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The Lexus Group Enthusiast dealers await halo car, more utility vehicles

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Michael O'Brien has been chairman of the Lexus National Dealer Advisory Council since January 2016 during a time of near-record sales and the continuing shift of consumers toward utility vehicles over traditional sedans.

O'Brien, 60, also was chairman during much tougher times, in 2009-10, when he preached dealership discipline to get through the downturn in the luxury market.

He owns O'Brien Auto Group in the state of Washington, with two Lexus dealerships in Bellevue and Tacoma. The group has other luxury and nonluxury brands that stretch into Portland, Ore.

O'Brien is excited about the coming Lexus halo car, the LC 500 coupe, and sees better SUV and crossover availability in 2017, bolstering the brand's already enviable position in the luxury market.

He was interviewed by Staff Reporter Laurence Iliff in December.

Q: How was 2016 for Lexus dealers?

A: Overall, the industry was good. Lexus business is down slightly -- but 2015 was a record year for the brand. All in all, it was a really solid year, but it didn't feel like a mid-17 million SAAR.

What major issues do Lexus dealers face?

Capitalizing on the shift in the market to SUVs. It took several months to right-size dealer inventory with the right amount of SUVs.

What do you hope to accomplish as chairman of the dealer council?

I want to help bring the right product at the right time so we can compete in all categories.

How best could the factory help dealers sell more vehicles?

We need to have the right vehicles at the right time with competitive incentives. We have a great relationship with Lexus -- they listen to our needs and concerns and are very responsive.

Is Lexus adding dealerships?

In the last several years, Lexus has only added a few stores in markets where they need representation. For Lexus dealers this is a nonissue.

Do you expect to see more or less leasing for Lexus in 2017?

Leasing is a core part of Lexus' overall customer retention strategy -- and we expect it to stay about the same.

Are inventory levels a concern?

There was a concern, but it has gotten much better. We expect to finish the fourth quarter very strong and to start 2017 off with great SUV availability.

Is there anything specific Lexus is doing to support dealer profit as volume flattens out?

Lexus has made the adjustments to inventory to build more SUVs and cut back on sedan production.

What products are you looking forward to?

Dealers are looking forward to having a halo sports car with the LC 500.

What would you like to see Lexus do to help dealers handle more service business?

Service business is up as Lexus has seen very solid growth in our customer-pay service business year-to-date. In addition to ensuring Lexus and its dealers continue to take tremendous care of Lexus customers to maximize retention, they have also been very proactive in providing new ways to drive more service business to our stores.

One great example: our biannual nationally promoted Exclusive Tire Events. These have gone a long way to ensuring our owners know their Lexus dealer can handle all of their service and maintenance needs, including tires.

Another example is our new Enform Service Connect technology, which has been available for about a year. Through the vehicle telematics system, Lexus owners who opt-in for Service Connect have added peace of mind with visibility to vehicle health reports. Owners can be reminded via email or a service alert in their vehicle when they have maintenance due. A great dealer advantage to Service Connect is our improved visibility into a guest's needs as we also can see these health reports. We now can proactively contact a guest to schedule maintenance, providing a personalized, elevated guest experience.

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