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Will Toyota's Crisis Hurt the Lexus RX350?

Up Front

You've got to wonder how Toyota's (TM) massive recall and production shutdown will affect Lexus. Toyota's luxury division has been largely excluded from the recalls, but things seem out of control and doubts about Toyota could easily start to undermine Lexus's reputation for bulletproof quality.

The model to watch, in my opinion, is the new Lexus RX 350, the pioneering, five-passenger, luxury crossover vehicle that was redesigned for 2010. The RX model, which also includes the hybrid-powered RX 450h, is by far the top-selling Lexus. It's the only continuing Lexus model whose sales increased last year.

Toyota's latest recall, which concerns glitches in the brakes of the 2010 Prius, which is made in Japan, could raise concerns about all Toyota-made hybrids, including the RX 450h. Indeed, the latest recall includes the new Lexus HS 250h hybrid, which also has problems with its brakes. Meanwhile, Toyota's main recent recall, of 2.3 million vehicles that have problems with their accelerator pedals, centers on models made in North America. If that recall raises questions about North American-made Toyota products, that's bad news for the gasoline-powered RX 350, which is the only Lexus not made in Japan.

About 80% of the RX 350s sold in the U.S. are manufactured in Cambridge, Ontario, according to a Lexus spokesman. The others, plus the RX 450h, the hybrid version, are made in Kyushu. No big problems have been associated with the Canadian-made RX 350s. But some RX owners are already fretting in online owner's forums—such as us.lexusownersclub.com—if their vehicle identification number starts with a "2" (for Canada) instead of a "J" (for Japan).

Toyota's quality crisis may already be hurting the RX. Model sales increased 10.9%, to 93,379, last year (the RX 350 accounted for 84.5% of that number, and the RX 450h the rest). In January, however, RX sales fell by 5.5% vs. the same month a year earlier, to 5,688 (factoring in the different number of selling days in '08 and '09). Of course, one month doesn't make a trend, but that's a big downturn, especially considering that overall Lexus sales increased in January and RX sales were up 10.5% in December and nearly 50% in November.

Should you be afraid to buy an RX 350? Probably not. The RX 350 has been made in Ontario since 2003 with no major complaints, and the company says Lexus uses a different North American accelerator-pedal supplier than Toyota. Lexus also made the new RX slightly bigger and roomier than the old one, while holding the line on price. The starting sticker on the 2010 RX 350 is $38,500 with front-wheel drive and $39,900 with all-wheel drive, about the same as on the '09.

However, there's no reason to rush out and buy an RX 350, either. There are numerous alternatives to choose from, including Honda's (HMC) redesigned Acura MDX, General Motors' popular new Cadillac SRX, Ford's (F) Lincoln MKX, and Daimler's (DAI) Mercedes GLK350. Moreover, if you want an RX 350, Toyota's problems could eventually force dealers to cut prices to move the metal.

Regions : Asia

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