Q&A: Ewan Shepherd, MD Lexus UK
Craig Thomas caught up with Lexus UK MD Ewan Shepherd at the recent launch of the new LC, to take stock of the Toyota-owned premium brand’s current activities…
Where is the Lexus brand headed?
We are trying to shift the brand forward through the product and open it up to more people’s minds. I see us hitting towards 20,000 units by the end of the decade, as opposed to our current 13,000.
Lexus hybrids have had growing fleet appeal, how are you looking to continue that?
We’ve suffered in the last 18 months because the yen-pound/euro-pound relationship has meant our German competitors have had a significant extra profit benefit from selling in the UK. They’ve deployed that extra financial benefit quite aggressively, to give bigger discounts and, therefore, buy greater volume. Lexus has suffered because of that.
But we’ve not panicked, we’ve countered it through improvement of residual values. So we’ve been communicating with all the RV setters and the leasing companies on core fleet business. We’ve seen a dramatic increase in our RVs at a time when our core competitors, because there are so many cars in the market, have seen a decline.
We’ve also been communicating our hybrid leadership and the tax cost of ownership benefits that brings. Then there’s the actual servicing cost of ownership you get from a hybrid, compared to a conventional engine, because there are fewer parts to repair and go wrong. Warranty claims on hybrid product are the lowest we’ve seen on any models.
We’re also running a pilot concierge service with two leasing companies. We’re suggesting that they order centrally though us, and we ensure the car is delivered to where their driver lives, through their local dealer. They can have a proper handover and a Lexus experience. Our benefit is that relationship will turn into customer retention and strong advocacy.
We’re not going to try and buy national fleet business on a big scale. It’s organic growth through strong relationships with local businesses that we’re after. We would like more national fleet, so we’re talking to leasing companies more, because the user-chooser market should be a Lexus market. That’s where we’re accelerating our efforts.
So how did you tackle the RV question?
We took RV setters to the Goodwood circuit and pretty much relaunched the range to them. We presented our strategy, reminded them of the strength of our product range and showed them a little bit of the future direction.
But we also put context to the volume of Lexus in the market and potential used car stock, compared to some of the German brands, where there are hundreds of times more stock than we have. We therefore said that we should have stronger RVs, because of the rarity value and the growth of our brand.
And it’s paid off: our cars have stabilised or gone forward. Some that will be about the slight move away from diesel, and the greater acceptance of hybrid, but I think our brand has been respected a bit more than it has for a while.
Do you see any benefit in moving to plug-in hybrids and fuel cell vehicles in the next few years?
Some of our models will have a plug-in – we can’t confirm specifically which ones yet – in around two-and-a half years’ time. We haven’t got a date for [fuel cells], but it will be on the back of LS. There’s no firm commitment in time to introduce it, but I would imagine the next two or three years is realistic.