Lexus on track in transition to electric vehicles

DETROIT — Dejuan Ross is a veteran Toyota Motor North America executive who became head of the Lexus brand at the end of June in a management shuffle brought about by the retirement of longtime Toyota sales head Bob Carter. Ross, 50, a graduate of Howard University, has been with Toyota in a variety of sales and marketing positions since he joined the company in 1995. Before his appointment to head up Lexus, he was vice president of marketing for Toyota Financial Services.

Ross said he sees Lexus remaining steady on its planned transition to an all-electric vehicle lineup by the next decade, beginning early next year with the RZ 450e compact electric crossover. Ross spoke to Staff Reporter Larry P. Vellequette and News Editor Omari Gardner on the sidelines of the Detroit auto show.

Q: How do you see Lexus dealers transitioning to an all-EV lineup? What progress are they making?

A: They’re in the process of transitioning. They’re working on their infrastructure to prepare themselves for our first BEV, the RZ 450e. I think a lot of it is going to have to do with training their teams.

We see our dealers as a competitive advantage, especially against competitors that don’t have a dealer network. We’re working with our dealers to make sure that they can address guest needs.

Lexus will have one BEV for now, with a second one not due until 2025. Is that enough to keep customers satisfied?

Everyone coming in for a BEV may or may not need a BEV based upon their driving habits and what they’re trying to accomplish. The fact that we have so many hybrid vehicles and plug-ins available, there might be another solution for the customer, based on their needs. So we’re asking our dealers to make sure they train their salespeople to be able to answer those questions and then assess the right vehicle for the customer based on what they do day-in, day-out and their driving habits.

Some other automakers are asking their dealers to install additional public charging to promote EVs and bring people into their stores. What’s the plan at Lexus?

Well, I think what we want to do is position our dealers to be kind of the Shell answer men and women for all things electrified, which will give us an opportunity to bring in more conquest business. I think that ultimately is a benefit to our stores. I think we have a pretty strong message with electrified vehicles that sometimes we don’t get the credit for, but I think our dealers are able to communicate the benefits of whether it’s a full-on electrified vehicle or some of the other products that we’re offering right now.

What’s the latest prognosis on vehicle inventory?

We’re communicating to our dealers that we will probably be in this situation for the next year. So you know, we might see some relief fourth quarter of next year. No one knows what normal means anymore, but hopefully we’ll be back to normal as we go into 2024. We’re ending each month with about 5,000 units in dealer stock, spread across 244 dealers, so that’s pretty slim pickings, and it will probably remain that way at least for the short term.

The transition to a full BEV lineup will take some time, obviously. How will this transition play out in dealer service departments? Are dealers being asked to change their service operations now?

We still have a very viable CPO program, and we’ll continue to sell certified pre-owned vehicles for a long time to come.

We don’t anticipate that our service business, which has been doing very well over the last couple of years, will let off. There was a little concern, as we go electric, what it would do to service revenues, but in the short term, they’re going to be just fine.

Leasing has always been a strength for Lexus and other luxury brands, but these economic conditions and inventory shortages are changing that. What’s your outlook on leasing, and will there be space for secondary leases for Lexus BEVs?

There’s a huge opportunity for leasing right now because in the current market, our leasing portfolio has shrunk quite a bit. Our goal is to grow leasing, and then I think there will be opportunities. The benefit of having a captive finance company is that we’ve been having those discussions. As we get back to focusing on leasing, then opportunities will occur as we follow the asset through the maturation process.

Where does the brand stand now in terms of penetration of the Monogram digital retailing tool?

By the end of the year, we’re forecasting we’ll hit 20 percent with Monogram, which will make it the No. 1 digital sales tool across our network.

We’ve been telling dealers that we would require them to have a digital retailing tool, but we also tell them that while we believe Monogram is our best tool, they’re more than welcome to go out and find the best tool for them, so we haven’t been making it mandatory. But there’s been a growing demand for Monogram that was highlighted in our dealer meeting a couple of weeks ago.

There obviously are some benefits having it integrated into our lexus.com system and our mobile sales app. And I think dealers realize that they need to have a digital tool that mirrors the same physical experience a guest has when they come into the showroom.