I guess what we saw on stage with Akio’s commercial [Toyoda] For me, and I think for all Lexus dealers, what we’ve all been waiting for, which is the knowledge that if the customer’s demand is going to be just that electric car in terms of luxury – if that’s what they want we’re asking for, and we’re ready in a very short period of time to have our product.
Having said that, I’m very excited about the fact that we finally have a statement from the President that we’re ready to go and we can go fully electrified by 2030.
Will the market demand this type of inventory to meet consumer demand? I don’t know. If that’s, in fact, what the market is going to say about demand, it’s great to know that we’ll have the ability to have an assortment that will accommodate what might be.
Were you excited or frustrated that the Lexus cars shown didn’t have giant crankshaft grilles?
I think spindle grid is one design cues that is intentionally polarizing. Either you love him or you hate him. I don’t think we lost any sales because of the giant spindle web.
We have a acknowledgment when it comes to owning a Lexus on your way that consumers can say it’s, in fact, a Lexus, and what would that look like tomorrow? I don’t know. But I’m happy with what I saw at that point. It looks really cool to see an assortment like the one we were offered.
Was there something on that platform that you wanted in your showroom right away?
There were many products out there. You have to ask which side you are looking at: which side wants the car Can I make money selling it in bulk? Or on my part who wants the aura car that will bring more people to the brand? Thankfully, there were products at that point that checked both boxes, but I can’t pick just one.
If and when the microchip shortage recedes, what practices from the past 18 months or so should be maintained, and which should be abandoned?
I don’t know if any of them should be completely abandoned. I think the auto industry has really transformed in a positive way. I believe that transparent consumer-led treatment is the one that we’ve all been forced to adapt to and adopt the way we do business every day. And I think this should continue because it certainly gave us a different respect for how we do business today versus pre-pandemic.
We have an advantage as Lexus dealers. We have the Monogram (Digital Lexus Retail Tool) which we will now turn to. I think as we get through the pandemic and get past the microchip shortage, we’ll have an existing process that will be better than most of us. I think that’s part of our business model that needs to survive forever, because it takes a lot of the anxiety out of the process, whether it’s sales or service. This is the process we now use not only to buy a car; Every transaction made at the agency is now done in a completely different way. Whether it’s through pickup and delivery, whether it’s a new or pre-owned vehicle, the customer is driving the process and not so much the distributor.
Let me know how your business process has changed as you transition to Monogram, which is what your stores are doing now.
I think it’s just a process that every employee has to stick to. You don’t live by someone who wants to adapt the new system to their way of doing business.
The truth is that everyone has a percentage of how they do business that they would like to change or not. But when you have a process in place with a tool like Monogram, it no longer gives everyone their own definition of how well they have adapted to the way they do business. It will be from start to finish, and it will be made through a process with a tool that I think removes any concern as a distributor that everyone in the dealership is doing things the same way. This will bring you closer to one sure thing that everyone in the agency does things the same way from start to finish.
Will it change your relationship with outside sellers at all?
I hope it is, because this means that our tool is comprehensive, containing everything you need. And I think the shift is happening, once you get into Monogram, to take the 3rd party providers and compare what Monogram does and what it does to what you have. Lexus and Toyota have always given us the power to always win – giving us everything that third party is currently giving us in a very compact tool that protects, at the end of the day, our owner base information, which is very important. And I think that’s part of what makes this special.
It should save money, right?
It is always good to save money. I don’t need to tell you that the third party providers have made their investment. And because the tools are so good for what we use them for, they justify us making some nice payments for them on a monthly basis to use them. And it’s not a bad thing to have a comprehensive tool that also provides savings to your agency. And again, this consumer information privacy is key, to keep it within your family, as it were.
What pressure do Lexus dealers feel from Tesla and the way it deals with its customers?
I think my answer before the pandemic would have been very different from the one I’m going to give you now.
Before the pandemic, Tesla operated in a transparent digital fashion, where what you saw is what you got and the transaction was very clean and was pretty much everything a consumer said they wanted when they bought a new car. But we’re there now, and we’re getting better at that as we go.
The only thing we enjoy right now is when it comes to car servicing. You know, the direct selling model is great, but the truth is that when it comes to servicing and the lack of locations available to service all of these working vehicles, it’s very different with a Tesla than it is with a Lexus. We are set up to meet the needs of customers when it comes to vehicle servicing. Our model has been proven and refined over the past three decades, and this gives them pause and I think reason to scratch them, that once we have these vehicles that compete directly with them, our best consumer now has a choice. And our customers have an advantage when it comes to service and customer experience over what they currently get from Tesla.
We’re starting to see customers who own Teslas now coming in and we’re hearing these stories about the service experience, and that’s everything we hoped it would be with the go-live and everything we were expecting would probably happen.
The only thing we are missing now is a replacement vehicle for the vehicle they are looking to replace. Once we have that, I think we’ll close the loop and have everything we need.
Last year, we talked about how much Lexus needs a new infotainment system for its cars, and one is coming, starting with the NX now in showrooms. How do customers respond and what is your long-term expectation?
We sold the NX by quantity. When you take a look at our buyers, they were happy with the vehicle, with the reliability and the reputation, and maybe the infotainment system isn’t what we’re selling. This is a big deal.
But we’re trying to sell in a lifetime, and I think what that means is that we’d be very effective in doing that, because when we brought in younger buyers and they looked at what we had, they were very impressed. And the new LX has the same thing now. So we’re finally fighting with the weapons everyone else has when it comes to technology which, unfortunately, wasn’t all we wanted in previous generation vehicles.
The luxury car sales race was completely shaken up in 2021, with Tesla aggressively moving into second place behind BMW and Lexus to finish fourth behind Mercedes-Benz. Do you think this was an anomaly or a new normal?
There was a lull in the rhythm of the Lexus product which gave us the inability to continue that dominance we had, which had previously made us No. 1 in the luxury segment.
There was no doubt that our competitors had a newer product that hampered our ability to conquer, and perhaps even retain customers in some cases. It was something that disappointed us, because a lot of consumers were just saying, “Hey, I was in your car. It’s cool. It’s bulletproof; it doesn’t break—but I want something new and something new and something exciting.” And we lost some customers there.
I think the future will give us the ability to retain and conquer, like way back when Lexus owned the new product.
I believe when you see all that we have coming, the future of Lexus is bright, and it will take us back to where we were.