Why the 2015 Lexus NX SUV Is Huge for Toyota Motor Corporation

Toyota's latest Lexus is aimed at the hottest market niche in the world.

Apr 15, 2014 at 2:32PM


Toyota will take the wraps off of its all-new Lexus NX SUV later this month in Beijing. Photo credit: Toyota Motor Corp.

Toyota's (NYSE:TM) luxury brand Lexus has had a fair amount of success in the U.S. in the 25 years since its inception. But it still lags the big three German luxury brands here, and it hasn't made much of an impression in Europe or China.

Toyota would very much like to change that, and that's where the Lexus NX comes in. The NX is an all-new product for Lexus, a compact luxury crossover SUV. The company has chosen to unveil it in Beijing, which is a clue as to its global importance -- but it'll be rolled out all over the world, including in the U.S., in coming months.

As the Motley Fool's John Rosevear explains in this video, the NX is entering one of the world's hottest market segments. It might be the most important new Lexus in many years -- but it's going to have to overcome stiff competition to be a success.

A transcript of the video is below.

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John Rosevear: Hey Fools, it's John Rosevear, senior auto analyst for Fool.com. Toyota's Lexus luxury brand has released photos and some information on the all-new Lexus NX crossover, which it plans to formally unveil at the Beijing International Auto Exposition on April 20.

This is a new product for Lexus, it's the brand's first-ever compact crossover, and there's not much of a mystery behind why they're doing this, compact crossover SUVs are a white-hot market segment all over the world right now, and compact luxury SUVs and crossovers are especially hot.

The Lexus brand has done fairly well in the U.S., but it never gained much traction in Europe and it's way way behind the big three German luxury brands in China. Toyota is hoping that the new Lexus NX will help boost the brand in both Europe and China, and that makes the new NX a pretty important vehicle for Toyota.

So what is this thing? Well, it's a compact luxury crossover, as you can see from the photos, it closely follows the lines of the LF-NX concept vehicle that Lexus showed at the Frankfurt motor show last fall, though the more extreme styling touches we saw on that concept vehicle have been toned down, it had some pretty radical folds and bends around the rear fenders.


The new Lexus NX is a toned-down version of last year's LF-NX Concept. Photo credit: Toyota Motor Corp.

They will be offering it in the U.S., we'll get it here in three different versions. It'll start with the NX200t, which will be the first Lexus to have a turbocharged engine, 2.0 liter turbo four banger, and then the NX 300h, which will be a hybrid, it'll presumably have the same drivetrain they use in the ES300h sedan, which is a 2.5 liter Atkinson cycle four cylinder with obviously an electric motor as well, and then there will be a sporty version of the 200, the NX 200t F SPORT, which they say will have "unique exterior and interior features", though they haven't yet given specifics.

You'll have choice of front wheel drive or what they call "all-weather drive", and it has the high-tech luxury and safety features that you'd expect to see here. It looks good, it should do OK, but it's going up against some very hot-selling competitors, the BMW (NASDAQOTH:BAMXF) X1, the Audi Q3, the Mercedes-Benz GLA, these are all racking up some big sales numbers.

And there's more competition coming, we know that Ford (NYSE:F)is about to launch the Lincoln MKC, which is a nice-looking vehicle very much along the same lines as this Lexus, Lincoln is way behind in the U.S. but we know that Ford is gearing up to make a big push for the Lincoln brand in China, and Ford has passed Toyota in total sales in China and is growing very rapidly, it gives them a good base to start to be aggressive with the Lincoln brand.

And Nissan's (NASDAQOTH:NSANY) Infiniti brand recently launched its QX50 crossover, which is getting strong reviews, and Infiniti is another brand looking for a strong push in China, and we expect to see General Motors (NYSE:GM) launch a Cadillac entry in this space before long as well.

So long story short, the new Lexus NX is a vehicle that Toyota needs, it's entering a hot market segment, it looks like a solid entry, but the competition is fierce and about to get fiercer, we'll see how it goes for them. Thanks for watching.  

John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends BMW, Ford, and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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