Lexus back in luxury race with new compact SUV

A Lexus NX 200t crossover sport-utility vehicle that is helping Toyota Motor put Lexus back among the top luxury brands

With a new entry in the hot-selling compact crossover segment, Toyota Motor's Lexus brand has gotten itself back in the hunt for the US luxury auto-sales crown.

The new NX, a small sport utility vehicle starting around $35,000, has helped Toyota's luxury brand to a 26 per cent sales gain this year through February, enough to hop over BMW for second place in the US luxury sales race.

With its reputation for outstanding durability and its versatile RX crossover, Lexus was number one in the US for 11 years until 2011, when recalls and natural disasters tripped it up and the Germans seized control. Now the Japanese brand is back in the game.

"The NX...fills a pretty big hole that Lexus has had for a pretty long time," says John Krafcik, president of auto researcher TrueCar.

Light-vehicle sales are on track to rise for a sixth straight year as job gains, available credit and cheaper fuel prices have brought more shoppers.

Luxury race
Last year, BMW's namesake brand held off a late surge by Daimler's Mercedes-Benz, to win the US luxury title as Lexus finished 19,000 sales shy of second place.

Lexus sales jumped 22 per cent in February, led by the RX, the brand's top-selling model, which rose 14 per cent to 6,490, and the GS sedan, which rose 18 percent to 1,851. Year-to-date sales through February totaled 46,126, placing it second behind Mercedes.

Mercedes says deliveries jumped 4.5 per cent to 23,616 for its best February ever. Results were led by the C-Class and CLA sedans and the new GLA small SUV. For the year, sales have risen 6.7 per cent to 48,235.

BMW sales rose 14 per cent in February to 25,201 as the 6 Series more than doubled to 1,237 and the X5 SUV rose 42 per cent to 4,149. Through February, BMW deliveries have risen 9.7 per cent to 44,182.

Heat check
The NX gives Lexus something it had been missing, a hot vehicle in the hottest segment. Compact SUVs and crossovers have grown to 11 per cent of the US new-car market from 7 per cent in 2007, according to Kelley Blue Book.

Compact crossovers appeal to shoppers who want more storage space or a higher seating position than in a sedan and do not want to pay for a larger, less fuel-efficient SUV. BMW's X1 and Audi's Q3 are other recent entries.

Low-end theory
Among luxury brands, many are using lower-priced vehicles to target young, upwardly mobile drivers who might become brand enthusiasts for life, eventually shelling out six figures for a top-of-the-line, high-margin sedan.

Mercedes renewed the trend with the 2013 introduction of its CLA, with a splashy Super Bowl ad saying that drivers could buy a Mercedes without having to sell their soul. Audi, the fourth-largest seller of luxury vehicles in the US last year, revamped the A3 sedan last year and it was the brand's second-best selling model last month, behind the Q5 SUV. Both Audi and Mercedes say their entry-level cars have brought new buyers to the fold without poaching them from existing models.

Lexus vow
Lexus vowed not to follow the German brands below the $30,000 level. The concern was that selling at lower prices - effectively competing with higher-end Toyota models - might dilute its brand.

Turns out, Lexus is luring those same customers anyway.
"It's been really great for us to see - more than anything else - younger buyers and new buyers," Jeff Bracken, US general manager for Lexus, says. "That's a huge home run for the Lexus brand."

Smaller than the older RX, the NX appeals to younger buyers, but also to empty nesters, says Titus Merriam, a salesman at a Lexus store.

"It's definitely got a fresher look," he says. "We're a smaller market store, so our client base is older and can afford to spend $40,000 on a smaller car. But it's generated interest in the younger segment: Our dealership is close to Michigan State University, so we get students who come in to look at it."