Lexus LS - Industrial Significance

Industrial Significance

The Lexus LS marked the first successful entrant of a Japanese manufacturer into the prestige luxury arena, a market that had long been dominated by established European and American brands. By 1991, with the LS 400 its top-selling model, Lexus had overtaken Mercedes-Benz and BMW in overall U.S. sales, and in 2000, the marque passed Cadillac as the luxury sales leader in the largest automotive market. Rival manufacturers responded with lower prices and added features. In particular, Mercedes-Benz reorganized its operations, shifting to a targeted-cost process similar to Lexus production methods, and dropped competing U.S. base prices by nearly 10 percent. To rival the LS 400, extra features were rushed for the launch of the 1991 Mercedes-Benz S-Class (W140), causing budget overruns and costing the job of Daimler-Benz's chief engineer, Wolfgang Peter. Approximately 5 percent of 1989 LS 400 sales went to buyers employed by rival manufacturers, including GM, Ford, and Chrysler. When the LS 400 was disassembled for engineering analysis, Cadillac engineers concluded that the vehicle could not be built using existing GM methods. Industry publications noted the LS 400's precise panel gaps, and the subject became a common evaluation standard in road tests. The LS 430's interior noise level was later used by rival makes as a measure of cabin quiet.

According to industry observers, the introduction of the Lexus LS reshaped Toyota's image from that of an "econobox" manufacturer to the builder of an automotive standard bearer. This stood in contrast to the predictions of early detractors, including rival manufacturers who dismissed Toyota as incapable of producing a competitive luxury vehicle. Japanese contemporaries from the luxury divisions of Honda (Acura) and Nissan (Infiniti) had differing degrees of success. Honda had entered into a joint venture with Britain's Austin Rover Group in November 1981, launching Project XX with an Austin Rover–Honda XX letter of intent to replace the Rover SD1 with the Rover 800 and to provide a midsize, V6-powered luxury sedan for Honda, called the Honda Legend. Marketed as the Acura Legend in the U.S., the sedan initially sold well, but subsequent models (renamed Acura RL) performed below sales expectations. Launched by Nissan in December 1989, the V8-powered Infiniti Q45 closely rivaled the LS 400 in specifications and price, but was unsuccessful in sales (attributed to unconventional styling and marketing), leading to its discontinuation in 2006. The success of the Lexus LS became a test case for mainstream manufacturers targeting upscale segments. By investing in a separate marque, Toyota was able to avoid the stigma attached to a mass-market brand's charging premium prices. The effect of the LS 400 on the automotive industry led Automobile Magazine to add the sedan to its "24 Most Important Vehicles of the 20th Century" list in 1996.