A recall earned Lexus a top reputation (2006)

The year was 1987 and the domestic automakers had finally resigned themselves to the fact that the Japanese were here to stay. What began as a trend in California and was perceived as consumers' knee-jerk response to the gasoline shortages of the '70s had taken root across the country. To the domestic automakers' dismay, even after gas prices stabilized, cars such as the Honda Civic and Toyota Corolla continued to gain share not only on the West Coast, but also in small Midwestern towns that traditionally bought American.

Although the loss of share was daunting, the domestic automakers believed their problem was self-limiting. "Okay," they thought, "Americans may have fallen in love with small economy cars from Japan, but the Japanese will never be able to sell a large car in this country." And this was a comforting thought, because small cars were a loss leader for domestic automakers. Their real profits came from the larger, option-laden vehicles, which they felt were immune from Japanese attack. And so the executives from the Big Three went to bed at night content that although they may be losing the battle for small cars, they would still win the war for corporate profits and market dominance in the end.

Halfway across the globe, executives at the European automakers were even less concerned about America's growing acceptance of Japanese vehicles. After all, with the exception of Volkswagen, the Europeans didn't even sell small cars in America. They didn't even sell large cars, for that matter. They sold luxury vehicles. And a luxury vehicle isn't just defined by its size; it exists because of its brand cachet -- something that no Japanese automaker could deliver, or so they thought.

So you can only imagine the reaction on both sides of the pond when, on August 24, 1987, Toyota announced the unthinkable. It would create Lexus, an entirely new division dedicated to building and selling what they said would be the best luxury vehicles in the world. You could almost hear the laughter filtering down from corporate towers in Detroit and Stuttgart, "An office worker may pay $10,000 for a Toyota to get back and forth to work, but there is no way a doctor or a lawyer is going to plunk down $40,000 for a Toyota, even if you give it a fancy name like Lexus."

Toyota was undaunted. It set out to redefine luxury beyond the traditional attributes of leather trim and a powerful engine. To Lexus, luxury would be defined by the total ownership experience, including a defect-free vehicle coupled with great dealer service.

Development progressed quickly, and 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. That's okay, Mercedes thought; Lexus needs that price advantage to make up for the stigma of driving a glorified Toyota.

from Hacker News https://ift.tt/3foeFRY