Lexus plans a second 'flagship' model, hints at large SUV

By Joseph White

TRAVERSE CITY, Mich. (Reuters) - Toyota Motor Corp's Lexus brand is planning to launch a second top-of-the-line "flagship" model to accompany a new generation of its LS sedan, the head of the brand's U.S. operations told Reuters on Wednesday.

"We need a flagship. It doesn't have to be a sedan," Jeff Bracken, Lexus division general manager, told Reuters on the sidelines of an industry conference.

Bracken noted the success of luxury sport utility vehicles such as Tata Motors' Land Rover brand, the Cadillac Escalade from General Motors Co and large SUVs coming from the German luxury automakers.

Luxury SUV sales have grown more quickly than sales of large luxury sedans, which have for decades anchored the top ends of the model lines of luxury auto brands. The SUV surge has prompted even luxury brands with no history of selling SUVs, such as BMW's Rolls-Royce, to develop models to compete in the super luxury SUV segment.

U.S. sales have been supported by a prolonged drop in gasoline prices. Average prices at the pump on Tuesday were $2.63, down 25 percent from a year ago, according to the AAA travel group.

"In addition to the LS (a large sedan), there could be another flagship in our lineup," Bracken said. "We'll define what it is in January."

Lexus also is looking to strengthen its SUV lineup by offering a version of the midsize RX SUV with a third row seat. An RX with room for seven or eight passengers is the No. 1 request from U.S. Lexus dealers, Bracken said. A new RX is due this fall but will not have a third row seat.

"We don't want to wait for a next generation" to add the extra seating row, Bracken said.

(Reporting by Joseph White in Traverse City, Michigan; Editing by Dan Grebler)