How Lexus Practically Broke BMW — and How BMW Fought Again

BMW sells plenty of automobiles within the U.S. nowadays. Actually, finally rely, the marque moved 371,346 automobiles and SUVs final yr. It didn’t occur in a single day; fifty years in the past, BMW of North America’s inaugural yr, the model solely bought 19,419 automobiles. One of many greatest velocity bumps on the model’s journey to promoting that many automobiles got here within the late Eighties. Issues started because the U.S. greenback to Deutschmark trade price fell, which sadly made BMWs extraordinarily dear within the U.S. (and elsewhere). Including to the model’s U.S.-based woes had been more and more stringent emissions requirements. Arguably, a few of BMW’s best fanatic choices by no means made it to our shores due to them. Then, lastly, within the ultimate yr of the Eighties, BMW had another reason to lie awake at evening: Lexus.

Lexus Challenges BMW

In 1989, Toyota formally launched the Lexus model. Its purpose was to focus on the BMW/Mercedes-Benz purchaser with luxurious automobiles and a watch to customer support; traditionally, a single buyer grievance launched a brand-wide service marketing campaign, which drew plenty of optimistic consideration. In 1991, Lexus made landfall, and it was painfully clear for anybody BMW’s gross sales numbers. Whereas the model bought 96,759 automobiles in 1986, 1991 noticed that quantity fall to a painful 53,343. “What was clear was that our mannequin vary merely didn’t reside as much as ‘The Final Driving Machine,’” mentioned Vic Doolan, then newly appointed as BMW AG Head of Gross sales and Advertising and marketing. “We knew that to compete we needed to excite and please the BMW proprietor.” The unstated fact? Lexus was successful market share by advantage of its highly effective and clean V8 engines, glorious consolation and facilities, and perceived reliability due to its Toyota ties.

BMW Battles Again

So, BMW started engaged on one thing Lexus had demonstrated was a buyer want: larger and badder V8 engines. The 5 and seven Sequence grew to become extra interesting to U.S. prospects, in keeping with BMW, and a brand new product line within the Z3 roadster additional bolstered the lineup. Adjustments began occurring on the dealership stage, too. In any case, they needed to in an effort to compete with Lexus’s newly-earned status. “Our vendor community was demotivated and unprofitable,” Doolan mentioned. “Poor vendor service was the outcome.” Doolan applied complimentary scheduled upkeep and improved technical coaching to make sure a greater service expertise.

Huge adjustments additionally occurred to how folks purchased BMWs within the mid-Nineties. BMW Monetary Providers was launched in 1992, which supplied higher charges and elevated flexibility for purchasers and sellers. Buyer loyalty elevated, whereas sellers had enhanced entry to pre-owned BMW automobiles. By 1996, BMW managed to submit gross sales of 105,761 for the yr. By 1999, Lexus had bought its millionth automobile after lower than a decade of existence. Thus, the battle continued.

As we all know at the moment, there was room for each manufacturers — and plenty of different rivals — within the market. By 2000, BMW had introduced the E39 M5 and all-new BMW X5 SUV to market. The latter, notably, was an ideal foil for the blossoming Lexus portfolio, which added the Land Cruiser-based LX 470 SUV in 1998. As a little bit of a “the place are they now,” Lexus moved 91,609 automobiles in Q3 2025. BMW, however, bought 96,886. As shut as ever, so it will appear. As an enormous fan of each manufacturers — and proprietor of each a GX 470 and “clown shoe” M Coupe — it’s wonderful to see the dividends that good competitors paid.

Supply: BMW USA