By Published on .

Industry sales of large luxury cars will continue to slide as sales of entry-lux cars and trucks make a greater impact in the near-luxury market category.

Researchers at Toyota Motor Sales USA's Lexus, in fact, are betting the industry's greatest growth potential in the coming years is near-luxury sport utilities.

Lexus' strategy in the past few years has been to cover the lux car and truck segments with multiple models. In near-lux cars, it has the IS 300 sports sedan and more traditional ES 300. On the truck side, Lexus added the mid-range GX 470 SUV late last year and is launching the RX330, the second generation of its popular RX300 SUV. Next year, Lexus introduces the hybrid-engine version of the RX300, the first lux hybrid ever.

To break through the clutter, high-end marketers are hiking advertising support for their new entry-lux models, says Mike Wells, VP-marketing at the Lexus unit. The total near-luxury market as defined by Automotive News, sibling publication of Advertising Age, attracted $315 million in media advertising for cars in 2002, up 19.9%, according to TNS Media Intelligence/CMR. Near-lux unit sales grew 4.5% compared to a 7.8% decline in luxury units.

Ford Motor Co.'s Lincoln brand changed strategy for its 2003-model LS entry-lux sedan to better hit the segment's sweet spot. A few months into the model year, the marketer reduced the price of its V-6 model by $2,000 from a base of $34,496, says Mike Crowley, marketing plans manager. The majority of sales across the luxury segment are in the $30,000-plus range, he says.


The move was made to attract younger buyers in their late 20s and more women to the six-cylinder LS. Lincoln developed separate TV and print ads for its LS V-6 and LS V-8, which attracts 45-to-55-year-old buyers, most of them men. Mr. Crowley says "a lot of manufacturers moved down-market and are using those models to attract younger buyers." BMW Group, Mercedes-Benz USA and Ford's Jaguar are examples.

Andy Chien, VP of consultancy A.T. Kearney, predicts "some fallout" in the overall luxury market because the competition has grown so intense.

Most Popular