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Lexus thinks big with used cars

Lexus is putting the finishing touches to its used car programme – due to be launched in November and coinciding with the introduction of the latest IS model range.

The upmarket carmaker says it needs to be creative with the scheme because many of its retail centres do not have large used car display areas.

“We want to use the internet more and we plan to have used car brochures for individual cars,” says Steve Settle, Lexus GB director. “We need to treat the customer the same as a new car buyer in terms of the process, customer service and overall experience.”

The programme has yet to be given a name, but while there will be signage investment required, Settle says the costs will not be onerous to dealers.

He is calling on the retail network to help raise awareness among the UK’s car buying population, both to reinforce residual values and in preparation for more new models.

The company says brand awareness is only 6% despite spending more money than ever this year on advertising.

“We have a responsibility to raise Lexus brand awareness and our centres have a role to play,” says Settle. “They see the importance of this in their local communities.”

Lexus intends to throw more money at TV ads and consumer press during launch periods. Third quarter sales have been tougher for dealers with the runout of the IS and lack of RX400h models due to unexpected global demand. Lexus was hoping to bring in 2,500 RX400hs this year, but dealers have had to settle for 1,635.

However, IS shortages have raised residuals values, which will help customers when it comes to replacing cars with the higher priced model due in November. The new IS will be sold with a diesel option for the first time, giving Lexus a boost in the corporate market. Sales to user-choosers account for 25% of annual volume, but Settle believes new products will put this closer to the market average of 55%.

“This will be great for the brand because of the aftersales business. It will strengthen profits for the network,” says Settle.

Sales to date are slightly behind forecast, with the company predicting a year-end total of around 11,000, largely due to model shortages. Settle calls 2005 a “transition year” with the runout and launch of several key products. As a result, dealers’ return on sales will average 1% against a strategy target of 2%.

“We have a number of undeveloped centres and it’s mostly these that are performing below the network average,” Settle says. “But the plan is to get these centres relocated or refurbished next year.”



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