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Lexus and the 2017-2020 Bank of America Merrill Lynch Car Wars report

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Trying to predict a carmaker’s future product pipeline and cadence of new-generation model releases is a fascinating sport for a sizable portion of the car enthusiast community, yours truly among them. Among the automotive publication universe, Automotive News’ annual July/August predictions, going out 3 years or so, are widely read and commented on. Flying under some radars, but very much worth mentioning, is the Bank of America Merrill Lynch Car Wars report, an annual fixture since 1991. As the banking giant’s corporate and investment banking division defines it,

Car Wars is an annual proprietary study that assesses the relative strength of each automaker’s product pipeline in the US. The purpose is to quantify industry product trends and then relate our findings to investment decisions.

We believe that the replacement rate drives showroom age, which drives market share, which in turn drives profits and stock prices. OEMs with the highest replacement rate and youngest relative showroom age have generally gained market share from 2001-16. We expect this relationship to hold over our forecast period of model years 2017-20. We also expect that the total industry’s profit momentum will be strong as more new models are launched in the next four model years.

Beyond the financial and mission statement gobbledygook are their actual new model launch predictions. In their latest (29 April 2016) Car Wars study, a road map of new-generation product launches between the 2017 and 2020 model years is laid out. In their words,

The study is based on numerous primary and secondary sources, including industry contacts, auto show visits, trade publications, enthusiast magazines, supply chain relationships, our general knowledge of platform strategies, and product cycle planning…

In Car Wars, we include only products we judge to be all-new or next-generation vehicles – what the industry typically calls a major. We do not include mid-cycle enhancements, where only modest changes are made to the vehicle, but do concede there is an increasing focus by many OEMs to make more substantial mid-cycle enhancements that could create some distortions.

Authoritative as they seem, Car Wars predictions are hardly infallible. As Michael Karesh of True Delta noted,

… none of the predictions made two years ago for Toyota for the 2017 and 2018 model years remain in the new report. This probably isn’t entirely or even mostly the analysts’ fault. Programs get delayed and even canceled all the time.

2017-lexus-lc-500h-0To cite a specific example, the 2016-2019 Car Wars report (dated 8 May 2015) predicted a 3rd-generation Scion tC coupe for the 2018 model year when, in fact, Toyota pulled the plug on the Scion brand less than a year later, and odds of a 3rd-generation successor to the Scion tC/Toyota Zelas C-segment FWD coupe are somewhere between very slim and none.

Given the scope of information appearing in the Car Wars reports, a single Kaizen Factor commentary and analysis article would be too long and unwieldy, so here we’ll start our discussion with the Lexus brand, and leave our thoughts on the Toyota brand for a future separate article.

BOA/ML Car Wars’ Lexus predictions kick off with a technicality error of sorts: its sole 2017 model year listing is the LC 500 coupe (shown above left). Yes, it was first introduced at the Detroit Auto Show in January 2016, followed closely by the debut of its hybrid LC 500h at the Geneva Motor Show in March 2016. With an initial on-sale date around March 2017, however, it is far more likely to premiere as an extended-run 2018 model year vehicle, much like the lengthy February 2012 thru late September 2013 run that marked the 2013 model year launch of the 4th-gen (L10) Lexus GS.

Following on the LC, the one official 2018 model year Car Wars prediction is for the overdue debut of the 5th-generation Lexus LS flagship sedan (as previewed by the LF-FC concept shown below right). We predict an LC-like rollout with a January 2017 Detroit Auto Show debut for the LS 500 (marking the 28th anniversary of the original Lexus LS 400’s unveiling there), followed by a March 2017 Geneva Motor Show premiere for its LS 500h hybrid counterpart. On-sale dates, however, should be less protracted, probably sticking to the traditional late summer/early autumn 2017 start of the 2018 model year.

2015_lexus_lf-fc_concept_tokyo_06The pace picks up considerably for the 2019 MODEL YEAR, when BOA/ML Car Wars predicts new-generation versions of a trio of Lexus models. The first of these is the C-segment hybrid hatchback CT. With its March 2010 Geneva Motor Show unveiling, early 2011 on-sale debut and a single mid-life freshening for the 2014 model year, the current CT is certainly due – if not overdue – for replacement. The rumor mill has, over the years, been rife with all sorts of predictions for the 2nd-gen CT. These run the gamut from the addition of a second 4-door sedan body style to rival the Audi A3 and Mercedes-Benz CLA and serve as a de facto replacement for the unloved HS 250h (Would it use an old BMW-esque CS moniker? Or become a 2nd-gen HS?) to additional powertrain options such as a non-hybrid CT 200t or CT F hot hatch to a plug-in hybrid Lexus counterpart to the Toyota Prius Prime (Lexus CT 200p? CT 200ph? CT 200hp? CT 200h Plug-in?) to its outright discontinuation, replaced not by a new generation but by the UX crossover. As of this writing, however, the only CT-related live U.S. trademark is the original CT 200h, which was last renewed on 31 July 2015.

In stark contrast, the launch of the 7th-generation Lexus ES should be utterly predictable, if past patterns hold true: a late March introduction of larger-engined ES variants at the 2018 New York Auto Show in late March, followed by the reveal of at least one smaller-engined variant (ES 200, ES 200t and/or ES 250) at the Beijing Auto Show in April, and a traditional autumn 2018 on-sale date for this 2019 model year intro.

An element of unpredictability surrounds the 3rd-generation Lexus GX cited by Car Wars for the 2019 model year. Lexus executives have, in the past, cast doubts on the long-term viability of old-school body-on-frame SUVs such as the GX in the face of tightening CAFE (Corporate Average Fuel Economy) laws in the U.S., yet the current GX’s spindle grille facelift for the 2014 model year, coupled with a $4710 price reduction in the U.S., gave it a major sales boost that is only tapering off this year. And with no apparent plans to “crossover-ize” its Toyota Land Cruiser Prado and 4Runner BOF SUV siblings, we’ll guess that the 3rd-gen GX will be much like its predecessors. Perhaps a 4-liter 1GR-FKS V6 with the dual cycle and dual injection bells and whistles previously applied to the 2GR-FKS 3.5-liter V6 will make a GX 400 a viable notion outside of China.

The 2015 Bank of America Merrill Lynch Car Wars report predicted a fourth 2019 Model Year new Lexus model: the GS. But its 2016 counterpart pushes this back one year, to a 2020 MODEL YEAR launch. Quite notably, they suggest that the GS will join its slightly smaller IS platform-mate in being revised that same model year. If true, this will be a bit of history repeating. To recap, when the original Lexus IS and 2nd-gen GS divorced themselves from their Toyota Altezza and Aristo roots once and for all, the 3rd-gen GS debuted at the January 2004 Detroit Auto Show, but did not go into production until a year later as an extended-run 2006 model (sound familiar?). Meanwhile, the 2nd-gen Lexus IS had its public unveiling at the March 2005 Geneva Motor Show and went on sale a few months later in autumn 2005, roughly 7-8 months after the new GS. That was probably the original plan for the 4GS/3IS launch as well, but a combination of the 2008 Great Recession and a desire to better manage and space out the IS/GS/LS sedan product cadence led to a decision to delay the 3rd-gen IS. A second mid-cycle facelift for 2IS was unveiled for the 2011 model year, thus stretching its life cycle to 8 model years. Meanwhile, the 3rd-gen GS stuck to its originally-planned 6-year life cycle, skipped the 2012 model year altogether and was succeeded by 4GS’s production launch on February 2012 as an extended-run 2013 model.

If the 2016 Car Wars prediction is correct and we extrapolate past history, we could see a scenario where the 5th-gen GS is first revealed during the second half of calendar year 2018 (August at the Pebble Beach Concours d’Elegance, October at the Paris Motor Show, November at the Los Angeles Auto Show and December at China’s Auto Guangzhou being the likeliest venues), followed by a January-February 2019 on-sale date. The 4th-gen IS would debut during the first trimester of calendar year 2019 (Detroit, Geneva, New York and Shanghai being the major auto shows during that time frame) followed by a traditional late summer/early fall 2019 on-sale date.

The third of four all-new Lexus introductions allegedly pencilled in for the 2020 model year is the SUV flagship LX‘s 4th generation. Conventional wisdom (and the Car Wars predictions) suggest a continued close launch alignment with the so-called J300 large Toyota Land Cruiser. The always well-informed Lexus Enthusiast forums member Carmaker1 suggests that

The next LX will not be introduced prior to 2019… (it) might go its separate ways, as the Land Cruiser 200 was given minimal updates by comparison and has a successor already signed-off. The LX might adopt IRS, for MY2020 and is likely being designed at this point.

The fourth and final new Lexus predicted by BOA/ML Car Wars for the 2020 model year is the 2nd-generation NX upper C-segment crossover. Color us skeptical, though. The original NX was introduced as a 2015 model year vehicle. If it follows big brother RX and the most typical Lexus lifecycle, expect a 2018 model year mid-life refresh and a 2nd-gen successor for the 2021 model year. As True Delta‘s Michael Karesh sagely notes,

(A)re these predictions accurate? Those made in the same report two years ago have turned out to be overly optimistic, with many launches actually happening a year or two later than predicted…

My prediction based on the outcome of these past predictions: that huge surge for 2019 and 2020 won’t happen, at least not in 2019 and 2020. Many of the launches currently predicted for 2019 and 2020 will instead happen in 2021 and 2022, if ever.

Other comments and possible omissions
The 2017-2020 model year Bank of America Merrill Lynch Car Wars predictions fail to mention a couple of Lexus’ existing model lines. The RC coupe will most likely follow the NX cadence noted a couple of paragraphs above, and see a new generation for the 2021 model year. As Lexus’ freshest current model line, the 4th-gen (AL20) RX was all-new for the 2016 model year, and thus won’t be on the BOA/ML Car Wars radar for quite some time.

16-05-24-lexus-ct-replacementWorth noting here are a couple of Lexus trademarks that suggest extensions to the model line. The first of these is the somewhat mysterious TX, first registered on October 2009, with no number appended to denote engine size. We discussed the possibilities at length on March 2016, and would only add that labelling Lexus’ first-ever unibody FWD-centric 3-row crossover as an extension of the RX line has cost, profitability, marketing and even sales advantages (piggybacking and expanding upon RX’s still class-leading numbers) versus launching an additional, differently-badged line.

In contrast, there appear to be far more concrete plans for the trio of UX trademarks filed on February 2016. Car Wars fails to mention this potentially Toyota C-HR-derived lower C-segment luxury crossover (as imagined by Autocar in the LF-SA-inspired rendering shown above left), but we agree with Carmaker1’s suggestion on the Lexus Enthusiast forums that

The UX will likely be launched in 2018, before the next ES (fall 2018) and GS (late 2018).

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