The Lexus RX originated the luxury SUV category two decades ago and arguably has remained the gold standard ever since. Lexus kept improving the smooth, comfortable mid-size nameplate over the years and increasing its alphanumeric designation from RX 350 to RX 450, and it’s got the best reputation in its class.
But finally something happened in the market that prompted Lexus to make the biggest change ever in its RX lineup: Competitors kept bringing out more of their own models in RX’s segment and also larger premium SUVs that family-building millennials have begun to demand in big numbers.
Now, just as the North American International Auto Show gets rolling, Lexus is introducing RX 350L, a three-row version of its iconic SUV that is intended to help the nameplate hold onto, and even extend, its unmatched position in the category.
The pitch: “More seats. More possibilities. Open up your world with the first-ever three-row RXL. With seven-passenger seating, it offers the ultimate luxury: flexibility.”
“We’ve got a real good foundation with the RX so as we transition into RXL we’re not getting too complicated,” Cooper Ericksen, vice president of marketing for Lexus, told us. “The RX customer has a growing family that needs more space and appreciates craftsmanship and what the RX brings.”
On the eve of the North American International Auto Show and before its Super Bowl spot, Ericksen told us more about the brand’s strategy for growing in the luxury auto segment with this (literal) expansion.
Lexus invented the luxury SUV with RX. How do you make sure stretching it into an RXL is beneficial for the brand?
But we’d been hearing from customers that they wanted more seating capacity for their growing families. So we wanted to figure out a way for growing families to stay in the RX even though we have a couple of other three-row options in our lineup, with GX and LX—they’re a little more money and a little less fuel-efficient. It seemed like a natural for us.
When you realize size does matter. #LexusRX 350L https://t.co/Bi19MH8YOG pic.twitter.com/UiEVil9a9s
— Lexus (@Lexus) January 12, 2018
What’s the biggest obstacle to upselling to these other vehicles?
Even though it’s in the luxury market and Lexus is a luxury brand, price point is always a consideration. The further you move up, the smaller the population that can move into [even pricier models].
LX at $90,000 is quite the step up and it’s larger, and maneuverability and parking is an issue. GX skews more male, with a V8, body-on-frame construction and more rugged and tremendous off-road capability. So for the most part they’re different customers. GX has a nice niche, 25,000 [units] a year, but RXL is different, more family friendly, a little more space inside, ride comfort, all those things you get with a unibody frame.
Experience a journey worth sharing. #LexusRX 350L. https://t.co/L9ONsIjenS pic.twitter.com/GpFiT6mEcn
— Lexus (@Lexus) January 2, 2018
What’s the price differential?
RXL has a manufacturer’s suggested retail price of $47,600. Basically it’s about $2,750 or so less than an equivalently equipped RX without the third row. The wheelbase is the same but we extended the overall length of the body about five inches. We added a lot of functionality as well. The rear seats are electric; they fold flat into the floor. It’s not a compromise at all. There’s a lot of rear cargo room and functionality, and with the seat up or down a competitive amount of cargo space.
Are some customers going to migrate from RX to RXL, or is it primarily new customers coming to RXL?
We will cannibalize some existing RX sales. Some people will opt for the third row given the choice but we probably would have sold them RX anyway. But we expect a minimum of RXL sales to be coming from us. We will be getting them from a lot of competitors because we didn’t have a third row in the RX. Half of our sales will be stealing some from competitors. That’s not too high of a conquest number.
What can you tell us about the launch marketing campaign?
There’s something that draws you in. “Emily” is such a great concept. Here’s this adorable kid that thinks they have the world all to themselves. Parents are expanding their vehicle and little does she know the family is expanding too. It’s a priceless moment done in an adorable way.
It’s a way to endear Emily and the RXL to that customer, and that customer can appreciate that conversation, something that you always remember when you let the family know that another one is on the way. It was just emotionally on point for us and felt good for us—and very aspirational.
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