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VOL. 126 | NO. 38 | Thursday, February 24, 2011

Hybrid Luxury

Lexus of Memphis bets on fuel-efficient demand

By Bill Dries

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With gas selling at $3 a gallon, the staff at Lexus of Memphis gathered earlier this month for a training session.

Bryan Smith, general sales manager of Lexus of Memphis, looks at a four-door HS250H dedicated hybrid vehicle, which is only available with a hybrid power train. Another dedicated hybrid, the CT200H, is coming to the dealership, which Smith said will be the most fuel-efficient luxury sedan hybrid on the market. (Photo: Lance Murphey)

The East Memphis dealership had just taken delivery of a first for the luxury carmaker – a five-door hybrid hatchback Lexus. The CT200h is the fifth hybrid Lexus has offered, but the first hybrid car classified as a luxury car that promises to top 40 miles per gallon of gas.

“It will be the most fuel-efficient Lexus that has ever been made,” said Bryan Smith, general manager of Lexus of Memphis. “This is the first Lexus that incorporates a four-cylinder engine. Everything else has been V-6s or V-8s.”

Lexus is marketing the car as the world’s first premium sport-utility hybrid vehicle with four modes of operation.

It’s a bigger market in Europe than the U.S. where the car has three rivals for a smaller share of the domestic market – Audi, BMW and Volvo.

Car and Driver magazine estimated in October that the group was competing for approximately 23,000 combined sales in the U.S. last year.

Smith said he has a goal of selling five to 10 of the cars a month.

“It’s still kind of a niche-y segment,” he said.

“You always want to hope to try to catch lightning in a bottle of some sort. ... I don’t think Lexus expects that the CT would be that. But I do think that they expect that fuel prices will get much, much more expensive over the next year to two years. They’re just trying to position themselves well with a lineup that includes smaller, more affordable and more fuel-efficient vehicles.”

Smith admits getting car buyers to commit to a hybrid has taken time.

“If you go back five to seven years, I think people liked the idea – thought it was a cool idea,” he said. “But in terms of, ‘Would I buy one?’ – the answer was no. Certainly the idea of buying a plug-in hybrid, which is emerging into the market, would have been a definite no.”

Smith and his sales staff still get asked by customers if their hybrids require plugging in at night. They don’t. But plug-ins or electric vehicles (EVs) – cars with zero emissions that run on rechargeable batteries – are coming to the market.

Nissan begins production of The Leaf in 2012 at the General Motors Smyrna, Tenn., plant.

And Nissan is among the private corporations and public agencies working now to build infrastructure for EVs in Memphis, Nashville, Chattanooga and Knoxville.

Memphis Light, Gas and Water Division committed this week to open 10 free public charging stations in Memphis by September. The sites being considered include Shelby Farms Park.

The plug-in hybrids are making inroads in easing what car dealers and EV boosters call “range anxiety.”

It is the anxiety those weighing the option of EVs have about whether the all-electric cars will run out of power away from a charging station.

MLGW president Jerry Collins said the utility’s plans include a smart phone application to summon a MLGW crew that will provide a charge to cars that get stuck away from a charging station.

“We are going to take all of the worry out of the equation so we can encourage maximum utilization of electric vehicles,” he said.

The hybrids, the EVs and the charging stations each represent changes of habit for car drivers and buyers. In the past, the desire to change habits of a century have waxed and waned as gas prices did the same.

“I don’t know that the $3 a gallon is changing buying habits or driving habits all that much,” Smith said.

But $4 a gallon several years ago did, and it did so quickly.

“It certainly changed their buying habits. The big SUVs were being traded in quickly and often at that time,” Smith said. “I don’t know at what point the pain threshold gets reached. From what Lexus and Toyota tell us, they feel like that number’s going to be $5 at the not too distant future and stay there.”

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