Bloomberg News

Lexus U.S. Chief Says Sales Will Grow Even If Taxes Rise

December 03, 2012

Lexus U.S. Chief Sees Sales Gain Even as Taxes on Rich May Rise

A worker cleans a Toyota Motor Corp. Lexus vehicle displayed at the company's booth during the Los Angeles Auto Show. Photographer: Jonathan Alcorn/Bloomberg

Toyota Motor Corp. (7203) expects to boost U.S. sales of its luxury Lexus model next year even though taxes on the wealthy may rise as a result of a federal budget deal, the brand’s global marketing chief said.

Lexus sales, up 23 percent in the U.S. this year through November, may gain at least 10 percent in 2013, Mark Templin, who is also head of the brand in the region, said in an interview last week at the Los Angeles Auto Show. Demand for luxury autos will grow faster than the industrywide pace, even with a change in tax rates, he said.

“I think that we and everyone else project that we’re still going to see good consistent growth in the industry,” Templin said. “Our wealthy clients have remained that way and they’ve been shown to be pretty resilient.”

Discussions between President Barack Obama and House Speaker John Boehner on averting the $607 billion in automatic tax increases and spending cuts due to take effect in January have deadlocked over tax rates for the top 2 percent of wage earners in the country. For Toyota, the U.S. is the biggest market for Lexus models, which sell for more than $40,000 on average, accounting for at least half the brand’s global volume.

Sales of new cars and light trucks have been a bright spot for the economy this year, growing 14 percent through November. U.S. industrywide deliveries rose 15 percent last month, according to researcher Autodata Corp., topping a 12 percent increase that was the average of 10 analyst estimates compiled by Bloomberg.

Best Pace

The annualized sales rate, adjusted for seasonal trends, accelerated to 15.5 million, the best pace since January 2008, according to Autodata.

Combined sales for Lexus, Daimler AG (DAI)’s Mercedes-Benz, Bayerische Motoren Werke AG (BMW)’s BMW, Honda Motor Co.’s Acura, General Motors Co. (GM:US)’s Cadillac, Volkswagen AG (VOW)’s Audi (NSU) and Nissan Motor Co.’s Infiniti, the seven largest luxury brands, rose 15 percent through November, based on company statements.

“We all project that luxury will grow faster than the rest of the market,” Templin said. “It didn’t happen in the first half of the year, but it’s starting to show again, and the projections for the future still show that’s the case.”

U.S. sales units for both Toyota and Lexus are based in Torrance, California.

‘Prolonged Negotiations’

On Nov. 30, Obama said there will be “prolonged negotiations” as the White House and Congress try to reach a budget deal. Obama has proposed a framework that would raise taxes immediately on top earners and set an Aug. 1 deadline for rewriting the tax code and deciding on spending cuts, according to administration officials.

Auto demand would plunge as much as 20 percent if Washington can’t find a solution to avoid the fiscal cliff coming at the end of the year, Lacey Plache, chief economist of auto researcher Edmunds.com, said last week.

Ford Motor Co. said last week it’s making contingency plans should a deal not be reached whereas domestic rivals Chrysler Group LLC and General Motors Co. aren’t making such preparations.

Toyota’s American depositary receipts fell 0.5 percent to $85.66 at the close in New York. They’ve risen 30 percent this year.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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