DETROIT — Dejuan Ross is a seasoned Toyota Motor North America executive who took over as head of the Lexus brand in late June as part of a leadership shake-up sparked by the retirement of Bob Carter, head of sales at Toyota’s long standing. Ross, 50, a graduate of Howard University, has held various sales and marketing positions at Toyota since joining the company in 1995. Prior to his appointment as head of Lexus, he was vice president of marketing at Toyota Financial Services.
Ross said he sees Lexus remaining steady in its planned transition to an all-electric vehicle lineup over the next decade, starting early next year with the RZ 450e compact electric crossover. Ross spoke with staff reporter Larry P. Vellequette and editor Omari Gardner on the sidelines of the Detroit auto show.
Q: How do you see Lexus dealerships moving to an all-electric range? What progress are they making?
A: They are in transition. They are working on their infrastructure to prepare for our first BEV, the RZ 450e. I think it will largely depend on the formation of their teams.
We view our dealerships as a competitive advantage, especially over competitors who do not have a dealership network. We work with our dealers to ensure they can meet customer needs.
Lexus will have one BEV for now, and a second isn’t planned until 2025. Is that enough to satisfy customers?
Anyone picking up a BEV may or may not need a BEV depending on their driving habits and what they are trying to accomplish. The fact that we have so many hybrid vehicles and plug-ins available, there could be another solution for the customer, depending on their needs. So we ask our dealers to make sure they train their sales people to answer these questions and then assess the right vehicle for the customer based on what they do on a daily basis and of his driving habits.
Some other automakers are asking their dealerships to install additional public charging to promote electric vehicles and attract people to their stores. What is the plan at Lexus?
Well, I think what we want to do is position our dealers to be kind of Shell’s answer men and women for all things electrified, which will give us the opportunity to attract more conquest business. I think that’s ultimately an advantage for our stores. I think we have a pretty strong message with electrified vehicles that sometimes we don’t get the credit for, but I think our dealerships are able to communicate the benefits whether it’s a fully electrified vehicle or some of the other products we’re offering right now.
What’s the latest vehicle inventory forecast?
We communicate to our dealers that we will probably be in this situation for the next year. So, you know, we might see some relief in the fourth quarter of next year. Nobody knows what normal means anymore, but hopefully we’ll get back to normal as we approach 2024. We end each month with around 5,000 units in dealer stock, spread across 244 dealerships, so that’s is a pretty slim selection, and it will likely stay that way, at least in the short term.
The transition to a full range of BEVs will obviously take time. How will this transition unfold in dealership service departments? Are dealers being asked to change their service operations now?
We still have a very viable CPO program and will continue to sell Certified Pre-Owned vehicles for a long time to come.
We do not expect our services business, which has performed very well over the past two years, to let up. There was a bit of concern as we move to electricity what it would do to service revenues, but in the short term it will be fine.
Leasing has always been a strength for Lexus and other luxury brands, but these economic conditions and inventory shortages are changing the game. What is your outlook on leasing, and will there be room for secondary leases for Lexus BEVs?
There is a huge opportunity for rentals right now because in the current market our rental portfolio has shrunk considerably. Our goal is to develop rental, and I think there will be opportunities then. The advantage of having a captive finance company is that we have had these discussions. As we focus on leasing, opportunities will arise as we follow the asset through the maturation process.
Where is the brand in terms of Monogram digital retail tool penetration?
By the end of the year, we expect to reach 20% with Monogram, making it the #1 digital selling tool on our network.
We told resellers that we would ask them to have a digital retail tool, but we also tell them that even though we think Monogram is our best tool, they are more than welcome to find the best tool for them, so we didn’t make it mandatory. But there has been growing demand for Monogram which was highlighted at our dealer meeting a few weeks ago.
There are obviously benefits to integrating it with our lexus.com system and mobile sales app. And I think dealerships are realizing they need a digital tool that mirrors the same physical experience a customer has when they walk into the showroom.