Be Our Guest: 30 Years of Lexus | Toyota Untold Podcast #16

Be Our Guest: 30 Years of Lexus | Toyota Untold Podcast #16

Doron Levin: So, you’ve got performance,
you’ve got quality, and, now, you’ve got value. And those things add up to a
strong message to consumers. And the consumers, then, responded. Dave Illingworth: As long as you keep the
focus on the customers and the people, then you’ll do okay. If you’re trying to just make
money, you’re not going to do it. You’ve got to put the customer first. Tyler Litchenberger: Hey,
everyone, it’s Tyler. Kelsey Soule: And this is Kelsey. In today’s episode, we’re gonna take
you to the finer side of things. So, think champagne, caviar, first-class
seating, and basically anything you can imagine on like Air Drake. Tyler Litchenberger: We
started from the bottom. And, now, we’re here. Kelsey Soule: That’s exactly it. Tyler Litchenberger: All right. I’m in. Kelsey Soule: Okay. Today, we’re talking about
Lexus, the luxury brand. Tyler Litchenberger: And to all you
listeners out there who may not know, our luxury brand, Lexus, was born in 1989. Kelsey Soule: The year that
all great things were born. Tyler Litchenberger: Yes, we know
you were born in 1989, Kelsey. Kelsey Soule: Yes. Tyler Litchenberger: But unlike you, Lexus
has accomplished a lot of things in the last 30 years. Kelsey Soule: Well done. Well done. So, yeah. Lexus is celebrating their
30th anniversary this year. And while some may say that 30 years isn’t
that long, which feels really long to me now that I’ve lived 30 whole years- Tyler Litchenberger: They
really have accomplished a lot. Kelsey Soule: Yeah. No, for sure. All jokes aside, I want to say, even as an
employee, I wasn’t aware of the monumental impact that Lexus had on the luxury
industry back then, and the intense amount of research and secrecy that
went into starting the brand. Tyler Litchenberger: Right? A little spoiler upfront. We actually sent engineers to Southern
California to live and study how luxury intenders lived. That’s what we call
them, luxury intenders. Kelsey Soule: Yes. Tyler Litchenberger: They fully immersed
themselves in the culture to understand what customers would want
and need in a luxury vehicle. Kelsey Soule: That’s right. So, their dedication was unmatched. And that customer-first mindset and
finesse didn’t go away in the ’80s. It’s still around at Lexus today. Tyler Litchenberger: So, we want to take
you back to the beginning to tell the story of Lexus straight from the leaders
who were around back before Lexus even had a name. Kelsey Soule: And the perfect
person for that is Dave Illingworth. Dave was the first general
manager of Lexus back in ’89. And today, he is still
a brand loyal dealer. Alison Powell caught up with Dave to
talk about the early beginnings of Lexus, starting with how he came up with the
Lexus Covenant, which is the brand’s commitment statement that is still used
today to guide every decision Lexus makes. Female: Toyota of Warsaw. May I help you? Tara McGillion: Hi. May we be connected with
Dave Illingworth, please? Female: Just a moment. Dave Illingworth: Dave Illingworth. Alison Powell: Hi, Dave. It’s Alison Powell from Toyota
Motor North America Podcasting. Dave Illingworth: Alison,
how are you today? Alison Powell: I’m very well, thank you. How are you? Dave Illingworth: Excellent. Alison Powell: Thank you so much for
making yourself available for us to do this interview. We’re very interested in talking to
you about a whole range of things. Dave Illingworth: Okay. Fire away. Alison Powell: Okay. We’re very interested in talking about
what inspired the creation of the Lexus Covenant. Can you talk a little bit about why you
came up with that, the story behind it, and how it operates today? Dave Illingworth: I think it was early
1989, and we were getting ready to launch the division. And about six to nine months, you know, we
just got to thinking about who we are, and what we are, and what we’re all about. What always impressed me so much about
Toyota was the engineers, and the commitment of senior management in Japan,
and senior management in the US to do things right, and to really make an
all-out effort to have the finest car that was ever built at the time. And I think there’s a lot of sense of
urgency on our part to really define who we are, and what we are, and
what we’re trying to accomplish. [] It was just one morning, I walked out,
and Linda [Morris-Sacko] , at the time, was my assistant. You know, she was with
me for quite a while. And I just went out and dictated it. I mean, it wasn’t—there wasn’t much to it. I don’t know. I just sat down and said, “Okay, Linda,”
and I just started saying it, talking about it. We fine-tuned a little bit. I gave it to the advertising agency and
the marketing people, and they looked at it, kind of shrugged their shoulders,
and said, “Well, okay, that’s all right. If you want to do it.” But the reason it came to life and the
reason it meant so much to the company was because of the recall that happened on the
cruise control a couple of months after we launched the company. And that’s when we looked at the Covenant
and said, “Who we are and what do we—how do we really conduct
ourselves a business?” And in talking to the dealers and to all
of the people in the company, we recited the Covenant to them, so they understood
why we were taking this action because, I think, at the time, we only had one
or two cars that had this problem. So, we decided if we are who we say we
are, and we are what the Covenant says we are, then we do the right thing. And so, the Covenant came to life,
and it just has lived ever since. Alison Powell: The customer service
efforts on that recall, at least, in my understanding, were extraordinary, and
they must have been extraordinary for the time. Did you hear a lot from American
carmakers, sort of, scratching their head over why you would work so hard over
something that affected a very few cars? Dave Illingworth: We went to extraordinary
efforts to take care of the customers, to tell everybody what was happening, to
communicate what was happening, to do it in an organized way. It turned out that it really helped
us establish ourselves as putting the customer first. So, that effort, combined with the
Covenant, really kind of set the tone for who we were. And even from the very beginning, we were
always talking about separating ourselves from the rest of the competition by
putting the customer first and how we could do that. And when you look at what the engineers
were doing, and what the company was doing back in Japan, and the effort that
was being made to make this car truly exceptional, we felt, in the United
States, since we were going to launch the car, we had to make a superhuman effort
to pick the right dealers and to get the customer-first aspect to delivering and
servicing a car above everybody else to basically match the effort that was being
made in Japan to produce a car of such high quality. Alison Powell: Can you tell us in your own
words why Toyota embarked on the project of creating a luxury brand? Dave Illingworth: The chairman
at the time, Eiji Toyoda and Dr. Toyoda, the President of the company,
Toyota had been a business that was approaching 50 years. And I think, my understanding is that they
believed that the company was producing the finest automobiles in the world. And I think that’s probably true. I think Toyotas are the finest
quality, highest quality cars produced. And they felt it was time to actually
extend that into the finest luxury car. And they had a car in Japan called the
Crown, which was an upscale car, but it wasn’t a car that would be accepted
globally or recognized by other manufacturers around the world as a
truly first-class luxury automobile. And so, it’s their decision back in the
mid-80s that the company should build this car, and it should be the finest
luxury car built up to that time. Kelsey Soule: We’re going to break in
here to give you a little fun fact. In order to build what they hoped to be
the finest luxury car at the time, Toyota decided it needed to learn more
about the American luxury buyer. So, in 1985, they sent a team of Japanese
designers and engineers to an upscale Southern California
community to do some recon. Tyler Litchenberger: Yeah. Imagine a small group of Toyota employees,
they quietly moved into this small beach city called Laguna Beach. Kelsey Soule:Let’s
go back, back to the beginning. Tyler Litchenberger: That
Laguna Beach, Kelsey. Exactly. Kelsey Soule: Yes. And so, they did the research
on American luxury culture. Why did I just sing? Tyler Litchenberger: I know. Kelsey Soule: Like where these fancy
people went, what they bought, their attitudes towards different brands. Tyler Litchenberger: Yeah. And then, they designed the Lexus
with all these considerations in mind. Like, how does a lady with long nails
such as myself use a steering wheel? How would a lady slide into
the seat with her fur coat on? How many sets of golf clubs
will fit in the trunk? Kelsey Soule: And 14 full-scale models and
about 450 test cars later, the LS 400 was born. Tyler Litchenberger: All right. Back to Alison. Alison Powell: Why do you think
luxury is important or necessary? We can get along quite well without it. We’ve got excellent cars, excellent
products that are not considered in the luxury level. What role do you think
luxury plays in—in our lives? Dave Illingworth: Well, I think
it’s an aspirational product. I think everybody wants to succeed,
and everybody wants to be successful. And I think the key to the Lexus product
was that we tried to split the market. At the time, Cadillac and Lincoln were
the major players on the market, but their—their styling was rather
traditional, and their ride was rather soft. And the Germans were also higher end of
the market, but they were—their styling was more European, and their ride was more
sportscar and hard—hard—hard handling type of vehicles. And I think the Lexus
product split the middle. We tried to be in between and give the
customers an aspirational vehicle that were driving Toyotas, so they could move
to a higher-class car, but didn’t have to pay the price of the German
products or the European products. And at the same time could have a more
younger, youthful looking car that wasn’t as traditional as the
domestic manufacturer. And eventually, I think, what happened
is the markets kind of merged. But when you say it’s a luxury car, there
are cars in the lineup that are very expensive. But I think there are also cars in the
lineup that are more reasonably placed for people that they can try to achieve. And so, I think if you look at the top end
of the Toyota market and the lower end of the Lexus market today, you’ll see
there’s a lot of crossover in there. Alison Powell: How does it feel to realize
it’s been 30 years since—since all that happened? Dave Illingworth: Well,
I feel a lot older. And I—I noticed—I noticed I don’t move
as quickly, and I fall asleep quicker at night. But it’s remarkable to see the progress of
the cars, of the dealer body, how much the market has changed. And yet, it still comes down to people,
people caring about other people, about the dealers, and the factory people,
and the engineers, all caring about the customer that they’re trying to
serve, and putting the customer first. That doesn’t change. No matter what happens,
that doesn’t change. And as long as you keep the focus on the
customers and the people, then you’ll do okay. If you’re trying to just make
money, you’re not going to do it. You’ve got to put the customer first. And so, no matter what
happens, that’s the key. Kelsey Soule: I don’t know about
you, Tyler, but I agree with Dave. As I turned 30 along with Lexus,
I don’t move as quick either. Tyler Litchenberger: I totally agree,
and I’m older than you and Lexus. Just by a smidge. Kelsey Soule: But in all seriousness, I
think it says a lot about a company that the promises they made 30 years ago,
despite what’s happening in the world, they’re still upheld today. No matter how the business changes, Lexus
is still committed to a world class guest experience, and they’re always
putting the customer first. Tyler Litchenberger: It’s incredible
what Lexus has been able to do in just 30 years, considering that most luxury brands
have been around for over a hundred. We’ve put in work. Kelsey Soule: And we’re not
even close to being done. Tyler Litchenberger: So, now, we’re
gonna go from the OG general manager Dave Illingworth to the current
general manager, David Christ. I was able to catch up with him here in
the office a couple weeks ago to talk about his take on the 30 years
of Lexus and what’s next. Thank you for coming to Toyota Untold. David Christ: Thanks
so much for having me. Tyler Litchenberger: Of course. So, Lexus, we’re going to talk about it
because 2019 is the 30th anniversary of Lexus. And there’s been a lot of other
manufacturers that have been here in the US a lot longer who haven’t been able
to get the foothold that Lexus has. So, how did it only take Lexus 30
years to get where it’s gotten? David Christ: You know, we really had what
I consider to be two cornerstones in the launch of the brand. One was an absolute focus on picking the
best dealers in the industry and really committing to them that we were going
to bring them the best products. Tyler Litchenberger: Yeah. David Christ: So, between our dealer
selection and our product plan, those two pieces really set Lexus up for success. And—and since then, we’ve done
a lot of great things together. Tyler Litchenberger: Can you talk about
some of the—the product, you know, over the past 30 years that customers have
come to love in addition to the dealers? David Christ: We spent 10
years developing that first LS. And it’s really a spectacular product and
continues to be in—in the used car market. From there, we developed the first
luxury crossover in the RX 300. We developed the first luxury
hybrid vehicle in the RX 400h. We developed the product that it continues
to do well in the used car market, which is the ISF, which was our first
real step into performance. And then, we recently introduced another
high-performance vehicle in the LC 500. So, over those 30 years, we’ve continued
to come out with some great product that has been very well received by our guests. Tyler Litchenberger: Whenever I see an LC
in the garage here around here, it’s like head turner non-stop. I’m just like, “Ooh, look at that LC.” David Christ: Agree. Tyler Litchenberger: It looks good. David Christ: Agreed. Tyler Litchenberger: So, on those 30
years, what were some of the milestones that stands out to Lexus as a company? David Christ: Well, I think if you go
back in time, one of the milestones of the brand was very shortly after
launch, we had a recall situation. And the way that we approached that recall
was very different than other brands that addressed it. We really took a huge focus on the guest,
and we tried to establish with our dealers a benchmark in the guest treatment. And from there, our brand has
continued to focus on the guest. Now, many car manufacturers call
purchasers of their vehicles customers. We call them guests because in our Lexus
Covenant, we refer to customers as guests in our home. And we really wanted to create an
environment where our dealers would treat the customers like guests in their home. And that, to me, was one of those
watershed moments that established the brand, established the fact that we were
focused on the guests, and really set us on the right path. Tyler Litchenberger: Just a funny personal
story for—for me, my dad’s parents, when they were alive, they—they
wanted a new car. They couldn’t get out a lot. They, you know—or they
didn’t want to get out a lot. They could still drive just fine. So, they called Lexus dealership. And they are like, “Listen,
we want to look at this car. Could you bring us one?” And they did. The dealership brought out a vehicle
for them to test drive around their neighborhood, and they
bought it right there. No problem. Not even in a dealership setting, so. David Christ: That’s right. The dealers have done such an amazing
job with the guest experience. I get emails and letters
all the time from customers. In fact, just recently, we ran a campaign
called “Letters.” And in that campaign, which was on TV a few months back, we
actually captured letters from actual consumers and had them read
the letter in their own voice. And those letters talked about the
exceptional service that these guests have gotten from dealers. Tyler Litchenberger: Yeah. David Christ: And that, to me, is one
of the big differentiators in our brand. Tyler Litchenberger: Yeah. Experience Amazing is
the tagline for Lexus. What does that mean? David Christ: Well,
it’s really two fronts. One is we want the guests to experience
the amazingness of our product. So, we want to deliver a product that has
a wow factor and that a customer can get in and really feel excited about. The second Experience Amazing piece
is really the dealer guest treatment. We want them to experience the amazing
service that our dealer members provide and the sincere commitment they have
to making their experience pleasurable. In fact, when I wear Lexus logo
shirts, which I’m very proud to wear- Tyler Litchenberger: Yeah. David Christ: … I have to leave more
time when I go to the airport because people will typically stop me and say,
“I love my Lexus, I love my dealer.” Tyler Litchenberger: Yeah. What does innovation and technology
look like moving forward? David Christ: Well,
that’s a great question. You know, we continue to be the leader
in hybrid technology or hybrid sales. We’re up 42% last year. So, we continue to focus
in on hybrid sales success. Our dealers have totally bought in. Our hybrid sales this year
continue at a really strong pace. And we’re also pursuing electric vehicles. And we really feel like we have the
history with hybrids to create success in that environment too. You think about that, that was
14 years ago that we introduced- Tyler Litchenberger: Yeah. David Christ: … the first
luxury hybrid vehicle. And since then, we’ve sold many. And we continued to
expand the line—lineup. Most recently in January, we launched
the UX Hybrid, which is another exciting product, and we’ll continue to do so
in hybrid and electrical vehicles. Tyler Litchenberger: So,
where does Lexus go from here? What does the next 30
years look like for Lexus? David Christ: Well, we are super
excited about the future of Lexus. I—I think there’s really those two
cornerstones we talked about at the beginning of the brand, which are
still very relevant to the brand. We’re working very hard right now on our
product plan to deliver the best and most competitive products in each segment- Tyler Litchenberger: Yeah. David Christ: … that we compete in. So, that’s hard at work. And we will continue to deliver high
quality product that’s exciting to drive. The second area, of course, is our—our
guest experience, and we’re constantly working with our dealers on how to improve
it; how to give the dealers more and better tools, so that they can help the
guests; how to eliminate pain points in the—in the sales or service process that
we can—and we have control over that we can help. And I think between the evolution of the
guest experience into a newer, faster, easier way, and the exciting products we
have coming, it’s going to be a homerun. Tyler Litchenberger: Can you
say any of those products? I know you can. David Christ: Unfortunately, I can’t. But thanks for trying. Kelsey Soule: So, nice try, Tyler, getting
the top-secret products out of Dave. Tyler Litchenberger:
Listen, I have a Lexus. I feel like I need to know. Kelsey Soule: Yeah, definitely just you. Tyler Litchenberger:
What are you going to do? We can’t reveal any Lexus product news
right now, unfortunately, but we’ve got some interviews lined up that we
will release when the time is right. Kelsey Soule: Yes. So, stay tuned for further Lexus episodes. All right. To close out the show, we talked to
someone who’s been an observer of the auto industry for over 30 years and who was
there when we first unveiled the LS 400 in Detroit. Tyler Litchenberger: That’s right. Doron Levin is a journalist
based out in Detroit. He’s written for The New York Times, The
Wall Street Journal, Bloomberg, Fortune, Forbes. And he’s the author of two
books about the auto industry. Take a listen. Kelsey Soule: So, today, we want to start off with learning
a little bit about you, how long you’ve been a journalist, how long you’ve been
covering the auto industry, and then we’ll get into some more
Lexus-focused questions. Doron Levin: Okay. I was a correspondent for The Wall Street
Journal in Pittsburgh in 1984 when I got a call from headquarters in New York
asking me to come out to Detroit. And I’d never really been to
Detroit, except on business but they told me that Detroit, because of its
importance to the auto industry, was a great beat, and I should
really think about it. So, I decided to take that offer. And I moved to Detroit with my family, and
I had a look around here, and I said, “You know, we’ll probably be out of here in
about two years, no longer,” because that’s typical of the way The Wall
Street Journal moves people around. And here we are 35 years
later, I’m still in Detroit. So- Kelsey Soule: Wow! Doron Levin: So, it’s
ended up being a good ride. I had a great time with The Wall
Street Journal covering General Motors. And that’s actually where I had
my first contact with Toyota. And—and this was a—this was an interesting
time for the automobile industry because General Motors was really sitting
on top of the world and was- Kelsey Soule: Right. Doron Levin: … the number one
manufacturer of cars in the world and, certainly, in the United States. And—and Toyota was a company that was
starting to become better known in the United States but wasn’t well-known. It was, basically, a manufacturer of
smaller, lighter, less expensive vehicles and—but it was getting popular. And General Motors was probably in the
process, at that point, of trying to figure out whether Toyota was a
company that should be taken seriously. And you—you heard all kinds of opinions
back then from GM executives, some people who’d say, “Well, why would anybody want
to buy a Toyota when you could buy a Buick, or an Oldsmobile, or a Pontiac?” And then, other people would say, “You
know, this is the way of the future, and we shouldn’t take anything lightly, and
we can’t afford to take any potential competition lightly.” And those people were fewer in number, but
it turns out, obviously, they were right. And so, it was a very interesting time,
and a—and a—and a very exciting time to be covering the automobile
industry from Detroit. And I have to say, in 30—35 years,
it really hasn’t ever let up. Kelsey Soule: So, when do you think
that you first heard about Lexus? And when did you start covering it? Doron Levin: I mean, I could tell you
exactly when I started covering it. I started covering in 1989 after the first
press conference at the Detroit Auto Show. And that was when it first
became known that Lexus existed. It was a secret project,
as you know, before that. There were rumors that Toyota was
going to come out with a luxury car. And I’ll never forget that press
conference because it—it was held in Cobo Hall in downtown Detroit, and it was
in a big exposition center down there. And because it was much anticipated, a lot
of people showed up, not just journalists, but a lot of people from all
the other companies showed up. And I remember seeing people
from GM, and Ford, and Chrysler. And they were just, I thought, very
dismissive of Lexus at the time. Their—their attitude was, “Well, why
would you buy a Lexus when you could buy a Cadillac, or a Lincoln, or—or, even a
Mercedes Benz?” And so, that changed, obviously, very quickly. But it—it was somewhat anticipated
because, at the time, Honda had come forward with Acura, and it was known that
Nissan was working on a luxury franchise as well. So, it was assumed that—that
Toyota would do that too. Tyler Litchenberger: And what do you think
the turning point was for Lexus from the kind of snickering other executives to
like, “Oh, this is a brand that we need to be worried about or to consider?” Doron Levin: I mean, this is the way
things, kind of, unfolded this business. If you’re in the business, you understand
this, but you—you come out with a vehicle like the LS 400, and everybody can
say whatever they want to say, but it—nothing’s going to really matter. And so, the reviewers get
into the seats and drive them. And the reviews were very strong. So, the initial reviews for this vehicle,
once it was put in the hands of—of journalists and others, especially the
enthusiast magazines, was very strong and very positive. So, I think that probably sent a signal
to the competition that, “Hey, you better take this seriously.” Now, if the public and the consuming
public doesn’t respond, then you’ve got a problem. But in this case, it did respond. Lexus had a very strong dealer network. And the consuming republic really
responded because the value story was very strong as well. Kelsey Soule: Yeah. Doron Levin: So, you had, really, a luxury
car that was riding on a strong reputation of Toyota quality, and it was just
becoming clear that Toyota did have strong quality, that—that Toyota
brand had strong quality. And so, the assumption was that Lexus
would have strong quality as well. So, you got performance, you got quality. And now, you got value. And those things add up to a strong
message to consumers, and the consumers, then, responded. Kelsey Soule: What else do you think, over
the years, that Lexus has done right in the auto space since you’ve covered pretty
much, you know, every—every automaker? Tyler Litchenberger: The whole auto space. Kelsey Soule: Right. Doron Levin: We should talk about the
strategy, the dealer strategy, because I think that was a key element of the
overall success of the—of the brand, which was to choose very strong dealers at
the beginning and make sure that they understood that the idea would be to
create experience for the consumers that was far more than what they could expect
at a Cadillac dealership or—or a Mercedes dealership at the time. Kelsey Soule: Do you mean like the
attitude of like when customers would come in? Doron Levin: Yeah, the attitude. You found some dealers
would provide loaner cars. Others didn’t. Kelsey Soule: Yeah. Doron Levin: You’d find some dealers
would invest in their waiting area, in the service base—near the service base with
nice furniture, and others were kind of shockingly plain for people who
were spending a lot of money- Kelsey Soule: Right. Doron Levin: … on a piece of equipment. And—and then, you would find that there
were little touches at Lexus dealerships, you know, filling up a tank of gas, or
washing the car, just going to great lengths to make the whole
experience a good one. And they were very good at that. And they, suddenly, became known, not just
for their cars, but also for the dealer experience. Kelsey Soule: Yeah. Doron Levin: And that’s very
important to a lot of people. I think that the dealer experience is
one that’s gotten much better in the automobile business in the United States,
but partly that’s happened because of Lexus. Tyler Litchenberger: And do you think that
that helped Lexus distinguish themselves in the marketplace? Doron Levin: Oh, no question about it
because I—I think, already, a lot of customers – Lexus or not – liked to deal
with a—a dealership that they—where they know the people, they know
they’ll be taken care of. They know that they’ll
be treated properly. They trust the people there. There’s a feeling of confidence. It’s like having a family
doctor almost, you know. Tyler Litchenberger: Right. Kelsey Soule: As a journalist, did you
wonder why those other companies didn’t make those considerations before Lexus? Doron Levin: Well, I mean, I
can only give you one anecdote. I think, first of all, the answer to that
question, specifically, is they didn’t because they didn’t have to. Tyler Litchenberger: Yeah. Kelsey Soule: That’s a good point. Doron Levin: It was—it was a—it was kind
of an elite market, and everybody had their market share, and they
tended to be making money. And so, there was no real
reason to spend the money. But along comes Lexus. They start really disrupting the market. And I can—I can relate one anecdote. I went to visit Roger Penske
late on a Friday afternoon. Roger, of course, is known
for a lot of things in racing- Kelsey Soule: Yeah. Doron Levin: But he’s also a big
owner of many, many dealerships. And I actually caught him in his office
after everyone had gone, and he was at a fax machine. You remember what those were? Tyler Litchenberger: I do, I do. Doron Levin: The old-day fax machine. Tyler Litchenberger: Yeah. Doron Levin: So, he was- Kelsey Soule: Barely. Doron Levin: He was reading faxes that
were coming in from his Lexus dealership. And he was just kind of shaking his head. And he was saying, “I can’t believe the
gross profits on these Lexus automobiles. It’s unbelievable.” Tyler Litchenberger: Yeah. Doron Levin: Now, keep in mind, these are
vehicles that were selling somewhat at a discount, but Lexus had—had gone to the—to
the length of making sure that its dealers were going to be profitable and—and make
this sort of franchise be very valuable and treasured among the people
who got the first opportunity. So, they chose really well. And they—they—they set it up in such
a fashion that it would be extremely profitable. And that really helped the—the owners of
these franchises to say, “Well, now, I can—I can invest even
more into my dealership. I can—I can put new design in there, new
furniture, latte machines, more loners, bigger parts, inventory.” All the things that cost money that
translate to consumer satisfaction was really something on their radar, and they
felt that because they were making these big profits in Lexus automobiles,
that it was justified. And that becomes a virtuous
circle that kind of feeds- Kelsey Soule: Yeah. Doron Levin: … on itself
and helps—helps the franchise. Kelsey Soule: Yeah, because if the
dealers are happy, then they’re making the customers happy, and then the customers- Doron Levin: Yeah. Kelsey Soule: … keep
coming back again and again, David Christ: More customers come back,
you make bigger profits, you invest more. Just, it’s kind of a great virtuous
circle when it works properly. And in Lexus’ case, I think it worked
properly because it—it was managed by very smart people. Yeah, I got a chance to meet some of
the—some of the Lexus executives who were—were very shrewd about this. They really did their
homework and did a good job. Tyler Litchenberger: So, you just talked
a little bit about changes that the dealerships were going
through to get to that model. But I think we’re seeing again in the auto
industry, change is happening again with ride share coming in,
mobility being a focus. What do you think the future
holds for the auto industry? Doron Levin: It’s hard to know precisely. I believe that autonomous
driving is—is going to be here. I don’t know whether it’s going to take
another couple of years, or maybe 5, or 10 years, or more, but
autonomous driving is coming. I feel that in my bones. There’s just—I’ve seen too much in their
R&D and—and experienced enough of what it can be in—in the—in the first prototypes
in the lay-up, and in the research projects, not to believe that it’s going
to be perfected, and it’s going to be able to create a vehicle that basically you’ll
be able to hail an autonomous vehicles to come and get you wherever you are with
very—on very short notice, and then take you safely to where you want to go. And this is going to revolutionize
mobility, and it’s going to, sort of, change the way cities operate. I think it’s going to change the
way new buildings are designed. I think it’s going to change the way
some companies locate their workforces. It’s going to change a lot of things. And it’s—I think those changes are going
to be good for humanity in ways that probably not all of which
we can really predict. Kelsey Soule: So, just one more
question before we wrap up. Doron Levin: Sure. Kelsey Soule: Everyone’s
working on autonomous. We have our—our programs
and things like that. But if we’re focusing on like what Lexus
is doing today and what everyone is doing in the industry today, what do you think
is important to do to be successful? Doron Levin: Well, listen, I’m very
flattered that anybody would ask me that question because I really think that—I
just have to say, quite honestly, I’ve always been impressed with the quality of
leadership and quality of—of—of staffing at Toyota and Lexus. And I’m sure they already know the answer
to that long before they’ll hear it from me. But I think it’s—it’s one of the things
that I’ve always been impressed with at Toyota is their open-mindedness. That is to say, their—their willingness
to listen and learn from customers, from associates, from—from each other. And I think it’s a hallmark of the
organization and the culture of—of Toyota that always depends on, sort of,
understanding the logic of your customer, whoever that is, whether that customer is
the end buyer of your car, or somebody you buy parts from, or a
journalist seeking information. And I think if—if you really just never
forget that everybody’s a customer and—and that you should always explore and try to
see things from their point of view, it’s a—it’s a good way, I think, just to be
personally, whether you’re in business or not, but I think it’s also a very
effective strategy in business. Tyler Litchenberger: All right. That’s our show. For more on the history of Lexus,
including an infographic showing key milestones and a short video on the Lexus
brand, check out the Lexus newsroom at Thank you to our guests, Dave Illingworth,
David Christ, and journalist Doron Levin. You can hear more from Doron Levin on his
talk show, In the Driver’s Seat, available on Sirius XM Radio. Follow him on Twitter at @doronplevin for links to more of his articles. This is Tyler. Kelsey Soule: And this is Kelsey. Shout out to our show producers,
Sharon Hong and Alison Powell. Music by Wes Meixner, who
also works here at Toyota. Edited and mixed by Crate Media. Tune in next time for a super fascinating
episode on how we keep you safe from counterfeit parts.

About the Author: Michael Flood

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