In 1983, Toyota chairman Eiji Toyoda summoned a secret meeting of company executives, to whom he posed the question, “Can we create a luxury vehicle to challenge the world's best?”This question prompted Toyota to embark on a top-secret project, code-named F1 (“Flagship” + “No. 1 vehicle”). The F1 project, whose finished product was ultimately the Lexus LS 400, aimed to develop a flagship sedan that would expand Toyota’s product line, giving it a foothold in the premium segment and offering both longtime and new customers an upmarket product. The F1 project followed the success of the Toyota Supra sports car and the premium Toyota Cressida models. Both the Supra and Cressida were rear-wheel drive cars with a powerful 7M-GE/7M-GTE engine. The opportunity for Japanese manufacturers to export more expensive models had arisen with the 1980s voluntary export restraints, negotiated by the Japanese government and U.S. trade representatives, restricting mainstream car sales. In 1986, Honda launched its Acura marque in the U.S., influencing Toyota's plans for a luxury division. Around the same time, Nissan would unveil plans to create its own premium brand, Infiniti, while Mazda also considered developing an upscale marque, to be called Amati.Toyota researchers visited the U.S. in May 1985 to conduct focus groups and market research on luxury consumers. During that time, several F1 designers rented a home in Laguna Beach, California to observe the lifestyles and tastes of American upper class consumers. Toyota’s market research concluded that a separate brand and sales channel were needed to present its new flagship sedan, and plans were made to develop a new network of dealerships in the U.S. market.
Brand development
In 1986, Toyota’s longtime advertising agency Saatchi & Saatchi formed a specialized unit, Team One, to handle marketing for the new premium brand. Image consulting firm Lippincott & Margulies was hired to develop a list of 219 prospective names; Vectre, Verone, Chaparel, Calibre and Alexis were chosen as top candidates. While Alexis quickly became the front runner (also associated with the Alexis Carrington character on the popular 1980s primetime drama Dynasty) and later morphed to Lexus, the name has been attributed to the combination of the words "luxury" and "elegance," and another theory claims it is an acronym for "luxury exports to the U.S." According to Team One interviews, the name has no specific meaning and simply denotes a luxurious and technological image.
Just prior to the release of the first vehicles, database service LexisNexis obtained a temporary injunction forbidding the name Lexus from being used as they stated it might cause confusion. The injunction threatened to delay the division's launch and marketing efforts. Upon reflection, a U.S. appeals court lifted the injunction, deciding that there was little likelihood of confusion between the two products.
The original Lexus slogan, developed after Team One representatives visited Lexus designers in Japan and noted an obsessive attention to detail, became "The Relentless Pursuit of Perfection." The Lexus logo was developed by Molly Designs and Hunter Communications. The final design for the Lexus logo featured a stylized “L” within an oval, and according to Toyota, was rendered using a precise mathematical formula. The first teaser ads featuring the Lexus name and logo, designed by Team One, appeared at the Chicago, Los Angeles, and New York auto shows in 1988.
Launch
In 1989, after an extended development process involving 60 designers, 24 engineering teams, 1,400 engineers, 2,300 technicians, 220 support workers, around 450 prototypes, and over US$1 billion in costs, the F1 project was completed. The resulting flagship, the Lexus LS 400, had a unique design that shared no major elements with previous Toyota vehicles, with a new 4.0 L V8 gasoline engine and rear-wheel drive. Testing locations for the Lexus LS 400 included the German autobahn.
The Lexus LS 400 debuted in January 1989 at the North American International Auto Show in Detroit. The following September, Lexus vehicles officially went on sale at a network of 81 new Lexus dealerships across the U.S. The Lexus LS 400 was sold along with a smaller sibling, the Toyota Camry-based ES 250. The launch of Lexus was heralded by a multimillion dollar advertising campaign in both television and print media.
At its launch, the Lexus LS 400 was widely praised for its quietness, well-appointed and ergonomic interior, engine performance, build quality, aerodynamics, fuel economy, and value, although it was criticized by some automobile columnists for derivative styling and a suspension regarded as too compromising of handling for ride comfort. The Lexus LS 400 debuted at US$38,000 in the U.S. (in some markets, it was priced against mid-size six-cylinder Mercedes-Benz and BMW models) and was rated by Car and Driver magazine as better than both the US$63,000 Mercedes-Benz 420 SEL and the US$55,000 BMW 735i in terms of ride, handling, and performance. The Lexus LS 400 also won major motoring awards from publications including Automobile Magazine and Wheels Magazine. Lexus' debut was generally regarded as a major shock to the European marques; BMW's and Mercedes-Benz's U.S. sales figures dropped 29% and 19%, respectively, with BMW executives accusing Lexus of dumping in that market.
In December 1989, Lexus initiated a voluntary recall of all 8,000 Lexus LS 400s sold to date, based upon two customer complaints over defective wiring and an overheated brake light. In a sweeping 20-day operation which replaced the parts on all affected vehicles, Lexus sent technicians to pick up, repair, and return cars to customers free of charge, and also flew in personnel and rented garage space for owners in remote locations. This response was lauded in media publications and helped establish the marque's early reputation for customer service.
By 1989's end, 16,392 Lexus LS 400 and Lexus ES 250 sedans had been sold in the four months following the U.S. launch. Although sales had begun at a slower pace than expected, the final tally matched the division's target of 16,000 units for that year. Following initial models, plans called for the addition of a sports coupe along with a redesigned Lexus ES sedan.
1990s: Growth and expansion
In 1990, during its first full year of sales, Lexus sold 63,594 Lexus LS 400 and Lexus ES 250 sedans in the U.S., the vast majority being the LS model. That year, Lexus also began limited exports to the United Kingdom, Switzerland, Canada, and Australia. In 1991, Lexus launched its first sports coupe, the Lexus SC 400, which shared the Lexus LS 400’s V8 engine and rear-wheel drive design. This was followed by the second generation Lexus ES 300 sedan, which succeeded the Lexus ES 250 and became Lexus' top seller. At the conclusion of 1991, Lexus had become the top-selling premium car import in the U.S., with sales reaching a total of 71,206 vehicles. That year, Lexus ranked highest in J.D. Power and Associates' studies on initial vehicle quality, customer satisfaction, and sales satisfaction for the first time. The marque also began increasing U.S. model prices past those of comparable American premium makes, but still below high-end European models; by 1992, the Lexus LS 400's base price had risen 18% to nearly US$45,000.
In 1993, Lexus launched the Lexus GS line, based on the Toyota Aristo, which had sold for two years prior in Japan. The Lexus GS 300 sports sedan was priced below the Lexus LS 400 in the marque's lineup. That same year, Lexus also became one of the first marques to debut a certified pre-owned program, with the aim of improving trade-in model values. In 1994, the marque introduced the second generation Lexus LS 400, a complete redesign of its flagship model. In May 1995, sales were threatened by the U.S. government's proposal of 100% tariffs on upscale Japanese cars in response to the widening U.S.-Japan trade deficit. SUVs were exempt from the proposed sanctions. Normal sales operations resumed by late 1995 when the Japanese auto manufacturers collectively agreed to greater American investments, and the tariffs were not enacted.
In 1996, Lexus debuted its first sport utility vehicle, the Lexus LX 450. The marque's plans for developing an SUV model had accelerated during the U.S.-Japan tariff discussions of 1995. In 1998, Lexus added the first luxury-branded crossover SUV, the Lexus RX 300, and the second generation Lexus GS 300 and Lexus GS 400 sedans. The RX crossover targeted suburban buyers who desired an upmarket SUV but did not need the LX's off-road capability, and was particularly successful. By year's end, the Lexus RX 300 had become the marque's top-selling model, ahead of the Lexus ES 300. In 1999, Lexus recorded its one-millionth vehicle sold in the U.S. market, and was ranked the top-selling premium car make in the U.S. overall.
2000s: Hybrids and F models
In 2000, Lexus introduced a new entry-level sedan, the Lexus IS 300. In 2001, the marque debuted its first convertible, the Lexus SC 430, and the third generation Lexus LS 430. The Lexus GX 470 mid-size SUV debuted in 2002, followed by the second generation Lexus RX 330 in 2003. In 2004, Lexus recorded its two-millionth U.S. vehicle sale. The following year, Lexus debuted the first luxury-branded production hybrid SUV, the Lexus RX 400h. The vehicle used a Lexus Hybrid Drive system which combined gasoline and electric motors for increased power, fuel efficiency, and lower emissions relative to gasoline-only equivalents.
In 2005, Lexus completed an organizational separation from parent company Toyota, with dedicated design, engineering, training, and manufacturing centers working exclusively for the division. This effort coincided with Lexus' launch in its home market of Japan and an expanded global launch of the brand in major world markets. Executives aimed to grow the marque's sales outside of its largest market in the U.S. The next generation IS, GS, and LS sedans were subsequently designed as "global models" for worldwide markets. In 2006, Lexus unveiled the Lexus GS 450h, a V6 hybrid performance sedan, along with the fourth generation flagship LS line, comprising both standard- and long-wheelbase V8 (LS 460 and LS 460 L) and hybrid (LS 600h and LS 600h L) versions. The Lexus LS 600h L subsequently went on sale as the most expensive sedan ever produced in Japan, with a sticker price of approximately US$125,000. In 2006, Lexus sales reached 475,000 vehicles worldwide.
In 2007, Lexus announced a new F marque performance division, which would produce racing-inspired versions of its performance models. The first of this line, the IS F, made its debut at the 2007 North American International Auto Show, accompanied by a supercar concept, the LF-A. By the end of 2007, Lexus' annual U.S. sales had risen to 329,177 vehicles, and total worldwide sales reached 500,000 vehicles. In 2008, amidst the late-2000s recession, U.S. sales dropped 21% to 260,087, and global sales fell 16% to 435,000, affected by a weakened global luxury car market. In mid-2009, the marque launched the HS 250h, a dedicated hybrid sedan for North America and Japan, the RX 450h, the second generation hybrid SUV replacing the earlier RX 400h, and later that year debuted the US$375,000 production LFA exotic coupe. In terms of volume, Lexus was the number-one-selling premium car marque in the historically largest automotive market for the past decade, and ranked as the fourth-largest premium car make in the world by volume.
2010s: Recent developments
In the early 2010s, Lexus underwent a gradual sales recovery in North America and Asia as the marque focused on adding hybrids and new model derivatives. Sales in the U.S. for the first half of 2010 held steady during the 2009–2010 Toyota vehicle recalls, several of which included Lexus models. The Lexus ES 350 and certain IS models were affected by a recall for potentially jamming floor mats; the New York Times found more federal acceleration reports per-vehicle for the marque versus parent company Toyota, while NPR determined the reports to be generally rare, with comparable rates at multiple makes. The redesigned Lexus GX 460 was also voluntarily recalled in April 2010 for a software update, one week after Consumer Reports issued a recommendation not to buy the SUV, citing a possible rollover risk following the slow stability control response to a high-speed emergency turn. Although the publication knew of no reported incidents, the Lexus GX 460 received updated stability control software.
At the 2010 Geneva Motor Show, Lexus introduced the Lexus CT 200h, a compact four-door hybrid hatchback initially designed for the European market. The Lexus CT 200h was scheduled to go on sale in Europe in the late 2010, with exports to follow in the U.S. and other regions worldwide. In the latter half of 2010, Lexus expanded sales of lower-displacement regional models, beginning with the Lexus ES 240 in China followed by the Lexus RX 270; Japan, Russia, and Taiwan were among markets which received model variants intended for reduced emissionsr import taxes.
In 2005, Lexus completed an organizational separation from parent company Toyota, with dedicated design, engineering, training, and manufacturing centers working exclusively for the division. This effort coincided with Lexus' launch in its home market of Japan and an expanded global launch of the brand in major world markets. Executives aimed to grow the marque's sales outside of its largest market in the U.S. The next generation IS, GS, and LS sedans were subsequently designed as "global models" for worldwide markets. In 2006, Lexus unveiled the Lexus GS 450h, a V6 hybrid performance sedan, along with the fourth generation flagship LS line, comprising both standard- and long-wheelbase V8 (LS 460 and LS 460 L) and hybrid (LS 600h and LS 600h L) versions. The Lexus LS 600h L subsequently went on sale as the most expensive sedan ever produced in Japan, with a sticker price of approximately US$125,000. In 2006, Lexus sales reached 475,000 vehicles worldwide.
In 2007, Lexus announced a new F marque performance division, which would produce racing-inspired versions of its performance models. The first of this line, the IS F, made its debut at the 2007 North American International Auto Show, accompanied by a supercar concept, the LF-A. By the end of 2007, Lexus' annual U.S. sales had risen to 329,177 vehicles, and total worldwide sales reached 500,000 vehicles. In 2008, amidst the late-2000s recession, U.S. sales dropped 21% to 260,087, and global sales fell 16% to 435,000, affected by a weakened global luxury car market. In mid-2009, the marque launched the HS 250h, a dedicated hybrid sedan for North America and Japan, the RX 450h, the second generation hybrid SUV replacing the earlier RX 400h, and later that year debuted the US$375,000 production LFA exotic coupe. In terms of volume, Lexus was the number-one-selling premium car marque in the historically largest automotive market for the past decade, and ranked as the fourth-largest premium car make in the world by volume.
2010s: Recent developments
In the early 2010s, Lexus underwent a gradual sales recovery in North America and Asia as the marque focused on adding hybrids and new model derivatives. Sales in the U.S. for the first half of 2010 held steady during the 2009–2010 Toyota vehicle recalls, several of which included Lexus models. The Lexus ES 350 and certain IS models were affected by a recall for potentially jamming floor mats; the New York Times found more federal acceleration reports per-vehicle for the marque versus parent company Toyota, while NPR determined the reports to be generally rare, with comparable rates at multiple makes. The redesigned Lexus GX 460 was also voluntarily recalled in April 2010 for a software update, one week after Consumer Reports issued a recommendation not to buy the SUV, citing a possible rollover risk following the slow stability control response to a high-speed emergency turn. Although the publication knew of no reported incidents, the Lexus GX 460 received updated stability control software.
At the 2010 Geneva Motor Show, Lexus introduced the Lexus CT 200h, a compact four-door hybrid hatchback initially designed for the European market. The Lexus CT 200h was scheduled to go on sale in Europe in the late 2010, with exports to follow in the U.S. and other regions worldwide. In the latter half of 2010, Lexus expanded sales of lower-displacement regional models, beginning with the Lexus ES 240 in China followed by the Lexus RX 270; Japan, Russia, and Taiwan were among markets which received model variants intended for reduced emissionsr import taxes.
