Date:
May 10, 2023
| Author: Martin Collins
Martyn Collins speaks with Lexus UK Managing Director Chris Hayes, who has been at the helm since early 2022, about the growth of the fleet with the introduction of the RZ and how Lexus will lead the way with the Kinto mobility brand in the UK.
Hayes is quick to point out that last year’s sales were impacted by supply. Moreover, delivery times in the fleet market are often the most important decision point. He says: “With a supplier footprint more east-oriented, it has taken a bit longer to recover production which is thankfully picking up again this year. Surprisingly, what that hasn’t done is reduced demand. So, after last year we had a record order bank, but no doubt we missed some fleet opportunities along the way.
“That said, going forward we have a very healthy order backlog in the major fleet channels for NX Hybrid and NX Plug-in. NX Plug-in has been extremely well received by consumers in both the retail and fleet markets and has a few picked up from awards What’s exciting to me is that now as we discuss the launch of the RZ here we now have a product range that appeals to a broader fleet market proposition for the first time So the fastest growing part of the premium market in the UK is SUV, in the small, medium and large SUV segments C, D and E will now feature four body styles for us, UX, NX, RX and now RZ, with eight powertrains, two of which are plug-in and two are electric.I think this now gives us a credible product offering for fleet users, fleet managers and small businesses, taking advantage of Benefit in Kind (BiK) with the tax benefits of plug-in, for example.
“Going forward, we certainly see a significant portion of our volume in growth coming from the fleet market and fleet channels. Our cruising volume over the last five to six years has been around 10-15,000. On a year-over-year basis, we’ll have that doing so in a sustainable, thoughtful and consistent manner – especially in the fleet market Total Cost of Ownership is of paramount importance to all customers whether retail or fleet and we recognize the importance of resale values and that will drive our channel management strategy. We are committed to the fleet market and we now have a product range that allows us to do that.”
According to Hayes, initial and early Lexus RZ orders were mostly retail, but their planning mix going forward is a 60:40 fleet and retail split. He says: “Of course we never really know. That’s our first guess, but what we see from the very first orders is that we have previous Lexus owners who have left the brand to
other premium brands, which have EV powertrains, are coming back. Certainly, as we go through the launch period, we expect demand to settle down, and within that segment it will be pretty close to the segment average, which will be 55%/45% — slightly in favor of the fleet.
“From a fleet perspective, it will be interesting to see the mix between the 18-inch and 20-inch wheels – depending on the requirements of user selectors and fleet managers. Our current order bank demand is 90% top two digits, which consists of 60% top Takumi- class and 40% Premium Plus. On an ongoing basis we will probably have 20-30% in the Premium trim with the 18″ wheels. We will have to monitor closely to see how the market responds.”
Hayes is delighted that the RZ is giving Lexus the chance to conquer in the UK. He says: “I am very excited about the possibilities. The Lexus EV Sport Concept is the pinnacle of our product planning future. In addition, the EV technology leader comes from TMC (Toyota Motor Corporation). I think that by putting the ingredients together , we get the chance to really appeal to a new audience. Either those who have been with us and left, or those who have never owned or experienced a Lexus. That kind of conquest appeal I think will come. We’re sure considering that so far this year.
“Interestingly, our recent UX campaign in some of our marketing communications activities has had a very positive response across the board, attracting new customers. I dare say we’re looking at leveraging those innovation credentials from a brand perspective and a lot as we move forward going, a younger and more progressive brand that resonates with a more contemporary British consumer. I think this presents us with a great opportunity.”
Hayes identifies two specific areas of focus that Lexus is most keen on within the fleet. He says: “The first is our localization program, where we have recently restructured our internal business/fleet operations. We are moving into a space that not only sells vehicles, but also solutions for finance, service, maintenance, repair and fleet management – a much more 360-degree approach to the fleet market, which is obviously what consumers are looking for — they don’t want to talk to multiple people, they just want to run their own fleet, so that’s definitely an area of focus for us.
“The second is the Kinto brand, and how we see that shift from ownership to use. Overall, that will manifest in the marketplace in new, innovative ownership and user solutions. Whether that’s on subscriptions or shared services, it will long term it will be interesting to see how that transition plays out, we see Lexus as one of the forerunners of some of those new user experiences.
“Looking at the current developments of the Kinto proposition, we are in the pilot phase and working through platforms on the operational side. In the second half of this year, some of those new solutions are starting to go live. Of course, our existing business contract rental proposal with Kinto live on the market today, as a fully serviced fleet services proposal so of course that foundation is already well in place, working with our dealer network and then we’ll use this year to get the platform processes and operations for some of the newer subscription sharing services coming later.”
