Lexus set to foray into used car business; roll out first EV in India by 2025
Luxury carmaker Lexus is planning to venture into the used car business in India starting next year. After completing six years in the Indian market, the Japanese automaker is now looking to expand its offerings to include pre-owned vehicles.
Currently, Lexus sells its product range through 23 touch points in the country, and the company aims to convert some of these sales outlets to also cater to the pre-owned car segment.
Lexus is well-known for its self-charging hybrid cars, and it is now preparing to launch its first electric model in India by 2025. To further expand its presence in the market, the company’s India President, Naveen Soni, revealed in an interaction with PTI that Lexus is seriously considering implementing a structured pre-owned car programme.
The program will be rolled out in select outlets, and the decision to include it will be based on the business viability of the dealer partner involved.This move to enter the used car market indicates Lexus’s interest in tapping into a new customer segment and enhancing its footprint in India’s automotive industry.
According to Naveen Soni, the President of Lexus India, the luxury carmaker is actively considering entering the used car segment in the country. He mentioned that they are studying the market closely and are planning to make a move very soon, possibly by the third quarter of this year or at the beginning of the next year.
Lexus is strategically selecting cities where there is a significant number of vehicles already on the roads, which would likely indicate a demand for used cars. The company believes that there might be customers who have purchased Lexus vehicles in the past six years since their entry into the Indian market and now wish to sell their cars to upgrade to newer models.
As a result, some of the existing sales outlets will likely be transformed into standalone used car outlets to cater to this potential customer base. This move allows Lexus to capture the growing interest in the luxury used car market and provide its customers with an option to purchase pre-owned Lexus vehicles with the assurance of the brand’s quality and service.
Naveen Soni, the President of Lexus India, mentioned that the company is also contemplating implementing a short buyback scheme to instill confidence in consumers. This scheme is designed to reassure customers and make them more comfortable with the idea of purchasing a pre-owned Lexus vehicle.
Regarding Lexus’s electric vehicle (EV) strategy, Soni stated that the company introduced a few EVs in the Indian market last year to test them under various climatic conditions and gather valuable customer feedback.
The data collected from these tests, including performance in summer conditions, testing conditions, and desert conditions, has been shared with the company’s headquarters in Japan. Based on this feedback and analysis, Lexus aims to launch its first EV product in India by 2025.
Lexus, the luxury car division of the Japanese auto giant Toyota, has been entrusted with the responsibility of leading the group’s efforts in electric vehicle technology. The company has set an ambitious target of becoming fully electric by the year 2035.
Regarding the sales outlook, Naveen Soni, the President of Lexus India, expressed optimism about their performance. He stated that the company is poised to surpass its sales volume from the previous year by the end of July 2023. In fact, he anticipates that 2023 will be the best year for the luxury car segment in India, surpassing the peak achieved in 2018.
Soni mentioned that the luxury car industry is expected to achieve sales figures between 42,000 to 45,000 units this year. Lexus, along with other luxury carmakers, is contributing to this positive trend and projecting strong growth in the Indian market.
The luxury car industry in India experienced a peak in 2018 with approximately 40,000 units sold annually. However, due to the disruptions caused by the Covid-19 pandemic, sales dropped to around 20,000 units in the following two years. Despite these challenges, Lexus has been making significant progress in expanding its presence in the Indian market.
Naveen Soni, the President of Lexus India, highlighted the company’s efforts to increase its reach across the country by enhancing its sales network. The number of outlets has grown from just four outlets in four cities a few years ago to 23 outlets currently. This expansion has allowed more potential customers to physically experience and engage with Lexus products, which has positively impacted sales.
Soni also mentioned that Lexus has been improving its standing in the APAC (Asia-Pacific) region. The company has moved up from being among the top 10 players to now being in the top five. The goal is to further climb the ranks and eventually secure a position in the top three in the region, excluding China and Japan.
Regarding local assembly, Lexus currently assembles one product, the ES sedan, in India. However, the company is cautious about expanding local assembly due to the business sustainability issue. This suggests that further decisions on local assembly would depend on various factors, including market conditions and demand.
Despite the challenges posed by the pandemic, Lexus remains committed to growing its presence in India and enhancing its market standing in the luxury car segment.
