Lexus and Infiniti at 25
In the late 1980s, the luxury-car market received its greatest shock since the worldwide energy crisis more than a decade earlier when the cash-rich Japanese auto industry decided to make a serious run at the comfortably profitable luxury segment. The multibillion-yen effort would create new brands and fresh products that allowed the Japanese to finally ascend to the upper end of the market.
Ironically, the seeds for their plans had been sown with the Japanese government's voluntary restraints on car exports, a 1981 agreement that was supposed to ease the pressure on the U.S. domestic auto industry. With the total volume of exports capped, however, the Japanese carmakers suddenly faced incentives to maximize profits by switching from exports of low-margin cheap cars to more expensive ones.
First out of the gate was Honda, with its near-luxury Acura nameplate, in 1986. By then, a research team of Toyota engineers from Japan was already in California, laying the groundwork for the eventual introduction of the Lexus brand. Meanwhile, Nissan was also on the move, having formed a secret task force in 1985 with the goal of creating a luxury brand, Infiniti, designed to take on all comers. Both Lexus and Infiniti made their world debuts at the 1989 Detroit auto show.
Nothing about premium brands in America has been the same since.
Of the new Japanese luxury sedans, the Infiniti Q45 (above) proved to be the most defiantly Japanese. It eschewed the typical wood-swathed interior, and in place of a grille it wore an insignia that evoked a samurai shield, yet it drove with the poise of a Jaguar. Lexus, meanwhile, was not only phonetically almost synonymous with "luxury," but had a beautifully executed—if conventionally styled—flagship in the LS 400. It quickly convinced price-sensitive Americans that Lexus was a smarter buy than those overengineered and overpriced European imports.
At first the German brands disdained the upstarts from Japan, but soon the shock waves reached even Mercedes-Benz headquarters in Stuttgart. How could it be that a brand-new luxury entry matched or bettered the S-Class in almost every respect yet cost less than an E-Class? The situation grew even more dire as the Japanese brands filled their portfolios with coupes, midsize sedans, and sport/utilities.
To this day, the German carmakers prefer to dismiss this competition from Japan with a wave of the hand, but the truth is that they changed every aspect of their business in order to catch up to the Japanese, including design, engineering, development, and especially (especially!) customer service.
And yet, for all their disruptive influence, the Japanese luxury brands today appear to have plateaued, while their German competitors are powering ahead. In 2012 and 2013, the battle for the luxury sales crown in the United States has been between Mercedes and BMW. None of the Japanese luxury brands have yet to bounce back to their previous sales peaks, while the Germans are setting new records. In the past decade, BMW sales have grown 19 percent, Mercedes 51 percent, and Audi is up 103 percent. Meanwhile, Lexus and Infiniti—not to mention Acura, Cadillac, and Lincoln—are all down.
We should also remember that this battle now takes place across the globe, where the Japanese have only recently entered the premium market. Particularly when one takes the worldwide view, the Germans still hold the high ground.
What exactly must Lexus and Infiniti do to close the gap with the Europeans? For a start, styling remains an issue, and the Japanese brands are only now attempting to establish a visual identity. Second, German cars still drive better, as they have matched concerted improvements in comfort and quietness with lively vehicle dynamics that the Japanese have yet to duplicate. Even when the Japanese have tried to create purebred sporting vehicles, the results have been mixed. Case in point: Akio Toyoda's Lexus LFA sports car. The LFA was an impressive piece, but one that became more notable for its $375,000 price than its V-10's 553 hp, and its lasting impression has been hubris, not horsepower.
When it comes to the ownership experience, Infiniti and Lexus speak to American consumers in a way that German cars do not, and no one who has ever been in a Lexus LS will ever doubt that the Japanese brands understand comfort and convenience features. Even so, the Europeans are catching up, perhaps motivated by the Chinese market, where such things are crucial to success. Efficiency should be an advantage particularly for Lexus, which introduced the first luxury hybrid SUV, the 2006 RX 400h, and the first hybrid flagship, the 2008 Lexus LS 600h L. But we're still waiting for the switch to more powerful lithium-ion batteries that would expand the appeal of the brand's hybrids. Meanwhile, Infiniti still awaits an electric vehicle even though Nissan has championed the technology. Moreover, the Europeans have begun offering hybrids of their own and also have achieved major fuel-economy gains with their mushrooming line of diesel-powered offerings.
Both Lexus and Infiniti, however, have begun work to move beyond the status quo and toward top-tier global luxury-brand status.
The reinvention of Lexus has been going on for some time, and indeed the Lexus LFA showed us just how serious the company is about finding a new direction, both in style and performance. Beyond the trademark spindle grille that has spread across the lineup, next up is the new NX compact crossover, whose 2.0-liter four-cylinder turbo will have more far-reaching duties.
We're more excited about the brand-shaping potential of the all-new 2015 Lexus RC F, not to mention the 2015 Lexus RC 350 and the convertible that will surely follow. The follow-up to the underwhelming CT200h will be a more emotional vehicle with a more powerful hybrid powertrain, sources say. At the same time, though, no major conceptual changes are being envisaged for the next LS sedan due in 2016—and this makes us wonder if the Lexus brand has become identified with the best-selling RX crossover instead of the flagship sedan not only in the mind of consumers but also within Lexus itself. Speaking of the RX, its replacement (due in 2015) presents a conundrum for Lexus. The vehicle has arguably been too successful for the brand's own good—it sells in huge volumes to an aging owner base but it does not present the young, hip brand image Lexus wants going forward.
Infiniti, meanwhile, has followed Lexus into the global marketplace and now sees itself as a global company, as indicated by the move of its world headquarters to Hong Kong and its stated goal to achieve 10 percent of the world's market for premium vehicles by 2020. The change is so comprehensive that it apparently requires a new nomenclature for all its models (much to the confusion of us all).
More important, Infiniti has plans for some serious image vehicles, possibly including the Infiniti Eau Rouge (above) with a 560-hp twin-turbo V-6, seven-speed transmission, and all-wheel drive. The Infiniti Q80 is due in 2017, and this flagship sedan will be the size of a standard-wheelbase Mercedes-Benz S-Class. The Q80 will also become the basis for the Q90 2+2 sports coupe in 2019 and the 600-hp Q100 supercar in 2019 or 2020. You can expect styling cues from design director Shiro Nakamura's Essence and Emerge-E concept cars for the new sedan and coupe, but we expect the Q100 will actually be a mid-engine plug-in hybrid. Even more significant might be the new QX40, which will be a re-bodied version of the next Mercedes-Benz GLA, as Nissan and Mercedes have entered into an agreement to exchange certain technologies in the future.
Underscoring the seriousness of the effort, Infiniti has been allocated fully one-third of Nissan's near-term investment to create more advanced and more emotional vehicles in its bid to achieve 500,000 sales worldwide per year by 2020. Clearly, the new technology link between Infiniti and Mercedes is meant to expedite developments, although we hear that the focus will be on hardware modules, not platforms. Nevertheless, when the next-generation Mercedes-Benz A-Class comes on stream in 2018, Infiniti is expected to ask for three spin-offs: a four-door notchback (Q40); a sportier compact crossover (QX30); and an image-building two-door model, either coupe or hatchback (Q20).
Lexus now also has its own German partner for technology—two years ago Toyota forged an agreement with BMW. In the near term, we expect to see some BMW diesels in Lexus models, but in the long term, we're more interested in the ZX6, a mutual sports-car project. It will ultimately lead to a BMW Z7 and a Lexus SC-style luxury coupe. We expect this rear-wheel-drive car will be powered by either an inline-six or a V-6 paired with an eight-speed automatic. We've also heard that the 2+2 coupe could accommodate up to three electric motors—an 82-hp unit between the front-mounted engine and transmission and a 92-hp motor on either side of the rear differential.
"Over the next 25 years, Infiniti must evolve from a U.S-centric to a global brand," said CEO Johan de Nysschen before his recent departure to Cadillac. "It is our aim to become a full member of the premium club." Lexus, too, is determined to close the gap with the Germans. Head honcho Kiyotaka Ise and his team know that they need to create more attractive and involving models and pay more attention to vehicle dynamics, without losing classic strengths such as craftsmanship, creature comfort, and customer service. Both brands, it would appear, are determined to finally reach the potential that so many in the industry expected and/or feared at their debut 25 years ago.
In Their Own Words
Jerry Hardcastle, vice president, vehicle design and development, Nissan Technical Center Europe
"We were looking at a way of building on the inspiration from our involvement with Red Bull Racing in Formula 1 and how we could bring that into the road cars. The Infiniti Performance Line exists, but it's a bit stickers-and-badges. We proposed the idea at the 2013 Geneva auto show, asking, 'Could we look at creating a new performance line?' And our executive said, 'Well, if you can do something with the Q50, then I'm interested. '"
Jeff Bracken, group vice president, Lexus U.S.A.
"Lexus is evolving into a more expressive entity. A more dramatic design language is playing a major role as we broaden our consumer base globally. The growth and popularity of the sportier side of Lexus such as the F brand and F Sport vehicles better help the brand connect emotionally with consumers looking for a greater thrill in a luxury vehicle. In the next 25 years, we will see product development focus on a performance and engineering identity."
Infiniti and Lexus: What's next
- 2015 Q30, Juke-style crossover
- 2016 Q50 Eau Rouge, sedan with 580 hp
- 2017 Q80, luxury sedan
- 2019 Q90, luxury coupe
- 2019 Q100, mid-engine sports car hybrid
- 20?? QX40, Mercedes GLA-style crossover
- 2015 RC 350, sports coupe with V-6
- 2015 RC F, sports coupe with V-8
- 2016 LS 460, sedan with same old, same old
- 20?? ZX6, coupe 2+2, Lexus SC replacement
In the Beginning: Why 1989 was a very big year
After suddenly shooting up like weeds in the fertile soil of gas-crisis-wracked 1970s America, Japanese auto sales gained momentum through the decade that followed. By the late 1980s, Japanese auto brands had grown well-entrenched, and the cars had become much more impressive—class-leading even, and not just in build quality. Except for the nascent success of Acura, however, Japanese automakers had never competed in the heart of the prestige market. Thus, the launch of new luxury divisions from powerhouses Toyota and Nissan, both in the same year, was a momentous event.
At one end of the spectrum, many questioned whether the Japanese could have any credibility as luxury-car builders. At the other, there was the fear that Japan Inc. might simply take over the luxury market in the same way it had overrun the economy segment.
The cars made their debut at the 1989 Detroit auto show. The Lexus LS 400 boasted a 4.0-liter, 32-valve DOHC V-8 making 250 hp. It went on sale in September at a base price of $35,000, which was thousands of dollars less than the six-cylinder Mercedes-Benz 300E and BMW 535i or the Audi V8. The Infiniti Q45 rolled into showrooms in November, with a 4.5-liter, 32-valve DOHC V-8 boasting 270 hp, and a $38,000 price tag that similarly undercut the Germans. Infiniti launched with an unconventional ad campaign that showed nature scenes but no car. An early Lexus ad, by contrast, featured a pyramid of Champagne glasses balanced on the hood, while the car drove 145 mph on a dynamometer.
In our first encounter with the new Lexus, nearly a year ahead of its arrival, Automobile Magazine editor David E. Davis Jr. heralded the LS 400 as "a pioneering vehicle." In the same month, we got our first wheel time in the Infiniti Q45, hot laps on the Tochigi test track at speeds in excess of 140 mph, which "provided convincing evidence of the minor miracle wrought by Nissan."
Still, we were eager to pit the new Japanese contenders against their Old World rivals. In the November 1989 issue, Automobile Magazine gathered the new Lexus LS 400 and Infiniti Q45 and their German competition: the Audi V8, the BMW 535i, and the Mercedes-Benz 300E. "I felt a pleasant and familiar tingle of anticipation as I stepped off the plane in Los Angeles," recounted David E., who wrote the story.
In it, the Q45 impressed, but it finished mid-pack. "We marveled over one thoughtful touch after another, reveled in the smooth acceleration, and luxuriated in the idea of the Infiniti," Davis wrote. But Nissan's new luxury sedan "didn't feel quite finished. The marriage of art and science that this car represents is not yet satisfactorily consummated."
Of the Lexus LS 400, the verdict was unequivocal: "Brilliant. Never seems to be trying hard. Extraordinarily swift, smooth, and silent," we said. "Toyota nailed it with the big Lexus sedan." The LS 400 walked away in first place. "Lexus is a paragon," Davis continued. "It will play hell with the marketing plans of the old-line European luxury-car builders, and it could have a disastrous effect on already shaky enterprises like Jaguar and Volvo.
"With these new cars, Toyota and Nissan have demonstrated, beyond a shadow of a doubt, that they can compete head to head with Europe's best," we concluded. In the same article, industry analyst Maryann Keller further posited that, while all attention was focused on Lexus and Infiniti's effect on the European luxury brands, the American luxury brands were even more vulnerable to the new arrivals. Of all the things we wrote in response to the Lexus and Infiniti arrivals, that may have been the most prescient of all. —Joe Lorio
Infiniti and Lexus: The first quarter-century
Toyota commences work on Project F1 ("Flagship no. 1"), the Lexus division.
Nissan Horizon task force gets underway, to create Infiniti.
Infiniti is announced. Badge design of "two central lines leading off into an infinite point on the horizon" signifies "brand's desire to be always looking forward—to new horizons, to infinity."
Lexus and Infiniti make their debut at the Detroit auto show. Lexus shows its LS 400 flagship and entry-level ES 250 sedans. Infiniti unveils its Q45 sedan.
Infiniti's companion model, the M30 coupe, arrives. A convertible soon follows.
Lexus sales start in Europe.
Infiniti introduces the compact G20, a version of the European Nissan Primera.
Lexus SC 300/400 coupe is the brand's first standout design.
Infiniti J30 is a RWD sports sedan with oddly rounded styling.
Lexus GS 300 is Lexus' modest first attempt at a sports sedan.
Infiniti caves to conventionality, adds a grille to the Q45.
2nd-generation Lexus LS 400 deviates little from the first.
More badge engineering gets Infiniti its first SUV, the QX4 (nee Pathfinder).
Redesigned Lexus GS 300/400 gains a V-8 and more credibility.
2nd-generation Infiniti Q45 is less BMW, more Buick.
Lexus RX 300 invents luxury crossover segment and promptly becomes the brand's best-seller.
Lexus reaches 100,000 sales for the first time.
Cumulative Lexus sales top 1 million in U.S.
Lexus IS 300 is an impressive, youthful sports sedan.
3rd-generation Lexus LS 430 delivers more of the same.
Lexus SC 430 hardtop convertible targets Beverly Hills bleach blondes.
3rd-gen Infiniti Q45 debuts.
Infiniti's brand-defining car finally arrives in the form of the G35 sports sedan and sports coupe.
Infiniti sales top 100,000 for the first time.
Cumulative Infiniti sales reach 1 million.
Lexus RX 400h hybrid, the first luxury hybrid SUV. Infiniti M35/45 arrives, replacing Q45. Lexus begins sales in China.
Lexus LF-A show car (1st of 3)
4th-gen Lexus LS includes the LS 600h L, a $100,000 hybrid flagship. Infiniti begins sales in China.
416-hp V-8 Lexus IS F sports sedan arrives.
Lexus LFA supercar arrives, priced at $375,000; 500 are built. Infiniti announces partnership with F1's Red Bull Racing.
4th-gen Lexus GS 350/450h introduces Lexus' more expressive design language.
Tennessee-built Infiniti JX three-row crossover is the brand's first U.S.-assembled vehicle. Infiniti HQ moves to Hong Kong.
Infiniti/Red Bull racing's F1 champion Sebastian Vettel (pictured) named Infiniti's director of performance.
Lexus launches 3rd-gen IS sedan.
Infiniti switches to all-Q nomenclature, which we still get confused.
Infiniti Q50 debuts steer-by-wire technology.
Infiniti Q30 compact crossover starts production in Europe (the concept is shown at right).