Over 20 years, Lexus has steered perception of luxury in new direction

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On the day 19 years ago that Bill Owens bought his Lexus, the saleswoman assured him it would be good for 500,000 miles.

“She just might be right,” says Owens, a retired auditor in Plano, Texas, whose 1990 LS 400 sedan has more than 420,000 miles on it.

Twenty years ago this month, Toyota’s new Lexus luxury division promised buyers high quality, exceptional reliability and industry-leading customer service ? and delivered on a scale few had anticipated.

Lexus redefined what luxury is, said James Bell, executive market analyst at Kelley Blue Book.

“In prior times, luxury vehicles were the fastest or handled the best or had the best styling,” he said. “Lexus has defined luxury as peace and quiet.”

Although Lexus struggled somewhat earlier this year, it reclaimed its status in August as the top-selling luxury brand in the U.S. ? a position it has held for nine straight years over such formidable competitors as BMW, Mercedes-Benz, Audi and General Motors’ Cadillac.

For an even longer period, Lexus has set the benchmark for quality.

The road ahead looks rougher, however. BMW continues to nip at Lexus’ heels with total U.S. sales through August of 129,176 ? compared with 131,469 for Lexus. Both are down about 30 percent from last year.

Moreover, BMW’s stronger performance credentials appeal to younger buyers, some analysts say, which may position BMW better for the future. The average age of Lexus buyers is 56.

In addition, all of Lexus’ competitors have improved their quality and service, stealing some of Lexus’ shine.

Still, Lexus general manager Mark Templin likes his company’s prospects. Lexus recently introduced a midsize hybrid sedan, the HS 250h, that is selling far beyond expectations in Japan and is likely to be a hit in the United States as well.

A new RX 350 crossover ? Lexus’ best-selling vehicle ? is now in dealerships and doing well. And Lexus is attracting media attention with a stylish small hybrid concept car called the LF-Ch and a long-rumored $370,000 supercar that should be unveiled next month in Tokyo.

“We’re kind of back in stride after a bit of a slow start to the year,” Templin said.

Before Bill Owens bought his Lexus in July 1990, he researched the fledgling company thoroughly, concluding that the big LS sedan would be a top-notch vehicle.

He believes the luxury segment ? a big generator of auto industry profit ? will grow beyond its 12 percent share of the industry, providing more opportunities for Lexus.

“The automotive landscape may have changed forever, but we think the segment will recover,” Templin said.

Longtime players in the segment ? brands such as BMW, Mercedes-Benz, Cadillac and Lincoln ? didn’t worry much about Lexus when it began selling cars in September 1989.

Many people doubted that a nuts-and-bolts automaker like Toyota could ever build appealing luxury cars. In the first year, Lexus’ 121 U.S. dealers sold a whopping 63,534 vehicles ? an average of 525 per retailer.

But the new company was determined, adopting a covenant that proclaimed: “Lexus will win the race because Lexus will do it right from the start.”

Over the years, the company made important additions to its lineup ? the original RX crossover, two SUVs and two more sedans. By 2007, Lexus’ peak year, annual sales had shot up to 329,177, the number of dealers had grown to 223 and Lexus had collected numerous awards from Motor Trend, Car and Driver and Consumer Digest.

“They raised the bar as far as quality and the dealership experience,” said Dave Sargent, vice president of automotive research at J.D. Power and Associates. “When we look at the reasons why Lexus owners buy, they are reliability and the lovely dealership service, which is exceptional.”

Before Owens bought his Lexus in July 1990, he researched the fledgling company and its new cars thoroughly, concluding that the big LS sedan would be a really good vehicle.

The car is still the only vehicle Owens and his wife own. When they need to run to East Texas or back to Kansas City to visit relatives, “we don’t hesitate to take the Lexus,” he said.

“My intent is to drive it until it stops,” he said. “But I would definitely buy another.”

That sort of loyalty has served Lexus well ? and been carefully nurtured by Lexus dealers, who were among the first to offer loaner cars, free carwashes and service appointments to their buyers.

“People will really think twice about going away from the brand if you provide good service,” said Jordan Case, president and managing partner of Park Place Lexus in Plano and Grapevine, Texas.

In 2006, the two dealerships became the only car retailers ever to receive the prestigious Malcolm Baldrige National Quality Award, the nation’s highest presidential honor for quality and organizational performance.

Park Place Lexus in Plano opened in 1991 with 36 employees. Today it has 250. And it sold 3,810 vehicles in Lexus’ peak year of 2007 ? more than any other dealership of any kind in Collin County.

“I knew from the outset that as long as we kept building quality cars and providing great service that we would do well,” said Case, who has served as chairman of Lexus’ national dealer council.

Carl Sewell, who was selected as one of Lexus’ original 121 dealers, expected to sell maybe 40 Lexus sedans a month in 1989 and ended up selling 120, making him the No. 1 Lexus dealer in the U.S. for a while.

“All kinds of people came out to look at the cars and drive them,” said Sewell, chairman of Dallas-based Sewell Automotive Cos. “Ross Perot drove the car. People who were automobile buffs came out to see it. It was fascinating to watch.”

Though his name is strongly associated with Cadillac, Sewell says his selection as a Lexus dealer was “one of the luckiest moments in my life.”

It’s been a good ride, said Templin, Lexus’ general manager.

“When we launched the division 20 years ago, nobody in their wildest dreams expected it to succeed like this,” he said. “We changed the automotive landscape. We changed the auto industry for everyone.”

(c) 2009, The Dallas Morning News. Source: McClatchy-Tribune Information Services.