Does Lexus Have Factories in China?
1 Answers
Reasons why Lexus does not set up factories in China: 1. Profit Maximization: The actual price of the Lexus ES is higher than that of the Audi A4L and BMW 3 Series, not because its brand image is more premium, but because in the minds of Chinese consumers, 'imported cars' are considered more upscale than 'joint-venture cars.' If Lexus were to establish factories in China, the allure of being a 'pure imported car' would fade, leading to a potential drop in prices and a negative impact on the brand image. 2. Japan is geographically close to China, resulting in low logistics costs. However, the distance to India, Africa, and European countries is much greater: Currently, Lexus performs well in both the U.S. and Chinese markets, but it has not gained significant traction in Europe or Africa. To achieve global expansion and sell its vehicles in Africa and Europe, Lexus must reduce logistics expenses to enhance competitiveness. Establishing a factory in India would facilitate easier transportation of products to Europe and Africa, thereby expanding overseas markets. 3. The Indian automotive market has great potential but lower purchasing power. Localizing production in India would benefit Lexus's development there: While Lexus has already established a strong presence in China, it has yet to do so in India. Local production in India would lower Lexus's prices in the Indian market and boost competitiveness. Additionally, India's relatively lower labor costs would significantly contribute to increasing manufacturing profits.
