Kinto, the Lexus subscription model
If it’s your dream to own a Lexus, there might be some good news for you. If you live in Japan, that is, and if you have a monthly car budget of about USD 1770.
Lexus’ owner, Toyota, doesn’t have a reputation of being forward thinking. The OEM usually takes it slow, is only moderately enthusiastic about innovation and prefers to follow the lead of other, more progressive brands. But the Japanese reality is forcing the manufacturer to make bolder decisions.
The domestic car market is shrinking dramatically; the 2018 sales (1.56 million) are down 40% compared to peak sales year 1990 (the market is predicted to head to a dramatic 1.2 million by 2025). Consequently, people drive their cars much longer – up to 9 years in average. Toyota, and its Japanese competitors, are fighting to keep the annual volume above 1.5 million units.
Lexus and Toyota have been looking overseas to come up with the idea of subscription based sales. General Motors has started (and stopped in the meanwhile) a similar concept for its luxury brand Cadillac. On the Japanese market, a large group of used-car dealerships had already kicked off a subscription model for pre-owned vehicles.
The Lexus model, called Kinto, is a simple and fully comprehensive approach of the subscription model. For USD 1770, the consumer can choose 2 new vehicles per year, with a free choice of RX, NX, UX, IS, ES and the RC Sports Coupe. Registration, insurance and admin are included, making the experience easy and smooth for the user. Even a down-payment is not required.
Lexus has spent some time defining its target customer and came up with the following description: “people who can afford to spend” or people who “can expense it”. This inspired market strategy is supposed to attract high end clients willing to link themselves to a single brand that, however popular, is not essential in Japan, for 3 years
Toyota has partnered up with one of Japan’s largest financiers in the auto industry, Sumitomo Mitsui Auto Services (SMAS). The legal nature of the agreement is a long term service sales rather than a financing model, whereby SMAS will guarantee the solvability of the consumer.
The services will be launched in Tokyo first and, if successful, rolled out across Japan.