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What markets will Lexus enter next?

On the sidelines of the January 2016 Detroit Auto Show and its world debut of the Lexus LC 500 sports/GT coupe, Lexus Enthusiast editor Kevin Watts made plans to interview outgoing Lexus International executive vice president Mark Templin. A day before the unveiling, Kevin solicited Lexus Enthusiast reader questions for Mr. Templin with one significant proviso: no questions on future products, unreleased or rumored vehicles. On the site’s community forum, I suggested what I thought would be a straightforward softball question: Lexus is notably absent from India and Mexico. There have been reports over the years of Lexus possibly entering those markets. Then…silence. Could you update us on whether or not there are still plans to sell Lexus vehicles there?

When the actual interview appeared 11 days later, my question was there, simplified and paraphrased as: Can you mention any new markets that you’ll be entering into this year? I know there’s been mention of India. Little did I imagine, however, that the answer would be as evasive as if I’d asked about future product plans:

I’m not going to talk about which markets…

Our goal is to enter the regions with the biggest luxury car markets, the biggest opportunities. Some of those places are difficult because of the tax structures and high import taxes, but we’re not so concerned with volume as we are in establishing our brand.

Mr. Templin did, however, provide an important clue:

There are about four markets that we’ll go into over the next couple years. I can’t mention which ones for a number of reasons, but we will announce when the time’s right.

Numerical clues such as these are an irresistible challenge for yours truly, who in the past has attempted to guess the 7 or 11 new and upcoming Toyota and Lexus hybrids due by the end of 2012; 7 new or updated Toyotas and Scions for 2013, (plus a couple of Lexus vehicles) and 9 hybrid Lexus lines to be offered by 2014 ahead of their actual launches.

The Lexus International 2015 Year in Review official news release, issued on 1 February 2016, narrows the field just a bit, informing us that

2015 was the first full year of sales in Vietnam, after opening our first dealership in Ho Chi Minh City followed by Hanoi in 2014

Approved in July 2015, Lexus’ first dealership in Santo Domingo, Dominican Republic, opened its doors at a temporary location in November. A newly constructed Lexus showroom and service facility will open later this year.

So, what are the four likeliest new Lexus markets over the next couple of years? Our answers run the gamut from the just officially confirmed to the very likely to iffy wild card guesses.

As a Lexus Europe news release informs us, on 10 March 2016 Lexus opened its first dealership in Turkey, in Istanbul’s prestigious Maslak neighborhood (shown at the top of our story). Additional showrooms are planned in other major cities, such as Ankara, Izmir, Bursa, Antalya and Adana, possibly opening within the next 12 months. There are also plans for a network of nearly 60 service points across the country.

Per the official Lexus Turkey website, 200t (2-liter, 4-cylinder turbo) versions of the RX, NX, GS, RC and IS model lines will be offered, as well as RX 450h and LS 600h L hybrids.

Head of Lexus Europe, Alain Uyttenhoven notes that

We expect the Turkish automotive premium market to grow from about 80,000 units in 2015 to more than 100,000 units in the near future. This puts Turkey in the top 7 in Europe…

Lexus expects to sell 250 vehicles in Turkey in the inaugural year, and 1,000 within 5 years.

The small-eared, hump-headed, high-backed Indian elephant in the room, the world’s 7th-largest (and 2nd-most populous) country nonetheless lacks an official Lexus presence, even in the face of predictions that it could become the world’s 3rd-largest automotive market by 2030.

Talk of a Lexus entry into the Indian market dates back to 2009, but plans were rejected in 2010 and again in 2012-2013 because of high import duties and a sluggish local auto market. In late September 2014, the rumor mill again suggested a possible entry. The Economic Times quoted Managing Director of Toyota Kirloskar Motor Naomi Ishii as stating that

The luxury car space is a prized segment… We need to go for that. We are under intensive planning to chart out the strategy for Lexus in India and are studying the taxation structure to order a right preposition (sic) to Indian customers.

The snag there is a tax of up to 160% on fully-built-up imported cars, and the fact that arch rivals Audi, BMW, Mercedes-Benz and Indian-owned Jaguar Land Rover all have local assembly facilities in India.

Again, rumors of Lexus sales in India died down, only to resurface about a month ago. A determining factor, as International Business Times suggests, is the FAME India (Faster Adoption and Manufacturing of hybrid and Electric vehicles in India) plan, which provides for incentives of up to Rs 1.38 lakh (roughly US$2062 at today’s exchange rate) for hybrid vehicles. Thus, expect a hybrid-only strategy going in for Lexus, as in a number of European markets.

NDTV’s Car and Bike suggests an August 2016 India launch for the marque, initially with the RX 450h, followed by the GS 450h and the LS 600h. They also cite sales targets between 1000 and 3500 cars a year by 2018, and above 5000 units by 2020.

This author vividly recalls strolling the halls of Detroit’s Marriott Renaissance Center in January 2013 (for the Detroit Auto Show debut of the 3rd-generation Lexus IS) and encountering something unexpected: a sign announcing an Infiniti de México sales meeting. Yes, Mexico, where Infiniti has had an official presence since late 2011 and its archrival Lexus is notably absent. Even once-groundbreaking but now-moribund Acura has sold its cars south of the border since 2004.

As in India, rumors of a Lexus entry into the Mexican market have flared up and died down over the years. Plans to enter the market in September 2008 were kiboshed by the Great Recession. Coincidentally (or not?), right around the time of Infiniti’s entering the market Excelsior reported that Lexus would arrive in Mexico in 2012, only to backtrack less than 5 months later.

Another 2016 Detroit Auto show interview with Mark Templin – this one by Christie Schweinsberg of WardsAuto – states that

A Lexus official last year noted Mexico was an obvious choice (to enter as a new market), as the brand isn’t there officially, but many Mexican consumers venture across the U.S. border to purchase the luxury models.

But perhaps the most encouraging and concrete report on an official Mexican presence for Lexus comes from Motorpasión México‘s Gerardo García. His 27 April 2015 report from the Huixquilucan Concours d’Elegance on Toyota’s announcement of its future plans there included this passage:

During the question-and-answer session, the subject of Lexus’ arrival (in Mexico) came up. (Toyota) brand leaders replied that “It is no longer in the freezer. Now it’s been brought down to the refrigerator”. It could happen within the next 3 years.

As we wander from the officially confirmed to the safe, likely bets to sheer informed speculation guesswork, we arrive at the ASEAN (Association of Southeast Asian Nations) bloc. Founded on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore, and Thailand, it added Brunei to its ranks on 7 January 1984, followed by Vietnam on 28 July 1995. All seven countries have an official Lexus presence, but the same cannot be said of the group’s later members: Laos, Myanmar (joined on 23 July 1997) and the newest, Cambodia (joined on 30 April 1999). And it is “the baby of the bunch” that emerges, in this author’s humble opinion, as the likeliest to join the ranks of official Lexus lands.

The title of an editorial in Cambodia’s The Nation says it all: Phnom Penh poor, but still the ultimate Lexus city. The I see Cambodia! blog seconds that notion.

Even as both articles and Wikipedia note the country’s poverty and the fact that most of those highly-coveted Lexus vehicles are second-hand imports from the U.S., the latter also reminds us that Cambodia has one of the fastest growing economies in Asia with growth averaging 6% over the last decade.

Other possibilities
Both the Lexus Enthusiast and WardsAuto Mark Templin interviews note that Lexus vehicles are currently officially sold in 93 countries, versus roughly 140 world markets offering the German “luxury 3” (Audi, BMW and Mercedes-Benz). That’s around 47 potential new markets for Lexus.

If we’re wrong about Cambodia, then Pakistan might be a logical contender for that fourth spot. That country’s carmudi informs us that, even without an official manufacturer presence, Lexus is the country’s second most popular luxury car behind the BMW 5-Series, even though the article can’t seem to make up its mind whether it’s the LS or LX occupying that coveted spot.

Other long-shot Asian possibilities include the aforementioned Laos and Myanmar, Bangladesh, Nepal and Sri Lanka.

Moving to Europe, Lexus of Europe’s official map on its home page makes spotting the gaps rather easy. And one such gap comes as a shocker: Denmark. We were ready to put it in our top 4, except that a bit of research, the remains of the official Lexus Denmark website and an article or two inform us that Lexus actually withdrew from the Danish market on 1 July 2013, citing the country’s onerously high taxes, even on environmentally-friendly hybrids. And Democrat socialist presidential candidate Bernie Sanders wants us to be more like Denmark?! Heaven forbid…

The biggest gap in official European Lexus availability is in some of the Balkan states (Bosnia and Herzegovina, Albania and Macedonia). Also lacking an official Lexus presence are Belarus, Moldova and Georgia.

South Africa is the continent’s sole official Lexus market.

In Central and South America, Lexus is officially sold in Puerto Rico, the Dominican Republic, Costa Rica, Panamá, Brazil, Perú, Bolivia and Chile.

Frankly, none of the missing countries emerges as a standout answer to the question of “Where will Lexus go next?” Perhaps Morocco in northern Africa? Or Argentina, if new president Mauricio Macri can get his act together after the disaster that was Cristina Fernández de Kirchner and her late husband Néstor?

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