Big Time

Further observations on Lexus’ 1989 gamechanger.

(c) : carsguide.com.au

Attempting to second-guess the United States customer has been the rock innumerable carmakers have perished upon over the past fifty years or so. It ought to be quite simple really. Large capacity engines, plenty of equipment, a sense of visual definition or style coupled with ease of operation. Durability too, since vehicles are likely to do large mileages in often hostile climatic conditions amid owners sometimes averse (it’s been alleged) to the prospect of preventative maintenance.

So much for generalisations, but those who have wilted under America’s often unyielding glare have largely failed to sufficiently cover the basics. Not so the Japanese, who like the Europeans before them learnt the hard way not only how difficult the US market can be to crack, but also how lucrative it could be if you carried out the necessary due diligence.

In the 1950s, Jaguar were for a time the top-selling imported car brand in the United States. Keen to capitalise on this, the carmaker began work in 1957 upon an all-new model, aimed primarily at the US market. Jaguar founder, Sir William Lyons was an autocrat, who preferred to work by instinct, in the belief that he had a sound idea of what the customer wanted.

Based on intelligence gleaned from occasional visits to the US and from wish lists provided from his American concessionaires, Browns Lane developed Mark Ten, the most ostentatious, most US-centric Jaguar ever. But Lyons’ market intelligence proved to be flawed and the car misfired badly, leaving them with a hugely expensive model programme whose costs could not be amortised. Ditto Peugeot, who a decade later also got their calculations wrong with the 604 model. US customers didn’t necessarily want a larger, more opulent car, they wanted a better 504.

(c) jaglovers

Unlike Jaguar in the 1950s, and to a lesser extent, PSA in the 1970s, Toyota was not run along autocratic lines – this not being the corporate Japanese way. So when senior management at Toyota City approached to the issue of building a luxury car aimed primarily at American (and European) tastes, they didn’t simply rely upon gut feeling. They set up a committee to establish the parameters, carrying out huge quantities of market research, which included sending a number of senior engineers to live in California to absorb the lifestyle of their target customer. Nothing was left to chance, because only when fully appraised of the facts could they arrive at a conclusion.

The background to Toyota’s Circle F programme was dominated by two significant factors. First, the realisation by Japanese carmakers that punitive import restrictions into the US and European markets were unlikely to be relaxed, and that the only way around this was to offer more upmarket, more profitable vehicles. The second factor was that on the back of a stock-market and property fuelled economic boom in Japan, credit was both cheap and freely available to businesses to invest as they saw fit.

Toyota already had decades of experience in both the United States and Europe to draw upon, so they knew the pitfalls. By 1984, when development of the LS 400 began in earnest, Toyota had already begun to cast off its reputation for engineering conservatism, building cars which genuinely impressed an often prejudiced motor press, if still lacking that final sprinkle of charisma.

Lead engineer, Ichiro Suzuki was in the enviable position of being able to select his best people for the Circle F programme, as well as drawing upon the not inconsiderable resources of a giant multi-national car company, and thanks to Japan’s credit bonanza, an almost unlimited budget. Certainly, cost constraints were out the window – the rationale being that the best could only be achieved if everything was on the table.

But all the resources in the world are no use if you do not know exactly where the destination lies, and can marshal your resources to get there. According to Lexus, over the timescale of the programme, 60 designers, 1,400 engineers split into 24 teams, 2,400 technicians and over 200 support workers worked on the car. Managing that number of people, without swamping the project or losing focus requires both leadership and sound judgement. Suzuki it seems was such a character, and as such deserves tremendous credit, a matter noted to this author by his former Jaguar opposite number.

Reviewers marvelled at how sorted the LS400 felt from the off, one journalist describing the driving experience as if Toyota had been building the car for around a decade, rather than being an all-new design. Another simply stated, “Toyota nailed it”. But the LS400 wasn’t flawless, there being some very minor early build-related issues. However, the exemplary manner in which Lexus handled this potential PR reversal proved a textbook case of going above and beyond previously held nostrums of customer care, laying the groundwork for their pre-eminent reputation in this arena.

Some have since suggested that Toyota were fortunate with the timing of Lexus, coming as it did to the US market in the wake of arguably the worst decade in the domestic industry’s history from both a product, perceived quality and durability perspective. As America’s premier luxury marques, already under pressure from imports, the arrival of Lexus hit both Cadillac and Lincoln hard. And with buyers already familiar with more upmarket products from Japan, it wasn’t as huge a leap for them perception-wise than it might have been for their European equivalents, who were also more hidebound in marque loyalties – to say nothing of brand snobbery.

Certainly, even if the LS400 never quite caught on with the European customer, its impact was felt acutely by all its major prestige rivals who were forced to re-evaluate their entire offer – particularly from a quality, durability, equipment, value for money and customer service perspective.

But timing, like luck is often commensurate with hard work and application. Basically, Toyota, having definitively established what was required, worked at it and worked at it until they had arrived at a conclusion they were satisfied with. And while some are equally content to dismiss LS 400 as simply a Camry on steroids, such was the engineering depth within the car, that such accusations turn to dust when faced with the reality of Toyota’s achievement.

Because if you want to make it big in America, you’ve got to do your homework. Even then, it requires hard graft and an unswerving focus. Relying on guesswork and a mentality of ‘if it works for us, it’ll work for them’ simply isn’t going to cut it. Because like most overnight successes, the Lexus LS400 was decades in the making.

Author: Eóin Doyle

Founding Editor. Content Provider.

29 thoughts on “Big Time”

  1. Hi Eoin,

    The LS400 was obviously benchmarked against the Peugeot 604 too. Toyota brazenly stole the peculiar headlight arrangement of the French saloon: 2 lamps, with one bigger then the other. I always thought they were made up of one piece on the Lexus so I was surprised to find this picture:

    1. The US had some strange headlight laws, allegedly to protect the home industry. See what that did to the front of the W126!

    2. “The 1994 second generation LS400 was a facsimile of the original, to the extent that it’s almost impossible to tell them apart”

      This could explain why I thought it was a single headlamp. The second generation might’ve ditched the twin headlamp set-up. Here the grille, lights and bumper are different, a JDM I presume.

    3. Not sure that copying one styling detail counts as benchmarking.

      The LS400 did suffer a little from its unoriginal styling – even the two tone bodywork is a direct copy from Mercedes. No doubt certain reviewers were looking for any excuse to criticise this disruptive new challenger, but this was an easy weak spot to identify.

      Interesting note on customer service too – something that is so often woefully overlooked by car manufacturers. McLaren took note and did the same thing when it relaunched as a sports car maker, even bringing in early models for free upgrades. A new luxury brand is by definition seeking conquest sales, but repeat business and customer confidence are critical.

    4. Youre right, NRJ. Here’s the first generation:

      And the (pre facelift) second generation:

      Actually, the change in headlamp arrangement is just about the only way to tell the two apart, which is why I’ve just realised that the photo I posted below was actually a (mislabeled) first generation model, not a second generation one!

    5. Still, it’s news to me that there was a second generation that looked so close to the original.

    6. See the chamfered end to the grille that catches the light in my photo of the Mk2? That’s another clue. The Mk1 grille was flatter and less three-dimensional.

  2. The LS400 changed the automotive industry for the better, by raising the benchmark for product quality and, especially, customer service expectations, forcing the industry to try and follow suit. Like so many seminal first albums, however, it proved very difficult to improve upon, from a design perspective at least. The 1994 second generation LS400 was a facsimile of the original, to the extent that it’s almost impossible to tell them apart. Here’s the second generation XF20 model:

    I can’t think of any other car where two model generations were so similar, despite the second sharing no body panels with the original. (Doubtless, DTW’s knowledgeable commentariat will put me right on this!) Interestingly, the first generation model only had a lifespan of five years, the second generation lived six years, both relatively short runs for a car in its segment.

    The doppelganger continued until 1997 until it was facelifted, if not necessarily improved, to freshen up what looked to most (all?) observers as an eight year old design. In 2000, Lexus really lost its way when it released the third generation model that was a virtual clone of the W140 S-Class.

    1. The short model-cycle is quite a Japanese thing isn’t it ? The Civic is completely renewed every 4 years and has been for decades if I remember correctly.

    2. I can’t think of any other car where two model generations were so similar … New Clio vs its predecessor?

    3. Renault again: the R5 and Super5 were considered to be too similar. They weren´t.
      My suggestion is the Mk1 and Mk2 Jaguar XF. Like Andy Warhol and the one on the silver screen, I can´t tell ’em apart at all…
      Renault are trying the Golf game: incremental change. Easier said than done. Worth persevering with though.

    4. I see what you did there Mr. Herriott. Now I’ve got the song in my head…

    5. Hi Richard. XF Mk1 and Mk2, really? The first is a close-coupled four-door coupé, the second a much more conventional six-light saloon:

      Admittedly, the front and rear ends are near identical.

    6. Daniel: you´ve picked a clear view. Having looked at them side by side, yes, they aren´t quite identical. The later one does not to me look like a later one though.

    7. True, Richard. The Mk1 was much more distinctive, and offered the market something unusual. The Mk2 is much more mainstream, and not selling.

  3. Could you roll the rear window all the way down in the LS400 ? with no quarter light a big space within the door must’ve been needed to accommodate it.

  4. Indeed. “Like all overnight successes, it was decades in the making.” Aesthetic issues aside, this has been a vehicle far more capable than anyone who ever bought into the snob value of a Mercedes would have ever recognized. We should be glad it exists; it shows us what the world would have been like if Karl Benz was never born.

  5. The following striked me when reading the linked Automotive News article:

    “in September 1989 Lexus delivered its first vehicles into the waiting hands of customers. Its flagship vehicle, the LS 400, carried a list price of just under $40,000. By comparison, a fully loaded Mercedes S-Type sold for nearly twice that amount.”

    In Europe the price has always been, roughly, at the same level; this is further proof, if needed, that Toyota’s main interest at that time was the US market, and nothing else.
    The same applies to the open recall policy, something at the time (and also later) completely unknown in Europe.
    I have the impression that in its “LS cruise control problem” Toyota, attacking herself and immediately with her vast recall action made the best possible choice, anticipating the attacks, which would undoubtledly come under the US “lemon car law” (Magnuson–Moss Warranty Act 1975) and would be deadly for the new and not yet established badge.
    An anticipated offensive, one could say, in order to shake the enemy, which was known to attack Lexus in a near future using that problem, and disrupt its possible actions.
    A costly action, which however probably avoided the failure of the Lexus operation, and, on the contrary, helped in establishing a new market standard, of which Lexus was the first bearer.
    Two birds with one stone for Toyota.
    Another proof of the “leadership and sound judgement”, as Eóin says, which led the Lexus operation: a prompt and well-conducted unexpected reaction leading to a reversal of the probabilities.

  6. No-one has referenced the title. Peter Gabriel’s song of the same name, a big bolt of cynical energy of a pop song. “My eyes, belly, house and car are getting bigger!” He cries. Was the person he’s singing about peeking out of the upstairs window of his gargantuan American home to the drive where his LS400 sits? Very possibly in this case. Great song, terrific album, So.

    1. It’s a common misconception that you require a large team to achieve great things. Professor Randle said as much when we spoke back in 2016. In his view, a core of about 250 really good people was about optimum, assuming you had someone leading them who knew exactly what the destination was. In his view, more than that number and you swamp the process. When XJ40 development began in 1981, he had a total of 176 engineers to cover not only the new car but everything else within the engineering programme.

      If memory serves, XJ40 came in at around £200 million. In addition to costing less than the LS400’s engine, XJ40 is also believed to have cost less than the developmental costs of Mercedes-Benz’s multilink suspension as fitted to the W201 series. Given what he achieved, one can imagine what Randle could have done with a more generous budget.

      If only they had got Toyota to build them…

  7. A quoted One Billion Dollars for the LS400 program is an extraordinary amount set against the £200 million for the XJ40 and the same amount later for the Rover K series engine. Considering that Jaguar got a “Whole car” for that and it was a machine some people could never wean themselves off shows how thriftily Jaguar spent their money.

    However in my experience of an outsider [Urchin] looking in the Lexus finished off Jaguars in the West Riding. The stereotypical 5′ tall toupe’d Yorkshire self-made millionaire wanted a flash comfy car that didn’t wink it’s warning lights at you at random whilst you waited for the breakdown wagon to collect you. Our local golf club carpark never looked the same again. Just to make sure everyone knew that Lexus had taken the crown of NVH supression they did their champagne pyramid television ad with an LS400 on a rolling road and a tower of champagne coupes [The thing that really dates the LS400, these days you’d have to try and stack champagne flutes if that’s even possible or just not bother, aren’t rough cars meant to remind wealthy drivers that they’re still alive?].

    Not sure of my own logic here but the East Coast main line electrification was the same year- if I recall- as both the K Series and the Lexus and that apparantly came in at £334million for the overheat wires, track n’ signals plus all the engines and carriages. That looks even better value until I remind myself that the K series had flaky reliability so did the XJ40 and every time we have a North Easterly storm the wires get torn down. On balance maybe Toyota achieved the best value…

  8. You might not need the cohorts of engineers that Lexus allegedly had to design a car, but 176 to design a Jaguar seems too few. And with all due respect to Mr Randle, he’d not been employed by a main line manufacturer so far as I recall, so had little idea what might be needed to turn out a fully professional upmarket product in a company that was more than peanut size. His estimate of 250 remains a guess to me.

    Because designing a vehicle is one thing. Then you have to consider HOW to make it properly, something Jaguar NEVER learnt before Ford took over, and arguably after that too. That was where Toyota had everyone beat, not just Jaguar, but quite obviously Mercedes Benz. I repeat for all the theorizers that they need to read that book from MIT Press “The Machine That Changed The World”. Only then will you have much insight into why Toyota steam-rollered the competition, and why Mercedes was in last place among the bigger manufacturers in assembly quality in the late 1980s.

    There was more jowl-flapping over the LS400 from “informed” US commentators who hadn’t a clue how to organize a tea party themselves but were useful propagandizers for America than you could shake a stick at, so the “experts” had to pretend there were vast armies working away, because the boys at home in Detroit couldn’t match the product and they were the very best, unequalled anywhere in the world to their way of thinking. So the only way to beat Detroit with Roger Smith on a multi-billion dollar robot-assembly binge for quality, was for Toyota to employ these vast armies of implied lesser capability persons to beat the American Way. Thus the product, they asserted, was dumped at below cost, based on their jaundiced views.

    Toyota also put out the Celsior for home market consumption at the same time as the LS400, detailed different specs for different overseas markets, made left and right hand drive variants, produced service manuals, trained armies of techs at brand new dealers, placed likely-needed spare parts in the right warehouses and so on.

    All from scratch and at one go.

    This in addition to designing the production of the body, no shipping it off to Pressed Steel on a wing and a prayer, and the process of assembling it with few errors. That, my friends, takes more than 250 people if you want to do it properly. I’d wager far more people were employed in the design of production lines, production layout, co-ordination with suppliers for Just In Time assembly routines and the service side than in the design itself, engine included.

    Not sure I’m getting through with my points. The audience here is not particularly engineering-oriented so might not appreciate what I’m saying. Mr Doyle says: “US customers didn’t necessarily want a larger, more opulent car, they wanted a better 504.” No sir, what they wanted after buying a Peugeot was a good dealer to get it serviced at. Hole-in-the-wall dealers run by enthusiastic amateurs helped ruin many a European nameplate. Sure the cars had their charms until things went wrong, then you were stuck. The complete lack of decent after sales service was what killed all those European nameplates whose manufacturers weren’t really trying hard enough.

    Volvo worked that out from day one back in the late 1950s, and they’ve never come close to abandoning the US market. They beat Mercedes (who used Studebaker dealers into the early ’60s) and certainly BMW (which was niche until the late 1960s) into having exclusive dealers where you could get your darn car repaired. They sent a crank and cam gear set for my old 1960 Volvo B16 engine by airmail from Gothenburg when none were available in Canada in early 1969. It (they) arrived in a blister pack, which was one of the earliest examples of such packaging I’d then seen. No rusty steel crank gear, all shiny. All for 27 bucks.

    The absolute lack of decent Jaguar mechanics at the only (!) local BLMC dealer in the ’70s and ’80s made another acquaintance of mine a rich man overhauling the XK engines’ cylinder heads and woeful DOHC chain drive – he worked out a way of doing it it without vast disassembly. He was also a dab hand at overhauling cheapo 3 litre BMW cylinder heads which warped by 70,000 miles. His back lot was littered with Jaguars including V12s and latterly BMWs. It overwhelmed him at times. Around here by 1989 the place was crawling with Japanese cars already with A1 mechanical durability reputations from the previous 25 years, and Lexus wasn’t going to have customer complaints about mere service. That’s what sells their current range of generally uninspired products – no hassle service. Buy a Lexus and you simply don’t have to worry. They treat you right. Not like Alfa, which I seem to remember from discussion here a few months ago, haven’t even got decent dealers in Europe today.

    1. Good morning, Bill. As one of the “Not particularly engineering-orientated” readers of DTW, I’m happy to say that your piece is very well argued and makes absolute sense.

      The car buying public, most of whom know far less about engineering even than me, can still, ultimately, tell the difference between good and bad service. Admittedly, the naive and trusting can be temporarily flummoxed by the nonsense spoken by a “service advisor” in an attempt to justify why they still haven’t fixed a fault on the third attempt, but they will (or, at least, can and should) ultimately judge the car itself, it’s reliability and the quality of service holistically, and will use that judgement to stay loyal to the marque or look elsewhere. As I said previously, we owe Lexus a debt of gratitude, whether or not we ever owned one of its cars, for driving up the standard of after-sales service and forcing the industry to follow them, or otherwise suffer the fate that is currently threatening to extinguish Alfa Romeo.

      With regard to designing cars from the outset with quality, consistency and ease of series production in mind, that argument also makes absolute sense, even to someone has no professional experience of engineering or series production.

      Alex Issigonis was a brilliant and visionary engineer, but he designed innovative and technically dense cars without taking much (or any?) interest in how easily or otherwise they could be manufactured. He was also allowed far too much freedom and autonomy within BMC and should have had senior counterweights with production and marketing experience to ensure his designs were feasible for consistent, high quality series manufacture, could be sold at a decent profit, and were actually what the public wanted to buy. Many of BMC and its successor companies’ products fell short on one or more of these parameters, until Honda showed how to do this properly. I imagine Issigonis wouldn’t have had much time for the R8 200/400’s relatively inefficient space utilisation or interior flourishes, but it was one of the company’s most reliable, well regarded and successful products ever, only undermined by the fragile Rover designed K-series engine.

    2. Good post – I liked the bit about working out *how* to design the car. If I may read too much into it, the British way to doing things is often about muddling through without a well-conceived big plan. Jaguar´s a microcosm of the society it operates in. Your points about dealer networks are also apt – and I´d be interested to know why dealer networks are so often still the weak link in the chain from engineer/designer to customer.

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