VM Interview Pascal Ruch, Lexus Europe: Growth without an arms race

VM: Mr. Ruch, what plans do you have for the RZ?

Ruch: We are planning an annual production of 30 to 35,000 units, half of which will go to our largest market, China. A good quarter to the USA and just under a quarter to Europe, that’s around 6,000 units.

Which are your most important markets in Europe?

Ruch: Europe is extremely heterogeneous for Lexus: Looking at BEV, currently it’s clearly Norway and the UK, followed by Germany. If I go by market shares in the premium segment, these range from less than one percent in Germany to over 50 percent in markets like Kazakhstan.

Will the new RZ change that? After all, it competes in the most popular segment for the class, the upper mid-class electric SUV, and it's purely electric...

Ruch (smiling): We expect that. Generally, the RZ is likely to accelerate our growth in Europe. Although one must not forget that Lexus has been producing electrified and fully electric models for twenty years. Our overall strategy has always been to have the best solution for customers with various and sensible technologies.

But in the future, the entire Toyota Group will be purely electric, if we are to believe Akio Toyoda's announcements from December 2021?

Ruch: In fact, electrification is an accelerator in the product program, especially since Lexus will only sell BEVs five years before Toyota, by 2030. And if you see that out of the 30 presented electric models, 14 were announced for Lexus, you see prioritization: Lexus makes up around ten percent of the group's total volume worldwide but will offer almost 50 percent of the BEV models. Although the RZ will also be followed by a few other electrified novelties.

Can you deliver?

Ruch: Of course, we cannot entirely free ourselves from supply shortages. With the RZ, we are introducing a reservation system for the first time, where customers can pre-order their car. Production starts in October 2022, so the first customers should receive their cars by the end of this year.

Will the RZ then become the new brand core?

Ruch: Here too, Europe is very heterogeneous: Every country has different bestsellers, and while Norway is already a very developed electric market, the situation is quite different in southern and eastern Europe. There, our more compact models are also preferred. But within the SUVs, the RZ does form a kind of global brand core.

Will Lexus also rely more on SUVs in the future?

Ruch: If you followed Akio Toyoda's press conference, you already saw electric Lexus sports cars and the topic of sedans remains relevant in many markets. We see a stabilization of the numbers here.

Which is extremely difficult in Germany right now – and even more difficult with the LS...

Ruch (smiling): The LS competes against very strong competition in the luxury segment in Europe and especially in Germany, which is of course a particular challenge. But even with the ES in the upper mid-range, we have up to a year's delivery time. In general, business sedans are in demand worldwide, especially as they offer clear advantages in aerodynamics and driving dynamics over SUVs.

Business sedans is a good keyword: How many Lexus models in Germany go to company car drivers and fleets?

Ruch: Depending on the model, it is currently up to 70 percent. That is a solid mix. Basically, we want to grow further in Europe. The chances for that are quite good. 

Can you be more specific?

Ruch: Forecasting specific numbers right now is difficult. But we will continue to bring the motto "Driving Signature" to life. This of course includes our DNA, which offers quality, comfort, and innovations, now combined with electromobility. Consistently and dynamically with the RZ on the new platform. However, we do not want an "arms race" with maximum battery sizes or capacities, but the best balance of efficiency and performance—and still offer customers great ranges. And with the RZ, we are currently up to twenty percent better than directly comparable competitors. But also topics such as a dense charging network, fast charging capability, and a dense service network with comprehensive warranties play a role.

But the benchmarks here are rather set by Korean competitors?

Ruch (smiling again): Lexuses run forever - indeed, Lexus is one of the most reliable brands worldwide. That's why we dare to have Lexus "relax" in Europe, which is very well received: That means – even if I had only come back to the service after seven or eight years for the first time, I would get another year of warranty from then on. This applies until your Lexus is ten years old—and it is very well received.

The interview was conducted by Gregor Soller