luxury vehicle production, a network of authorized dealerships and service centers for customer support, a strong brand reputation for quality and luxury, a portfolio of renowned vehicle models, commitment to advanced technology and innovation.|
|Cost Structure||Lexus incurs costs related to research and development (R&D) for vehicle innovation and advanced features, manufacturing and production expenses for luxury vehicles, marketing and advertising costs for brand promotion, employee salaries and benefits for a skilled workforce, dealer network support and maintenance expenses, customization and technology integration costs, and potential regulatory and compliance costs.||Costs related to R&D are essential for vehicle innovation and advanced features, positioning Lexus as a leader in luxury vehicles. Manufacturing and production expenses cover the creation of high-quality vehicles. Marketing and advertising costs promote the brand’s quality and luxury. Employee salaries and benefits support a skilled workforce. Dealer network support and maintenance ensure customer satisfaction. Customization and technology integration expenses enhance vehicle features. Potential regulatory and compliance costs may arise to meet legal and industry standards.||Costs related to research and development (R&D) for vehicle innovation, manufacturing and production expenses, marketing and advertising costs, employee salaries and benefits, dealer network support and maintenance, customization and technology integration expenses, potential regulatory and compliance costs to meet legal and industry standards.|
|Competitive Advantage||Lexus’s competitive advantage lies in its reputation for producing high-quality luxury vehicles known for their advanced features and innovation. The brand’s commitment to reliability and customer service enhances loyalty. A global network of authorized dealerships and service centers provides convenience and support. Lexus’s blend of luxury and sustainability through hybrid technology sets it apart in the luxury automotive market.||Lexus’s competitive advantage is rooted in its reputation for high-quality luxury vehicles featuring advanced features and innovation. The brand’s emphasis on reliability and exceptional customer service fosters loyalty and customer retention. A global network of authorized dealerships and service centers ensures convenience and support. Lexus’s incorporation of hybrid technology aligns with sustainability trends, differentiating it in the luxury automotive market.||Reputation for high-quality luxury vehicles with advanced features and innovation, emphasis on reliability and exceptional customer service, global network of authorized dealerships and service centers for convenience and support, differentiation through hybrid technology and sustainability in the luxury automotive market, competitive advantage.|
Toyota is the sole owner of the Lexus brand, but while Toyota is headquartered in Toyota City, Lexus has a separate Japanese headquarters in Nagoya.
Note that the company has also been operating its own design, engineering, training, and manufacturing facilities since 2005.
This move was made to provide organizational separation between Lexus and Toyota which coincided with expansion efforts into the United States and China.
Despite the separation between the two companies, Lexus executives nevertheless report directly to the Toyota CEO.
The Lexus RX 330 became the first model to be built outside of Japan, rolling off the line in Ontario, Canada, in 2003. Today, different models tend to be manufactured across seven locations:
- Kitakyushu, Japan.
- Tahara, Japan.
- Toyota City, Japan.
- Cambridge, Ontario, Canada.
- Georgetown, Kentucky, USA.
- Susono, Japan, and
- Miyawaka, Japan.
Lexus brand, design, and sales structure
In the United States, Lexus brand operations are managed by the U.S. Lexus Division in Texas, while a similar facility in Brussels is run by Lexus Europe.
In terms of design, there are two standalone facilities in Southern California and central Japan with an entire studio devoted to Lexus in Toyota City.
Sales operations also tend to differ according to the region. The organization that manages all United States dealerships, for example, is separate to Toyota headquarters with Lexus showrooms independently owned and operated.
In Japan, on the other hand, all dealerships are owned and operated by Lexus, while several markets such as the UAE differ again by utilizing third-party regional distributors.
- Lexus is a luxury vehicle manufacturer that was founded in 1989 by then-Toyota chairman Eiji Toyoda. The story of Lexus began in 1983 when a team of technicians, engineers, and designers were involved in a secret project to design a new luxury sedan.
- Toyota is the sole owner of the Lexus brand, but while Toyota is headquartered in Toyota City, Lexus has a separate Japanese headquarters in Nagoya. The two companies made a formal separation in 2005, at which point Lexus began operating its own design, engineering, training, and manufacturing facilities.
- The degree to which Lexus is distinct from Toyota also varies from one region to the next and is influenced by various brand, design, and sales structures.
- Founding and Origins: Lexus, a luxury vehicle manufacturer, was established in 1989 under the leadership of Eiji Toyoda, who saw an opportunity to create a luxury brand that could rival competitors like Infiniti and Acura.
- Secret Project: The foundation for Lexus was laid in 1983 when a team of Japanese technicians, engineers, and designers embarked on a secret project to develop a new luxury sedan, which eventually led to the creation of the LS 400.
- LS 400 Debut: The LS 400, the first Lexus model, was introduced as a flagship luxury sedan. It was designed to embody world-class attributes such as speed, comfort, safety, beauty, and elegance.
- Omotenashi Philosophy: Lexus’s customer service is deeply rooted in the Japanese philosophy of omotenashi, which emphasizes anticipating and meeting the needs of each individual customer.
- Diversification: Over the years, Lexus expanded its offerings beyond sedans to include SUVs, hybrid vehicles, high-performance sedans, and even supercars, catering to a broader luxury market.
- Global Sales: In 2021, Lexus sold over 760,000 vehicles, with a significant portion of sales (almost 45%) coming from the North American market.
- Ownership and Separation: Toyota is the sole owner of the Lexus brand. In 2005, Lexus and Toyota underwent a formal separation, which included establishing separate design, engineering, training, and manufacturing facilities.
- Global Manufacturing: Lexus vehicles are manufactured across seven locations in Japan, Canada, the United States, and other regions.
- Regional Structures: Lexus brand operations, design, and sales structures vary by region. In the United States, the U.S. Lexus Division manages brand operations, while in Europe, there is a facility in Brussels.
- Distinct Brand Identity: The degree of separation between Lexus and Toyota varies by region. In some markets, Lexus showrooms are independently owned and operated, while in others, dealerships are directly managed by Lexus.