Why the New 2018 Lexus LC 500 Is a Big Deal for Toyota
It’s a $100,000 luxury sports coupe that will probably sell in tiny numbers. But its importance to Lexus and parent Toyota goes way beyond sales numbers, officials say.
Lexus surprised the automotive media with its new LC 500 at the North American International Auto Show in Detroit last week.
It was a big statement for Toyota’s (NYSE:TM) luxury brand, which has long been known for its plush-but-unexciting offerings. It was such a big statement that Toyota CEO Akio Toyoda made a rare appearance in Detroit to present the car.
What’s it mean?
A plush, powerful coupe
The LC 500 is clearly intended to deliver a big message: Lexus has arrived. Specifically, that it has arrived as a peer to the big three German luxury automakers.
The LC 500 a low-slung rear-wheel-drive luxury coupe that will go on sale in about a year, at a starting price close to $100,000. It’s based on a new Toyota architecture called “GA-L” (for “global architecture for luxury vehicles) that will also be used as the foundation for the next generation of Lexus’ sedans.
As you’d expect from a serious luxury contender with Toyota’s corporate resources, the LC 500 is loaded with high-tech features. Its door structures are built on carbon-fiber frames to save weight, and its design was carefully considered to give a low center of gravity and near-even front-to-rear weight distribution. Power comes from a 467-horsepower version of Lexus’ 5.0 liter V8 engine. V6 and hybrid variants may follow.
Inside, it will have a new version of the Lexus infotainment system that Toyota says will feature much faster and more flexible software. It also comes standard with a high-end audio system, the latest editions of Toyota’s active safety systems, and one of the industry’s first-ever 10-speed automatic transmissions
But will it sell?
A flagship for the brand, and a beacon for its next phase
Big sales numbers aren’t the point. Toyota intends the LC 500 as a halo car, a model that elevates the image of the whole brand.
In presenting the LC 500 in Detroit, Toyoda said that the development of the car was something in which he had taken a personal interest. His hope was to “guide the future of [Lexus] with products that have more passion and distinction in the luxury market,” he said. The LC 500 “makes a strong statement about the brand’s emotional direction.”
That’s important. Lexus’ cars and SUVs sell on the brand’s image of impeccable reliability and a plush, quiet ride, but they aren’t usually thought of as passionate or emotional. Contrast with brands like BMW (NASDAQOTH:BAMXF), which has long started from a foundation of exciting drivers’ cars, and which has managed to maintain that image and appeal even as it has branched out into SUVs and battery-electric vehicles.
Lexus has done well in the U.S. and Japan, but it hasn’t yet caught on elsewhere in a big way. That’s arguably because it doesn’t offer the draw — the passion — of BMW and its German rivals.
Toyota hopes that the LC 500 will be the car that starts to change that.
It won’t be a hot seller, and that’s OK
In truth, the LC 500 will probably sell in tiny numbers. But its flashy good looks (this Fool had a close-up look and can attest that it’s quite stunning in person) and performance won’t just have a halo effect on Lexus’ other models. It’ll also, Toyota hopes, serve as a beacon for the company’s engineers and designers as they set out to create the next generation of Lexus models.
That was clearly a big part of Toyoda’s intent when he pushed the project. Toyota executives in Detroit talked up the “new phase” of the Lexus brand’s evolution that was “symbolized” by the debut of the LC 500.
Long story short, it’s an indication that Toyota is putting some real effort into upping its luxury game. For shareholders, that’s a good thing: A thriving global luxury brand can deliver outsized profits to an automaker’s bottom line.
Whether buyers in places like China and Europe will go for it remains to be seen. But the LC 500 looks like a promising start for the next chapter of Lexus’ evolution.