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Lexus is still studying the possibility of local assembly in India, says Lexus India president PB Venugopal
Sirish Chandran: How has the journey been?
PB Venugopal: Our overall vision is how do we establish Lexus as a luxury lifestyle brand. We had two hypothesis before we looked at launching Lexus in India. One is, from our Toyota stable after the Innova, Corolla and the Fortuner and also the Camry, the customers were moving to other luxury brands. So, one of the hypothesis was that 70 to 80 per cent of the customers would actually look at coming to Lexus. And today after over a two year period we see that 78 per cent of the customers are from the Toyota stable. Second thing is, we also felt that self-charging hybrid electric vehicles will be one of the main reasons for guests to look at Lexus and we see that 60 per cent of the customers who have bought Lexus’ have given one of the major buying reasons as self-charging hybrid electric vehicles.
Lexus came into India in March 2017 and we’ve been beyond our expectations, which is what has been very encouraging for us. It was a very conscious decision to go in for self-charging hybrid electric vehicles because we as an organisation, we strongly believe that we need to contribute to the society, and as you know that there are many cities in India which are highly polluted. And our guests [Lexus calls their customers guests] who actually own our Lexus, we not only give them a self-charging hybrid electric vehicle, but we also make them carbon neutral by planting equal number of trees. This is something that has been well appreciated by our guests.
We have developed our Lexus relationship managers as a single point of contact for a guest who owns a Lexus. It gives a hassle free experience and he is more comfortable in talking to one person who he has met at the time of buying or making the decision. This is why our focus is very much on the Lexus relationship managers. We do bring them to Japan to understand the hospitality of the country, the Omonotashi, we call it, which is anticipating the customer needs and that is what we try and do in our own country which is actually helping us do better than we anticipated.
SC: Have you gone to this project with very conservative numbers?
PBV: Not really. We came in with all the products, both the SUVs as well as the sedans. What we thought is that we will take it step by step. But I think we are much [better] prepared now. It is fully imported from Japan so it is based on customer orders. And the customers are understanding the situation and they are giving us the time to get it based on their specific orders.
SC: When does Lexus start local assembly?
PBV: We always study various production structures and also the various opportunities that are possibly there. We are studying it and that’s where we are.
SC: Your pricing, especially for the higher end versions, is out of the ballpark
PBV: That is based on the duty structure. One thing that we want to give assurance to our customers is that from an entry level sedan to SUV we are competitively priced — which is pricing as good as a local production. Of course you are right, from an RX, LX and LS perspective, that the pricing, obviously with the customs duties, couldn’t be that competitive. As I mentioned earlier, we always look at the opportunities and we see India as a big potential with a long term point of view.
SC: At the Toyota Kyushu plant they mentioned technicians from India, from TKM, had spent two months training at the Lexus line. Does that mean the wheels are already turning?
PBV: This is an ongoing preparation. On our roads, where customers sometimes meet with small accidents, and their cars would need to be repaired, we have to ensure the same kind of quality. And this is an ongoing training program where our technicians keep coming into the factory and because we have to ensure the same kind of repair quality. We have to ensure that there is no difference in what we can offer in our country from a repair quality point of view. It is an ongoing training program and it has started much before we have come into India.
SC: Are you looking at expanding your network?
PBV: We have three guest experience centres in Delhi, Mumbai and Bangalore and seven authorised centres in Chennai, Hyderabad, Kochi and Chandigarh. We have established a team in all these seven cities with our Lexus relationship managers and Lexus care managers. In these four cities we don’t have the brick and mortar but we have the system ready to take care of our guests which is much more important from their ownership experience. We don’t have any other immediate expansion plans.
SC: How the Lexus experience different?
PBV: The fundamental point is, what we can do in terms of anticipating the guests needs, be it from a product perspective or from an after sales perspective. That is the overall thinking, because we feel that the guests have to be taken care of if we have to establish a life time relationship. The guests have to keep coming back to us and we need to always be with them.
Some of our guests have even spoken about “Is your bill right? Have you missed a zero?”. I understand their experiences have been different but what we do is, we have our service corners which is part of our Toyota dealership. But it’s an exclusive service bay and well trained Lexus care managers. So, there is always a conscious effort to look at the cost of ownership. This is again adding to the amazing ownership experience that we are talking about. It is not just the initial costs that the guest pays but also the entire cost towards the ownership period.
SC: What about electrification?
PBV: We sincerely believe that our country is still not ready with the required infrastructure. And what we have seen in the last two years is that the strong self-charging hybrid electric vehicle is a clearly an interim solution. Of course from the product development point of view [the move] towards electrification is from our parent company which is Lexus International and Toyota Motor Corporation.
There is always on an ongoing discussion [with the government] and we have been giving some facts and figures and I am sure the government did come up with their FAME incentive. One positive thing that we see is that the GST cess has not been increased for the hybrid electric vehicle.
SC: And finally what is your ambition for Lexus in India?
LI: Lexus very clearly has a vision of establishing as a luxury lifestyle brand and we are in the right direction. From current standpoint, the luxury market is 1.2 per cent of the passenger car market and in developed countries it is about four to five per cent. We strongly believe our country is in the right direction and our economy will be growing faster. India has got the highest number of young population and that will make a difference for our country. From a mid to long term point of view, we are very confident that India will definitely offer a great potential and we are here for a long term.