Low-displacement Lexus cars driving into China

Lexus, a luxury brand under the wing of the Japanese auto giant Toyota Motor Corp., recently released two new ES350/ES240 models in China.

In particular, the ES240 is equipped with a 2.4L engine. It is the first model with displacement lower than 3.0 liters that the luxury brand brought to Chinese drivers after it formally set up its sales network in the country in March 2005.

This year, Lexus incurred a sales decline of over 30 percent in China but its rivals like Benz, BMW, and Audi witnessed a two-digit growth in the country.

In the first half of 2009, the excise had a big impact upon Lexus, said an executive with the brand. He ascribed the sale decline to the excise that China started levying upon high-displacement vehicles last October.

The sales of luxury products with displacement below 3.0 liters went up 26.3 percent in China, and sales of those with over-3.0L displacement stepped down 28 percent. However, over-3.0L products accounted for 82 percent of Lexus' total sales.

Its sales decline was also attributable to the fact that its sales network focused too much on southeastern coastal and eastern Chinese markets. For the moment, Lexus owns 53 4S stores, including 36 in coastal areas and Beijing. In the southern province of Guangdong alone, the number of its 4S stores stands at nine.

Notably, Toyota Motor (China) Investment Co., Ltd., a subsidiary of Toyota Motor, lowered its expectation for the development prospect of China's luxury vehicle market at the beginning of this year amid the financial crisis worldwide.

It forecast that the market would rise only 3 to 5 percent in 2009. Therefore, Toyota Motor will not consider mass production of Lexus sedans in China, in spite of the localization of BMW and Benz.

Benz, BMW and Audi made a good performance this year. In the first quarter, total sales of Benz-branded vehicles in China jumped 30 percent from a year earlier, and around 800 GLKs and 500 B-class ones were sold in the country.

From January to July, Benz China sold 31,700 vehicles, surging 49 percent from a year earlier. In particular, its S-class sedans contributed nearly 7,300, ranking among best-selling luxury brands.

The total sales volume of BMW and MINI products amounted to 45,000 in China, rising 26.3 percent. Audi gained a sales volume of 79,000 in the country, even more than those by both Benz and BMW and mounting 15 percent.