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The Lexus owes its allure to 300 subtle technological innovations that add up to a remarkably quiet and smooth ride, even at speeds of up to 150 m.p.h. in the LS400. The Lexus' computerized engine-control system, for example, retards the engine's r.p.m. just before a gear shift, which reduces the lurch common to many automatic transmissions. The car bristles with luxuries as well: a steering column that automatically adjusts to different drivers, heated seats and an optional telephone mounted in the steering wheel.
The Japanese push into the luxury market began with Honda's introduction of the Acura Legend in 1986 in the European and U.S. markets, but the trend has accelerated markedly in the past year. Nissan introduced its Infiniti line of cars in the U.S., featuring the opulent V-8-powered Q45 and the smaller M30, and is adding a new car this month. Another Japanese manufacturer, Mitsubishi, plans to introduce a luxury car next year.
The next marketplace ripe for Japan's "luxmobiles" is Europe. The Lexus went on sale in Switzerland and Britain earlier this year, and in 1991 will hit Germany, France, Italy, the Netherlands and Sweden. In an interview early this year, BMW chairman Eberhard von Kuenheim accused Toyota of "dumping" Lexus in the U.S. market at below-market prices, and declared, "Europe is not willing to destroy its own industry" by giving Japan free access. Toyota calls that charge "groundless and meaningless," but spokesman Yoshiharu Tateishi says, "We are fully aware of the trade friction, and our approach will be modest and prudent."
Von Kuenheim's concern stems at least in part from a fact that U.S. car manufacturers learned painfully in previous decades: Japanese automakers, according to a recent M.I.T. study, assemble their luxury cars in a mere 25% of the man-hours -- 16.9 for each auto -- that their European competitors need. Japan has gained a huge advantage by applying flexible automation to the task of building well-crafted cars, while Europeans do a greater portion of the work by hand.
For now, both BMW and Daimler-Benz, the maker of Mercedes, are flush with profits, thanks in part to the booming German economy. BMW aims to produce a record 520,000 cars this year, up 1.6% from 1989. Both companies proclaim their readiness to take on the Japanese luxury cars, but their fear is showing. "The Lexus is not a Mercedes, but as a portent of what they are able to do, it is more worrying," says John Evans, a British spokesman for Mercedes. "You ignore the Japanese at your peril."
Such concerns have spawned a heated debate in Europe about how to prevent layoffs and plant closures like those that occurred in the U.S. as Japanese automakers gobbled up 23% of the American marketplace. As a result of formal and informal quotas imposed by France, Italy, Portugal, Spain and Britain, the Japanese share of the European car market has remained steady at around 10% for the past four years. At one extreme are France and Italy, whose draconian protectionist policies have limited Japanese cars to 3% market shares. At the other is West Germany, whose laissez-faire stance has allowed the Japanese to capture 15% of that market. Lexus, which is moving cautiously into the protected European market, plans to sell only 2,500 autos on the Continent this year.