Upwardly Mobile: The Lexus LS400 and the Birth of the Japanese Luxury Brands

If the idea of a Japanese sports car would have been laughable in 1965, the thought that a Japanese company might one day take on the finest European luxury sedans would have seemed utterly mad. The idea that it might actually succeed would have been too outlandish to contemplate — yet that’s exactly what happened in 1989. This week, we look at the origins of the 1990-2000 Lexus LS400.
1996 Lexus LS400 decklid emblem


In one of life’s odder ironies, we may have Ronald Reagan to thank for the rise of the Japanese luxury brands.

During the 1970s, the U.S. market share of imported cars rose sharply, from 11.2% in 1969 to 28.2% in 1980. Most of that gain was made by Japanese automakers, principally Toyota, Nissan, and Honda, whose smaller, more fuel-efficient cars fared well in the wake of the 1973–1974 OPEC embargo and the late-seventies energy crisis. At the same time, Ford, Chrysler, and AMC suffered a precipitous decline in revenue that brought them to the brink of collapse. Before long, Detroit was begging Washington for trade restrictions to stem the tide of Japanese imports.

Reagan was ostensibly a free market conservative, but he was reluctant to ignore the outcry of big business. In March 1981, shortly after Reagan took office, his international trade negotiator, William Brock, approached Naohiro Amaya of Japan’s Ministry of International Trade and Industry (MITI) to talk about voluntary trade restrictions as an alternative to higher tariffs or other more punitive sanctions.

Amaya understood what was at stake and played his cards very astutely indeed. He convinced Brock to accept a short-term voluntary cap on imported Japanese cars, initially set at 1,685,000 a year. The cap was strictly numerical; there were no stipulations on the type of cars that could be imported — or on their prices.

The deal was a hard sell in Japan. Toyota leadership was resistant to the limits and Amaya allegedly had to prostrate himself before Nissan president Takashi Ishihara to persuade him not to oppose the agreement. However, Japanese automakers finally, reluctantly conceded and the import cap — known as the Voluntary Restraint Agreement (VRA) — went into effect in mid-1981. Over the next few years, the Japanese auto industry would slowly recognize that the deal was not so much a limit as a golden opportunity.


Up to that point, Japanese automakers had focused their efforts on the lower end of the American market. Nissan, of course, had made a splash in the sporty car segment with the Datsun 240Z, but most Japanese imports were compact economy cars.

To some extent, such self-imposed limitations may have reflected a deep-seated insecurity about the Japanese auto industry’s place in the world. As recently as the late fifties, there hadn’t been much market for passenger cars in Japan and the major Japanese manufacturers’ early export efforts had been cautious, halting, and not always particularly successful. The risk of failure and embarrassment may not have deterred smaller companies like Honda or Toyo Kogyo (Mazda), but it was a significant concern for Toyota and Nissan, which were the big fish in the home market.

Beyond that, the U.S. small car market was a comparatively easy target; Detroit’s record with subcompact cars was checkered and its enthusiasm for that segment was limited at best. By contemporary American standards, midsize Japanese family sedans like the Toyota Corona and Datsun Bluebird were tiny, but the Japanese could offer more features and a higher standard of fit and finish (although not better corrosion resistance) than their poverty-spec American rivals.

Those same factors made Toyota and Nissan reluctant to emphasize or even offer their bigger cars in the U.S. In Japan, a six-cylinder Toyota Crown or Nissan Cedric was a big, impressive car — roughly the equivalent of a Ford LTD or Chevrolet Caprice. In the U.S., the Crown didn’t even qualify as an intermediate, vying instead with the likes of the Ford Maverick or AMC Hornet. Toyota did import the Crown in small numbers, but its U.S. marketing was minimal, which Toyota Motor Sales executive vice president Shoji Hattori admitted was intentional. The smaller Corolla and Corona made up the bulk of Toyota’s U.S. sales.

1972 Toyota Crown 2600 Coupe (S70) front 3q
The Toyota Crown was the top of the JDM Toyota line (excepting the rare Toyota Century, generally limited to VIPs), but was an uncommon sight on U.S. roads. This is a 1972 MS70 Crown two-door hardtop, marketed as a coupe in the U.S.

That was fine as long as the Japanese economy was relatively healthy (which for the most part it was through the seventies and eighties) and Japanese automakers could expect their share of overseas markets to grow indefinitely, if gradually. The sudden imposition of a sales cap on their biggest single export market forced Japanese manufacturers to rethink their strategy. If their U.S. sales couldn’t grow (at least until they had established local production, something several Japanese manufacturers were already working on), they would need to shift their focus from sales volume to unit profit. It was time to move upmarket.

The process began gradually. Most of the Japanese cars sold in the U.S. already had high content levels by American standards, including many minor items that were (at least technically) extra-cost options on most domestic cars. Selling “fully equipped” models allowed Japanese automakers to simplify their export offerings while creating an impression of value.

Since those automakers were now limited in the number of units they could ship, each manufacturer began to ensure that each car it did ship was even better trimmed, better equipped, and more expensive than they had previously dared. Toyota brought more of its six-cylinder cars to the U.S., including the latest Mark II sedan (called Cressida in the States) and the Celica XX sports coupe, called Celica Supra in the U.S. Nissan responded with a federalized version of its plush 810 Maxima. Honda eventually got into the act, too, with products like the Accord SE (Special Edition) sedan, which featured Connolly leather upholstery and fancy Wilton carpets.

The Japanese soon discovered that American buyers whose appetites had been whetted by a generation of solidly built, reliable, frugal small cars were happy to pay a premium for a better-trimmed version of the same thing — and were ready to step up to something more.


As galling as the VRA may have been for the management of Toyota, Nissan, and Honda, it seemed to inspire them to bolder things. In 1983, Honda and Britain’s Austin Rover Group began a joint venture to create a new six-cylinder luxury sedan codenamed XX, which eventually emerged as the Honda/Acura Legend.

Around that time, Yukiyasu Togo, the recently appointed president of Toyota’s U.S. sales organization, went to company chairman Eiji Toyoda and suggested that Toyota produce a high-end luxury sedan. Toyoda thought it over and embraced the idea, seeing it as a fitting project for Toyota’s forthcoming 50th anniversary (although as it turned out, the car wouldn’t actually be available until almost two years after that).

Toyota could have restyled its home-market Crown, which was a step up in size and price from the Mark II/Cressida, and taken a few chunks out of the lower end of the American luxury market, but Eiji Toyoda had bigger game in mind. In August 1983, he called a confidential meeting of his senior executives and proposed the development of a new ultra-luxury sedan to go head to head with the world’s finest automobiles. Toyoda wasn’t just after Volvo or Cadillac; he wanted to take on BMW and Mercedes-Benz.

Challenging the Germans on their own ground was a big step. Even Cadillac, which had enjoyed more than 20 years of virtually unchallenged domination of the American luxury car scene, was now running scared at the growth of Mercedes-Benz. BMW, meanwhile, was rapidly establishing itself as a key status symbol for American yuppies. Ersatz Mercedes grilles were popping up on even the humblest of American sedans, while BMW had become the darling of the automotive press.

Still, as potent as the Germans had become, they were also vulnerable. Their biggest weakness was price; a combination of currency revaluations, inflation, and sheer avarice had sent their sticker prices through the roof. By the early eighties, the cheapest of BMW’s midsize 5-Series sedans was around $25,000 in the U.S. and most Mercedes were above $30,000 — three times the price of a Honda Accord sedan and almost 50% more than a Cadillac Seville. American buyers seemed willing to pay whatever was asked for the BMW roundel or the three-pointed star, but there was a large and alluring price gap between the upper-middle-class American brands and the Germans.

Moreover, despite BMW’s and Mercedes’ much-vaunted engineering excellence, their products were not entirely in tune with American tastes. People bought them for their prestige, which tended to overshadow the fact that by American standards, most BMW and Mercedes sedans had a rather stiff ride, austere interior appointments, and six-cylinder engines. (Mercedes also offered a V8, but it pushed the price even further into the stratosphere.) Car magazines appreciated the Germans’ no-nonsense character and bred-for-the-autobahn road manners, but that demeanor entailed significant compromises in routine American driving. That, too, suggested an opportunity.

1990 Acura Legend front 3q © 2007 Kentaro Matsui PD)
The Honda Legend (sold as the Acura Legend in North America) was the first really upscale Japanese car for the export market, although it was actually developed in partnership with Rover. Roughly the size of a contemporary Audi 4000, the Legend was powered by a V6 engine: initially 2,494 cc (152 cu. in.) with 151 hp (113 kW) SAE, later 2,675 cc (165 cu. in.) with 160 hp (120 kW). This is a 1990, the last year of the first generation. (Photo: “1990 Acura Legend” © 2007 Kentaro Matsui; released into the public domain by the photographer, resized by Aaron Severson)


In the domestic market, Toyota already had a high-end car of sorts, the big Toyota Century. Introduced back in 1967, the Century was roughly the size of the shorter-wheelbase S-Class Mercedes and offered a V8 engine, rare in the Japanese market. However, Toyota had never exported the Century and its styling and engineering were dated; Toyota resisted frequent model changes in hopes of insulating the Century from fashion trends. It was an extremely conservative car, sold mainly to business executives and politicians who needed an appropriately formal Japanese-made limousine, so many wealthy private buyers preferred the snob value and greater “individuality” of foreign makes. To do battle with the Germans, Toyota would need something wholly new.

The new luxury car was codenamed Project F1 (with “F” signifying “Flagship” rather than “Formula”). Toyota spared no expense; at its height, the development program involved some 3,700 engineers and technicians in 24 separate engineering teams. All these resources were directed at creating a single product: an all-new luxury sedan sharing neither platform nor engine with any then-extant Toyota model.

An American automaker would probably have picked a single target (such as Mercedes’ contemporary W126 S-Class sedan), designed something comparable, allowed it to be whittled away by the accountants, and tried to make up the difference with cut-rate pricing. (Indeed, Detroit has applied exactly that philosophy to challenging the imports for almost 40 years.) However, Toyota’s chief project engineer, Ichiro Suzuki, was determined to beat Mercedes and BMW in every parameter. It was a very tall order, and just setting such a lofty goal spoke volumes about Toyota’s ambitions. The Honda Legend, by comparison, was aimed at the Audi 80/4000, a considerably less daunting target, and even the Legend was a collaborative effort with the British automaker Rover.

Toyota’s army of engineers completed the first running prototype of the new sedan in July 1985. A fleet of development mules spent much of 1986 in extensive road testing on both the German autobahnen and American roads. Toyota eventually built 450 running prototypes, a remarkable number even for a clean-sheet design.

One of the key points of the F1 project was its engine: an all-new DOHC V8. The V8 was an important part of Toyota’s plan to leapfrog the Germans, but it was a risky decision. In the fuel-crunched late seventies, many industry pundits believed the V8 would be extinct by 1985, a victim of rising fuel prices and federal CAFE rules. By the time the first prototypes were ready, though, gasoline was again cheap and plentiful in the U.S., so American buyers were rediscovering their love of horsepower. Toyota spent $400 million developing a sophisticated new DOHC, 32-valve, 3,968 cc (242 cu. in.) engine, the 1UZ-FE. It was expensive, but it proved to be a wise investment.

1992 Lexus LS400 front
The Lexus LS400’s 3,968 cc (242 cu. in.) V8 engine, known to Toyota as 1UZ-FE, was all new. It used an aluminum block and heads and featured dual overhead camshafts, four valves per cylinder, and a sophisticated engine computer that managed fuel injection, ignition, and transmission controls. At launch, it was rated at 250 hp SAE (187 kW) and 260 lb-ft (353 N-m) of torque in the U.S.; the Japanese-market Toyota Celsior was rated at 260 PS JIS (191 kW) and 261 lb-ft (353 N-m) of torque, the differences mainly reflecting minor variations in testing methodology. Toyota has also used the basic 1UZ engine design for successful racing engines and later developed an iron-block version for use in its large trucks and SUVs.


In early 1985, Yukiyasu Togo, then head of Toyota Motor Sales, delicately suggested that if Toyota wanted to sell cars to a different class of customers, it needed to study those customers more closely. The upper-crust target market for Project F1, Togo pointed out, had a very different set of standards than did U.S. Corolla buyers or even Japanese luxury car customers. In response, in May of that year, Toyota dispatched a team of market researchers to explore the upscale market. Perhaps their most unusual stratagem was quietly renting a house in posh Laguna Beach, California, so their researchers could observe the affluent American consumer in its native habitat.

The researchers came to an obvious but politically awkward conclusion: The average Mercedes-Benz or BMW customer would not be caught dead in a Toyota showroom or, more gallingly for Japanese executives, driving a Toyota. The latter revelation probably caused a great deal of teeth-gritting among Toyota’s senior management. Setting up a new dealer network to cater to luxury customers was one thing — in Japan, Toyota then had six different dealer networks, each with its own distinct products — but what was the point of a Toyota flagship if it couldn’t be called a Toyota?

Honda had already confronted that same problem. In the summer of 1985, the company announced that its new Legend sedan would be marketed in North America through a new brand called Acura (although it was sold as a Honda elsewhere in the world). The announcement was greeted with some skepticism, but when the Acura division bowed in March 1986, it proved to be an immediate success.

In May 1986, Toyota swallowed its pride and hired the consulting firm of Lippincott & Margulies (now Lippincott) to help them develop a new luxury brand. Meanwhile, Toyota’s ad agency, Saatchi & Saatchi, set up a separate team to handle the new brand’s advertising. Lippincott ultimately suggested the name “Lexus,” which was ultimately adopted.

(Nissan would go through a similar process to develop its Infiniti brand, but that project did not begin until November 1986, after the introduction of Acura.)


In April 1985, the VRA import limit was increased to 2.3 million cars, where it remained until 1991. The limits did probably help American automakers retrench; Chrysler and Ford, which had been on the brink of collapse in 1979, enjoyed strong profits by 1984 and 1985. However, the VRA’s principal effect was to contribute to rapidly increasing new-car prices, already swelled by inflation and exchange rate changes.

The VRA also marked a fundamental shift in the import market. Before the limits were imposed, Japanese cars had generally been cheaper than their American competitors; thanks to the import restrictions and the ever-greater strength of the yen against the dollar, Japanese cars now generally cost more. However, buyers demonstrated that they were willing to pay a premium for the more sophisticated engineering and greater perceived quality of the Japanese brands. The introduction of Acura in 1986 drove that point home most clearly. The Legend was the most expensive Japanese car yet sold in America, around $20,000 to start, but it sold respectably and enjoyed strong resale value and an enviable reliability record, both excellent signs for its future.

The import restrictions and their attendant price increases had swelled the profit margins of the Japanese automakers, which raked in as much as $2,000 more for each car sold. Those profits, in turn, helped to finance projects like the Lexus LS400, whose development costs eventually ran to around $1 billion.

The Lexus F1 project was formally approved for production in May 1987. With the success of Acura, Toyota was more convinced than ever that there would be a market for it.


In the U.S. and most other worldwide markets, Toyota opted to give its new luxury car a European-style alphanumeric designation: Lexus LS400, LS for “Luxury Sedan” and “400” for the engine’s displacement in deciliters. In Japan, the new car was called Toyota Celsior; Toyota wouldn’t introduce the Lexus brand in the Japanese domestic market until August 2005.

1996 Lexus LS400 side
The original Lexus LS400 was roughly the size of a contemporary BMW 7-Series (E32) and split the difference between the Mercedes E-Class (W124) and S-Class (W126) sedans. The LS400 rode a 110.8-inch (2,815mm) wheelbase, and stretched 196.7 inches (4,995 mm) overall, narrowly avoiding the punitive taxes some countries levied on cars longer than 5 meters (196.9 inches). Curb weight for typically equipped U.S. cars was around 3,800 lb (1,730 kg), roughly 45 lb (20 kg) heavier with the optional air springs. In 1994, the LS400’s wheelbase was stretched to 112.2 in (2,850mm) and curb weight was trimmed to around 3,600 lb (1,633 kg). Overall length remained the same as before, and the increase in wheelbase provided a slight increase in rear-seat room at the expense of trunk space.

Toyota decided that introducing a new brand with only a single, relatively expensive model was too risky. Honda had hedged its bets in that regard by matching the Legend with an Acura version of the JDM Quint Integra, a sporty three- or five-door hatchback priced under $13,000. Toyota opted instead for a slightly restyled and retrimmed version of the recently added Japanese-market V20 Camry Prominent pillared hardtop, fitted with the larger-displacement 2,507 cc (152 cu. in.) 2VZ-FE engine from the U.S. Camry V6. The new model was dubbed Lexus ES250.

The Lexus lineup made its debut on the U.S. auto show circuit in January 1989. By the time it went on sale that fall, Toyota had established 70 Lexus franchises, a number that rose to about 150 by January 1990. It was bolstered by an extremely effective ad campaign, including a well-remembered TV spot in which a pyramid of wine glasses was balanced on the hood of a Lexus LS400.

One of Toyota’s goals for Lexus was to offer velvet-glove customer service. This was another chink in the armor of the high-end German marques, whose U.S. dealers had a reputation for brusque arrogance. Toyota required that Lexus dealers offer better customer facilities and service, something that became a major part of the brand’s marketing.


The arrival of Lexus and its new Nissan rival, Infiniti, were by far the biggest news in the American industry that year. Both brands laid the foundation with teaser ads, which, in Infiniti’s case, didn’t even always show the car. The Lexus LS400 and Infiniti Q45 became media darlings, eclipsing even Honda’s ambitious new NSX sports car.

Initial reaction to the Lexus LS400 was generally positive. Its build quality was obvious, but its styling was a well-polished pastiche of Mercedes-Benz cues — tasteful, but deeply conservative and somewhat anodyne. Nevertheless, the LS400’s virtues were clear. It had a ride as serene as that of any Cadillac, but matched that smoothness with surefooted handling, if not quite the agility of a big BMW. The Lexus had ample power and the new engine and transmission were exceptionally quiet and refined. If its interior was a little plasticky, the Lexus was nonetheless well-finished and solidly constructed, rivaling Mercedes’ best efforts. The European press was predictably less enthralled than were their American counterparts, but even British critics grudgingly admitted than the LS400 was in some respects superior contemporary German rivals.

One area where Lexus had a clear-cut advantage over the Germans — at least in the States — was price. The Lexus LS400 started at $35,000, which was $5,000 more than the priciest Acura Legend, but far less than its German competition. The Lexus’s price was slightly misleading because most cars shipped to dealers had the Luxury Features Group, with leather upholstery, moonroof, and high-end audio system, which brought the tab to almost $40,000. Nonetheless, the LS400 was still almost $10,000 cheaper than the less-powerful BMW 735i and more than $20,000 less than a Mercedes 420SEL. The V8-powered Cadillac Seville was slightly cheaper, but it had 70 fewer horsepower (52 kW less) and its quality was not at the same level. The price made the LS400 a bargain in its class.

1992 Lexus LS400 front 3q
The original UCF10 Lexus LS400 doesn’t look self-consciously “aero,” but it had one of the lowest coefficients of drag of any contemporary car: as low as 0.29 on some models. It did not lack for straight-line speed, although most reviewers found Lexus’s claimed 0-62 mph (0-100 km/h) time of 6.9 seconds optimistic. Top speed was around 150 mph (242 km/h).


Even BMW and Mercedes admitted that the Lexus LS400 was an excellent car, although its attractive price prompted accusations that Toyota was selling the LS below cost. The American public was highly impressed. Toyota’s Laguna Beach market-research sojourn had paid off; Lexus’s marketing pitch to high-end American buyers proved to be spot on. In its first year, Lexus sold nearly 64,000 cars in the U.S. This was not quite at the level of Mercedes-Benz, whose U.S. sales were around 75,000, but it was uncomfortably close to BMW. In 1991, Lexus sales rose to 71,206, bolstered by press adulation and awards for initial quality. Most of these sales were LS400s, many of which were “conquest” sales to former Mercedes and BMW customers.

Lexus did not have the same impact in the European market, in part because the LS400 was not priced as keenly in Europe as was in the U.S. In the U.K., for example, the LS400 started at around £32,000, about the same as a 735i. For class-conscious British buyers, the Lexus brand’s lack of pedigree was hard to get past, as was the perception that Lexus cars were just fancy Toyotas with new badges. The latter point was driven home with some irony by the case of British importer Simon Lerner, who in 1999 was charged with fraud for affixing Lexus badges to equivalent JDM models.

Tarted-up Toyota or not, the Lexus LS400 caused a great deal of scrambling in Munich and Stuttgart-Untertürkheim. BMW stepped up development of its first V8 engines in more than two decades while Mercedes moved to expand V8 availability and cut its costs to enable lower prices. The reasons were clear: After more than a decade of ruling the executive class, Mercedes and BMW were now on the defensive.

1992 Lexus LS400 rear 3q
The Lexus LS400’s double-wishbone/multi-link suspension was theoretically superior to BMW’s contemporary MacPherson strut/semi-trailing-arm layout, but the LS was tuned more for comfort than handling sharpness. Ride quality was excellent, although some critics found it somewhat under-damped, even with the stiffer suspension settings used for European models, and its steering was rather numb. Air springs, controlled electronically, were optional for an even plusher ride.


Toyota quickly began to expand the Lexus lineup. The first additions were the SC300/SC400 coupes (about which we’ll have more to say in our next installment), along with a new entry-level ES300 sedan (sold as Toyota Windom in Japan — still a fancy V6 Camry, but a far more convincing effort than before). In 1993, these were joined by the Giugiaro-styled GS300 sedan, based on the JDM Toyota Aristo and aimed at the BMW 5-Series and E-Class Mercedes.

The original Lexus LS400 continued with few changes through 1994, although its price escalated rapidly, reaching $51,200 by the 1994 model year. Japanese-market prices remained stable, so it appears the main culprit of the U.S. escalation was the weakness of the dollar relative to the yen, which made Japanese-made cars more expensive.

The LS400 got its first revision in 1995. The new edition was almost indistinguishable from its predecessor, but a careful reengineering trimmed its curb weight by about 200 pounds (90 kg), benefiting both performance and fuel economy. However, sales began to slip badly toward the end of its run, thanks in part to skyrocketing prices and internal competition with the second-generation Lexus GS. Redesigned in 2001 and again in 2007, the LS was still a highly competent luxury sedan, but it was no longer as significant as the original.

Toyota did not succeeded in trumping BMW and Mercedes in every area as Ichiro Suzuki had vowed, but it had managed to establish Lexus as a viable alternative, an impressive feat for a fresh-out-of-the-box car and a new brand. Lexus proved far more successful than Infiniti, which didn’t really establish itself until a decade later, and quickly overshadowed Acura, whose sales dropped precipitously in the early nineties.

In 2005, Toyota made Lexus a separate subsidiary organization with its own design and engineering facilities and established a new Lexus dealer network in the home market. In 2008, worldwide Lexus sales totaled 430,000, 270,000 of them in the U.S. That is still well short of BMW, whose worldwide sales were over 1.5 million last year, but Lexus remains a force to be reckoned with in the luxury market.

2008 Lexus LS460 front 3q
The current LS460 is bigger, nearly 600 pounds (272 kg) heavier, and vastly more expensive than the original Lexus LS400, starting at about $64,000. The long-wheelbase hybrid LS600H starts at $106,000 and tips the scales at around 5,100 lb (2,300 kg).

In the second part of our story, we’ll look at the second phase of Toyota’s assault on the luxury market: the Lexus SC coupes.



Our account of the origins of the Voluntary Restraint Agreement comes from David Halberstam, The Reckoning (New York: William Morrow and Company, 1986); and Masaaki Sato, The Toyota Leaders: An Executive Guide, trans. Justin Bonsey (New York: Vertical, Inc., 2008). Shoji Hattori’s comments on Toyota’s U.S. sales strategy came from Eric Dahlquist, “Who’s Afraid of Vega, Pinto and Gremlin? Not VW, says Stuart Perkins. Not Toyota, says Shoji Hattori,” Motor Trend Vol. 22, No. 8 (August 1970), pp. 65–68 and 103. Other information on the Japanese automakers in this period came from Rich Ceppos, “Cadillac Cimarron,” Car and Driver Vol. 27, No. 2 (August 1981), pp. 33–40; Michael A. Cusumano, The Japanese Automobile Industry: Technology & Management at Toyota & Nissan (Cambridge, MA: The Harvard University Press, 1985); Guide to Motor Industry of Japan 1967 Edition (Tokyo, Japan: Japan Motor Industrial Federation, Inc., 1967); Guide to the Motor Industry of Japan 1990 (Tokyo, Japan: Japan Motor Industrial Federation, Inc., 1990); and Jack Yamaguchi, “Japan: The Year of Uncertainty,” World Cars 1979, ed. Annamaria Lösch (Rome: L’Editrice dell’Automobile LEA/New York: Herald Books, 1979), pp. 61–66.

The chronology of the LS400’s development came from documents prepared by the Toyota USA Automobile Museum for Toyota’s U.S. 50th anniversary in 2007 (Toyota USA Automobile Museum, toyota50th. com, accessed 13 June 2009); “The Lexus LS Chronology,” pressroom.toyota. com, accessed 16 June 2009; Toyota Motor Corporation, “A 75-Year History Through Text: Overall Chronological Table,” www.toyota-global. com, accessed 19 January 2014; 75 Years of Toyota Vehicle Lineage: “Camry Hardtop (1st),” “Camry Sedan (3rd),” “Celsior 1st,” “Celsior 2nd,” “Celsior 3rd,” “Lexus ES Sedan (1st),” and “Vista Hardtop (2nd),” 2012, www.toyota-global. com, accessed 30 January to 8 March 2014; and Toyota Motor Sales, “Celsior” [Japanese brochure] October 1989; “Celsior” [Japanese brochure], October 1994; and “V6 Prominent: New Camry V6 4-door Hardtop” [Japanese brochure 141104-6308], August 1988. We also consulted “Barge Poll (Giant Test),” CAR November 1991: 84–95; Patrick Bedard, “Preview: Lexus LS400,” Car and Driver September 1989: 50–55; William Jeanes, “Comparison Test: Finding the Best Sedan in the World,” Car and Driver November 1990: 112–128; Maryann N. Keller, “Streetwise: Amati: What’s in a Name?” Motor Trend Vol. 44, No. 2 (February 1992): 118, and “Streetwise: Lexus Versus Infiniti: Luxury Battle—Round Two,” Motor Trend Vol. 42, No. 12 (December 1990): 130; “Lexus LS400 (The Autocar Road Test Number 4107),” Autocar 18 January 1995: 40–46; Kevin Smith, “Road Test: Lexus ES250,” Car and Driver May 1990: 91–96; Peter Robinson, “Lexus Drives BMW to the Limit,” Autocar 18 September 1989; and James Cleary, “Easy as One, Two, Three,” Motor Australia June 1992, both of which are reprinted in BMW 7 Series Performance Portfolio 1986-1993, ed. R.M. Clarke (Cobham, England: Brooklands Books Ltd., ca. 2006). Some additional details came from the Auto Editors of Consumer Guide, Auto ’90 Vol. 516 No. 1 (1990); Mike Covello, ed. Standard Catalog of Imported Cars 1946-2002, Second Edition (Iola, WI: Krause Publications, 2001); and Mark Walton, “The End of Grey Imports?” CAR July 1999, pp. 106–110, which discussed the Simon Lerner case.

Historical exchange rate equivalences were estimated based on data from Lawrence H. Officer, “Exchange Rates Between the United States Dollar and Forty-one Currencies” (2009, MeasuringWorth, https://www.measuringworth.org/exchangeglobal/; used by permission). Please note that all exchange rate equivalencies cited in the text are approximate and provided for illustration and general informational purposes only; this is an automotive history, not a treatise on currency trading or the value of money, and nothing in this article should be taken as financial advice of any kind!


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  1. In the summer of 1989, I had just taken a job as design director for Sail magazine. One of my first company junkets was the Lexus sponsored sailing regatta in Newport, Rhode Island. I had never heard of Lexus, but that all changed very quickly. I was 29 at the time and I distinctly remember that first night one of our interns pulling up to the front of our hotel in a "loaner" LS 400. Four of us all piled in and took turns flogging this amazing beast around the back roads of Newport.

  2. A couple of comments that are unrelated.
    Hyundai should have read the same references you did. They spend millions to make a V8 and they stuck in in a Hyundai. Anyone over 30 is old enough to remember the Hyundai Excel, a $4000 car that was a complete pile of junk. And the over 30 crowd is 100% of the market for the Genesis sedan. They also missed the boat in not putting the V8 in the Genesis coupe and creating a halo car.
    Lexus caught on quick with rap culture. Wu tang rapped about being “Smoother than a Lexus”. Biggie Smalls rapped about his “Lexus LS four and a half, tints for when I want some a__”. I think it is the greatest honor to have a song written about a car.

    1. Biggie said, “Lexus LX four and a half” referring to the Lexus LX 450. Just sayin’ Magedalno.

  3. I’d like to note that in the article, Lexus is presented as if it never earned its place in the battle with BMW and Mercedes, but this is not true. In less than 3 years of Lexus initiation on the US market, it oversold both German brands and the market share which was invaded by Lexus, was never fully recovered back by them. By 2000 (when the LS400 domination finally ended, simply because the model was discontinued), Lexus had oversold the current leader Cadillac too. And that’s not all. This defeat was so bitter, that it costed the head of Mercedes’ chief engineer at the time, while Cadillac engineers publicly declared that GM is unable to construct such vehicle with their currently available technological methods and engineering power. More than 5% of the UCF10-LS400 were bought not by actual customers, but by rival companies for testing and engineering analysis. That’s how scared they all were.
    So, yes – in Europe LS400 was never a big success, but to say that it did not succeeded in trumping BMW and Mercedes in America is simply not true. During ’90-95 the LS400 was unstoppable and beat Mercedes and BMW in their own game, catching them off-guard, while they were resting on old fame and reputation. Both brands were selling overpriced, uninspired and technologically lagging behind cars. They learned their lesson the hard way – if you don’t evolve and improve constantly, you lose.

    1. My read of the long-term impact of the LS400 is that it was a very impressive product that certainly gave BMW, Mercedes, Audi, and Cadillac a nasty fright — there’s no question about that — but it lacked the strong second act that would have established its long-term credibility in that segment. Had they followed it with a stretched-wheelbase car with the 1GZ-FE V-12 from the Century (which there were contemporary rumors Toyota was considering), going head to head with the 750iL and S600, that might have been a different story, but at the point they needed to follow up the F10, Toyota ended up standing pat, which allowed BMW and Mercedes-Benz to reclaim ground rather than keep them on the defensive. I think it would have helped if the Aristo/GS300 had been less of an oddball, making it clear that the LS was a flagship rather than a fancier 5-Series/E-Class rival. (In my view, Audi had a similar issue with the A6 for quite a while; it was neither as handsome as the smaller A4 nor as technically intriguing as the A8, and it was a while before it had an appealing powertrain option.)

      To use a cumbersome analogy, the F10 LS400 strikes me as like a brilliant first single from a new musical group. Whether that translates into long-term success is less a reflection of the quality of that single and more about the rest of the album and the ones that follow it.

  4. Yes, my thoughts exactly. I completely agree that the masterpiece which LS400 was, ended right there, without a condign successor – the result was loss of momentum and allowing space for German rivals to recover. I admit that I didn’t understand GS300 as a segment placement too, it reminds me of the self-harming moves many Japanese brands made at that time (like Honda for example, killing the Prelude by piling up the model line-up with endless way too similar models – at some point around the turn of the century, they were selling Accord coupe, CL and Integra apart from the Prelude, all at the same time!!!).
    Anyway, it seems that this brilliant first “single” had sufficient power to establish the Lexus brand as a legitimate member of the elite group, but it didn’t fulfill the dream of the long-term world dominating prodigy child of Toyota (which I’m sure was the initial ambition behind it); still, they had the chance to live this dream at least during the early 90s :)

    1. As I understand it, the first Aristo/GS300 was essentially a repackaged version of the S140 Crown Majesta, aimed at giving it more of a European flavor to better appeal to Japanese yuppies. When it became a Lexus, it was hampered by Toyota’s obvious worry about overshadowing the LS400 (hence the decision not to offer the 2JZ-GTE or 1UZ-FE engines available in Japan). The ’98 GS was a more straightforward 5-Series/E-Class rival and more coherent in that, although I suppose if you liked the original’s Giugiaro styling (which I thought rather flabby), it was less interesting.

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