Lexus hopes overhauled LS flagship will lure new buyers

Lexus, the premium arm of Japanese automaker Toyota Motor Co (7203.T), this fall is remaking its flagship LS-series sedan - the car that spearheaded the company's audacious assault 23 years ago on BMW and Mercedes-Benz in the upper luxury segment.

Now in its fourth generation, the big LS sedan is long overdue for an overhaul. Lexus said late Monday that it plans to unveil the redesigned 2013 LS on July 30 at a special invitation-only event in San Francisco.

Lexus released scant details, saying only that the 2013 edition will be offered again in three models - the standard LS 460, the long-wheelbase LS 460 L and the hybrid LS 600h L - as well as a new performance-oriented LS 460 F Sport.

The fifth-generation LS, which is being extensively revamped inside and out, will not redefine either the image of the car or the brand - although both could use a makeover.

One of the objectives of the redesign is to attract "some new luxury buyers who might not normally think about the LS" or Lexus when shopping, according to industry consultant James Hall, managing director of 2953 Analytics in Beverly Hills, Michigan.

"The original LS was a brand-defining product for Lexus, and it's still the standard bearer," says Hall. "But the target audience in the (luxury) segment is becoming more diffuse. Customer expectations are changing."

In the meantime, the current LS 460 sedan, which received its latest major redesign six years ago, is one of the oldest cars in a relatively exclusive segment populated with such stylish, technology-laden competitors as the Audi A8 (NSUG.DE), the BMW 7 Series (BMWG.DE) and the Porsche Panamera (PSHG_p.DE). Prices in this niche typically range from $60,000 to $135,000.

With the LS allowed to languish as newer, edgier rivals have driven onto the scene, customers have drifted away from Lexus and its top-of-the-line sedan, whose U.S. sales through the first six months are down 28 percent.

"In the luxury space, Lexus often is not even part of the conversation," observes Mike Jackson, director of North American vehicle forecasts at IHS Automotive in Northville, Michigan.

The irony is that the original LS - unveiled at the 1989 Detroit auto show and put on sale later that year as a 1990 model - was immediately perceived as a significant threat by the premium German brands, especially Mercedes-Benz (DAIGn.DE) whose long-running S Class sedan was one of the templates for the LS.

Over the next two decades, as Lexus fleshed out its product stable with a ever-wider variety of new models, its U.S. sales volume grew steadily and the brand established an enviable reputation as the industry-wide benchmark for quality and dependability, consistently topping the widely read annual rankings from Consumer Reports and J.D. Power and Associates.

Despite a modest facelift for the 2010 model year, and the addition of long-wheelbase, all-wheel-drive and gasoline-electric hybrid variants, however, sales of the LS sedan have continued to dwindle since the fourth generation was introduced in late 2006.

Last year's earthquake and tsunami in Japan also put a serious crimp in total Lexus volume. After 11 consecutive years of leading the luxury sales charts in the U.S., Lexus in 2011 dropped to third place behind BMW and Mercedes-Benz. Despite a partial recovery that has seen sales climb 23 percent in the first six months, Lexus remains mired in the same spot behind the segment leaders.

At the same time, the LS has become one of the priciest models, not only in the luxury segment, but also in the brand's U.S. lineup. The standard 2012 LS 460 starts at $68,505; the top-of-the-line 2012 LS 600h L hybrid is priced from $113,625.

Its position of prominence within the Lexus portfolio has long since been supplanted by the RX, a mid-size, middle-of-the-road crossover vehicle in 1998 the created a whole new premium sub-segment, one that has been hugely popular with female buyers.

The RX was freshened earlier this year with a crisper front-end design that borrows styling cues from the all-new 2013 Lexus GS sedan. The GS has been lauded for its edgier appearance and sporty driving dynamics, a portion of which is expected to be transferred to the 2013 LS sedan.

As was the case with the GS F Sport edition, the new 2013 LS 460 F Sport is expected to receive a bundle of aesthetic and hardware upgrades, ranging from larger wheels and tires to sportier seats and gauges.

Jackson says Lexus, with recent designs such the new GS sedan and the 2013 LS, may be starting to shift away from its historically conservative approach to the luxury segment.

"Lexus has its core customers," he says, but the brand needs to reposition itself and its products to steal buyers away from its premium competitors. Lexus "has to break away from some of its past thinking in order to generate a greater degree of consideration (among luxury buyers). That includes (adopting) not only cutting-edge styling, but also incredible driving dynamics and technology that have become hallmarks of the segment."