The company points to the example of America where its dealers average 1,300 sales per outlet – this year its 48 UK centres will each sell around 190 cars (total sales will fall just short of 10,000), while on mainland Europe they are retailing on average 50 cars per site.
“Our UK network, at 48 centres, is around a third of the size of our competitors,” says Stuart McCullough, director of Lexus Europe. He’s looking to add a couple more, but adds: “We deliberately limit ourselves so our retailers have greater focus. It means they are profitable enough to offer the level of services that we want.”
He is charging retailers on the continent to hit 200 sales per outlet by the end of the decade, but has far higher expectations in the UK. Investment in people and facilities will be necessary for retailers to handle its sales ambitions: 18,000 sales by 2010, around 360 sales per site.
He also believes each sales executive should be selling around 60 cars a year. This next stage will coincide with a number of product launches – including hybrids like the RX400h, due late spring 2005, which are exceeding initial expectations – that will add incremental volume.
“I see hybrids taking off very quickly for us. The RX400h was planned to do 1,500 in Europe, now we expect to sell 8,000 a year,” says McCullough. He admits the company had taken “too short a view” in the UK over its retail strategy, which resulted in outlets that are too small.
Lexus, which consistently features highly in the JD Power and Sewells dealer attitude surveys – this year finishing top in both – is “paranoid” about any downturn in customer service delivery.
That’s why it believes retailers will need to invest to accommodate the greater sales volumes.
“They need to have the time and space to deliver what the customer wants – they can’t be rushing around in the high volume business without having the staff to meet those requirements,” says McCullough.