On August 24, 1987, Toyota announced a new luxury car division to be called Lexus. Bob McCurry, Toyota Motor Sales, USA Senior Vice President, revealed that the new luxury car division would be a completely separate franchise from Toyota, have two all-new Lexus models, and be introduced in 1989 with 100 dealers. He went on to boldly predict an anticipated sales volume in 1989 of 60,000 cars and 100,000 annually.
McCurry also announced Corporate Manager J. Davis Illingworth, Jr. as the head of Lexus, reporting to Jim Perkins, Group Vice President of Sales, Marketing, Distribution, and Planning.
Reaction to the announcement was swift. Gunter Kramer of BMW was dismissive, stating, “The image of a luxury producer is hard to achieve from somebody who produces millions of cars. Our buyers will simply decide not to buy those Japanese products.”
Bjorn Ahlstrom, President of Volvo North America, was more direct, saying, “The Japanese are all trying to penetrate the upscale market, but they will be a marketing flop.”
Jim Higgins of Automotive News was more analytical, writing “By 1990 there will be 35 distinct luxury sedans on sale in the United States. A recent J.D. Power study indicates that some manufacturers will find it hard to attract buyers. On average luxury car owners can call to mind only three nameplates and with prompting five.”
Higgins went on to write that the J.D. Power study concluded, “In the crowded luxury market of 1990, image is going to be even more important as the number of makes and models to choose from grows at a faster rate than the number of buyers. Image is going to have to be earned the old-fashioned way: with good products and customer service.”
Jim Mateja, the auto writer for the Chicago Tribune, was skeptical, writing, “Toyota and Nissan are only holding a pair and gambling they will come up with a full house.”
The headline for Automobile Magazine ominously predicted in 1989 there would be a “Battle Royale—Clash of the Titans.”
I mentioned all the skeptics and naysayers in the media to McCurry. He snapped back at me, “Don’t listen to any of that. There’s always room at the top!”
“There is an opportune time to do things, a right time for everything on earth.” Ecclesiastes 3:1 (MSG)
All the negative press we received from the media and our competitors was little or nothing compared to the negative reaction we got from the Toyota Division. They immediately implemented “the NFL rule” that had nothing to do with football.
(To be continued in “The NFL Rule”)