The Lexus LFA and its marketing predicamentPosted: May 26, 2011
I just read Jalopnik this morning, and Mike Spinelli’s article comparing the Lexus LFA to the Jaguar XJ220 as a market failure, and there are some interesting similarities. Spinelli’s article was a reaction to an article on the motorathority.com by Nelson Ireson discussing the LFA’s market struggles alone. Ireson’s article compares the LFA to the likes of the similarly priced Lamborghini Aventador and Ferrari FF, which have both seen some huge demand. He also looks at the cars development to see if he believes the LFA was worth doing overall. Read their articles in the following links and read my take on the issue below.
I have also been considering the LFA’s viability as I have seen its progression in the last few months since the production version was first seen. I also have had many experiences seeing the various LFA concept cars over the last decade, so the LFA has been on the radar for some time. I was able to get up close with the Yellow press car this fall and I can attest that it is extremely well put together and of an equal or even higher quality than much of the high-end market, exactly what I would expect from Lexus. There is no doubt that it is a beautiful and awesome machine. However, that was never its real issue.
Both writers, myself, and countless others all recognized that the price of the LFA was far too high for what it was despite it being incredible. I personally think this is the root problem and that all the other issues mentioned in the other articles just serve to add to an already fatal flaw. Simply put, the LFA gives you Gallardo performance for the price of the Aventador, which is in a totally different league in both image and speed. Also the fact that the likes of the Ferrari Italia, Gallardo LP560-4, and the new Mclaren MP4-12C all cost $100,000+ less than the LFA. This is far too much of a price difference especially when you consider the equal performance and the much less prestigious image of the Lexus.
I am not someone who sees image as the end all be all though, I truly believe that if a company like Lexus makes the right car at the right price, they can compete with Ferrari, Lambo, Mclaren, etc. However because of this deficit in the prestige department, companies like Lexus must offer good value for money in order to compete with someone like Ferrari who could put their name on a soapbox derby car and have it sell out because of their lineage alone. Nissan hit the nail on the head in this department with the GTR, which also happens to compete in the LFA’s performance realm but for around $300k less. I think what we have here is simply just Lexus not knowing their place in the market and getting a little too big for their bridges.
As for the LFA being a market success, it was never supposed to be. Cars like this are meant to be a technical exercise that will boost technology available for more normal cars and the image of the company. VW did the same thing with the Bugatti Veryron, only much more successfully because they actually allow the technology to trickle down into their average cars whereas Toyota largely do not because they don’t think it is worth it for most of their customers who buy hybrids and don’t care about cars at all. These two mindsets are debatable. I personally think Toyota is moronic in their approach toward engineering, having sacked their racing programs and deciding not to allow knowledge gained here to influence the design of their normal cars. This commitment to mediocre engineering does actually render the LFA useless in its potential benefit to the company, so while it is cool it is also a total waste of money.
As for Spinelli’s point about it being like the XJ220 in today’s market, I agree that they were both market failures at the same level but I don’t see them as the same thing. The XJ220 failed because it was designed just for speed, and everything else about it was terrible. It was also a bit of a let down for buyers when they dropped the V12. All in all though, for what it was at the time, the Jag was priced just fine at $600k, especially being the fastest car in the world. The Lexus on the other hand is not at all a let down. It exceeds expectations of what Lexus could do with a supercar and is itself an incredible all round performance machine. It was not designed for setting any records, just to be a fantastic experience and it excels at that. The LFA’s failure is purely economic because they are just asking the wrong price, and in my opinion it really is that simple. They’re only making 500 LFAs and I do agree with Spinelli that at $275K it would sell out in an instant. It is the fault of Toyota’s head people that the LFA is in this predicament, not the car itself, so we can just add this to the list of idiotic decisions they have made in the past few years and leave it at that.
But would you just listen to it, my goodness: