In this article
Toyota created Lexus because it was losing customers as they grew wealthier. Loyal Toyota owners who wanted a luxury car were buying Mercedes-Benz, BMW and Cadillac, and Toyota’s brand could not follow them upmarket. So in 1983, chairman Eiji Toyoda launched a secret project to build a world-class luxury sedan and, crucially, to sell it under a separate brand with its own dealerships. Lexus launched in the U.S. in 1989 with the LS 400 and ES 250, and within a few years it was topping quality and customer-satisfaction surveys.
At a glance
| Project started | 1983 |
| Brand launched | 1989 (U.S.) |
| First models | LS 400 and ES 250 |
| Strategy | Separate brand, separate dealers, exceptional service |
| Contemporaries | Acura (1986), Infiniti (1989) |
The problem
Research in the U.S. showed that Toyota buyers were affluent and loyal — until they wanted a luxury car. A Toyota badge, associated with affordable, reliable cars, could not command luxury prices. Honda had reached the same conclusion and launched Acura in 1986; Nissan followed with Infiniti in 1989.
Choosing a name
Toyota worked with a branding agency that generated hundreds of candidate names. “Alexis” was reportedly among them and evolved into Lexus, which suggested luxury and technology without a specific meaning. Toyota has never given an official definition.
Building the car
The engineering effort behind the LS 400 — thousands of engineers and hundreds of prototypes — aimed to beat Mercedes and BMW on noise, smoothness, aerodynamics and fuel economy simultaneously. Read the Lexus LS 400 story.
Building the experience
Lexus designed dealerships to feel like upscale hotels, with lavish customer lounges and meticulous service. The legendary handling of an early recall — picking up owners’ cars and returning them cleaned and fueled — set a standard competitors had to match.
The results
Lexus quickly became one of America’s best-selling luxury brands and a fixture at the top of reliability rankings. Its success inspired Hyundai to launch Genesis decades later. Read the Genesis G90.
Good to know
Frequently asked questions
Why did Toyota create Lexus?
To keep customers who wanted a luxury car, which a Toyota-branded car could not satisfy, and to compete directly with European luxury brands.
What does Lexus stand for?
Toyota has never given an official meaning. It is often linked to “luxury” and was developed from candidate names such as “Alexis”.
When did Lexus launch?
In 1989, in the United States.
