Why Lexus is yet to break into the UK mainstream

Currently, Lexus only takes orders for plug-in hybrid versions of its key NX SUV

Toyota's luxury brand seemingly does everything right – yet its sales figures trail Jaguar and Porsche

Lexus seemingly does everything you’d want of a premium brand. This year it topped the What Car? reliability survey for the third year running. Owners regularly praise the dealership experience and the brand was leagues ahead on electrified drivetrains, launching its first hybrid in 2005. It was also at the forefront of the posh, road-oriented SUV trend, starting with the RX in 1998.

So why does the brand still not resonate with buyers in either the UK or Europe? As owner Toyota basks in a record market share for its mainstream brand in Europe, it is applying an overhaul to Lexus in the region in the hope of fixing the imbalance.

Lexus sales to the end of November in the UK reached just 9034, down 31% to put it behind even beleaguered Jaguar, according to UK automotive lobby group the SMMT. Even in its best year, 2019, it only sold 15,713.

Despite those small numbers, the UK’s still a relatively big market for Lexus compared to the rest of Europe. The brand sold 30,265 to the end of October across the region, down 27%. according to the SMMT equivalent for Europe, ACEA.

“There’s no denying 2022 was a very tough year for Lexus,” the head of Toyota in Europe, Matt Harrison, told journalists at a media event held at the end of November. 

Part of the problem right now is supply. All Lexus models sold in Europe are made in Japan and they’ve been hit hard by the chip shortage. 

As of the beginning of December, the UK webpage for the brand’s key NX mid-sized SUV – which vies with the compact UX for best-seller in the brand’s range – was dominated by the message that the parallel-hybrid version of the newly launched model has sold out for 2023. “As such, we have temporarily stopped taking orders”. The plug-in hybrid remains on sale.

Many carmakers have been shifting chip supply to higher margin models or brands, but not the NX. “The NX has a lot of components unique to the car, so flexibility is limited,” Pascal Ruch, head of value chain and business planning for Lexus Europe, told Autocar.

The NX was “central to our growth aspirations this year”, Harrison said, so the production crunch has hit hard.

But Lexus’s difficulties in the region go beyond shortage. The brand has struggled to appeal to fleet buyers, accounting for 35% this year compared to around half for Mercedes. That’s a hangover from the old days. “Diesel was the dominant powertrain for many many years,” Ruch said. “This is now evolving.”

Lexus had been in danger of making a similar mistake by not offering a broad enough range of plug-in electrified models, which have fast replaced diesel as the powertrain of choice given their tax benefits. The electric UX has been a flop so far, with just 300 sold in the UK to the end of October, with buyers potentially put off by the uncompetitive 196-mile range.

Ruch’s defence of Lexus’s low market share that it’s still a “young” brand compared to the likes of BMW and Mercedes rings a little hollow, especially given what Tesla has achieved in less than a decade. Polestar is even younger and is now snapping at Lexus’s heels. But Ruch’s argument that the brand is positioning itself with the freshest line-up in years carries more weight.

For example, the NX now comes with a plug-in hybrid for the first time and such was the demand for the ones that did make it across from Japan that the PHEV has overtaken sales of the straight hybrid in the UK (although stopping sales of the hybrid helps).

The paltry range of the electric UX (above) meanwhile is being fixed with the launch of a new version next year with the battery size increased from 54kWh to 73kWh, boosting range to 280 miles.

Lexus’s flagship SUV, the RX, returns next year with a plug-in hybrid and a performance hybrid mated to a turbocharged four-cylinder making 366bhp, badged 500h.

Also coming in 2023 is the Lexus RZ SUV, the first model on the dedicated e-TNGA platform and a sister car to the Toyota bZ4X. 

There’s more in the pipeline. Last December’s reveal of 15 new electric cars for Toyota included seven for Lexus with variants included, giving us an intriguing peek into a future when they offer a “full line-up of EVs”  by 2030 for Europe. Included in that concept line-up was a sporty looking saloon and estate indicating a possible return of the IS and IS Sportcross. The bonkers looking Electrified Sport EV supercar is also a possibility by 2030.

Lexus is also expected to revive the CT as a compact crossover to sit underneath the UX, providing it with a rival in one of the fastest-growing and fiercely fought segments in the European market.

“We’re clearly working on alternative body types that would allow us to not only offer a wider range of vehicles but also meet the growth ambitions we have for Europe,” Lexus Europea boss Spiros Fotinos said in May. 

Lexus hopes to sharpen up its slightly fuzzy brand image with a renewed focus on engineering-led technology that leans to the sporty. “We want to leverage electrification to reinvent the driving experience,” Ruch said. Two innovations stand out: One Motion Grip, which is steer-by-wire. And DIRECT4 torque vectoring, which directs torque to individual wheels for better grip and control. The latter makes use of an electric motor on each axle, on either EVs or hybrids, and is key to this the “Lexus driving signature”.

Steer-by-wire has been done before – remember the Infiniti Q50? – but as an option on the RZ it does away with the steering column together, instead using a separate ECU and electrical system as a back-up. By varying the steering ratio, it allows a yoke steering wheel.

That Toyota is persisting with Lexus in Europe is a compliment really, given how little it needs us. The brand notched up an impressive 760,012 sales globally in 2021, dominated by the US (332,000) and China (227,000). Europe, including the UK, for the same period was just 47,604. 

Sales outside Europe are mostly larger models like the RX. The brand’s biggest and likely most profitable European market of Russia (not shown in the ACEA figures quoted above) given its higher mix of upmarket models was extinguished earlier this year when Toyota and Lexus pulled out following Russia’s brutal invasion of Ukraine in February.

So far the Lexus formula has not triggered a wave of affection for the brand in this part of the world. Electrification and the persistent application of good old fashioned engineering might just be the tweak needed to lift Lexus onto the premium shopping list.