NAGOYA -- Toyota Motor will let drivers pick a new Lexus twice a year for 194,400 yen ($1,770) per month, it said Tuesday, through a subscription service that will test how the sharing model fares in Japan's flagging auto market.
While some European and American competitors have launched new-car subscription services -- General Motors tried with Cadillac but halted it last year -- Toyota is the first to do so in Japan. The country's top automaker has been cautious in debuting new services, but the declining popularity of car ownership spurred it to move ahead of the pack.
The Lexus subscriptions will start Wednesday in Tokyo and expand to other cities this summer. Users will be able to take out three-year subscriptions letting them swap every six months to any of six Lexus hybrid models on offer through a new joint venture called Kinto.
"Toyota has generally tried to predict where markets lie and tested the waters before crossing," Kinto President Shinya Kotera told reporters in Nagoya on Tuesday. "But this time, we're making the first move even though things are still unclear."
The service is geared toward "people who can afford to spend" or who "can expense it," said Hiroshi Oguma, a managing executive officer with Sumitomo Mitsui Auto Service, Toyota's partner in Kinto.
The Kinto Select service requires no down payment. The tax-inclusive price tag also covers registration fees, voluntary insurance, automotive taxes and other costs, cutting down on the paperwork that comes with buying a car.
A customer can take out a Lexus from the nearest dealership. Subscriptions will be made available online as the service rolls out to other urban areas.
Every time users switch, they can pick a new model from one of six available: the RX, NX and UX sport utility vehicles, the ES and IS sedans, and the RC sports coupe. These have starting prices of 4.25 million to 6.04 million yen before fees.
Conventional auto leases generally cover a single model at a time, making Kinto Select's ability to choose from multiple cars a unique feature. Users can also skip the procedures associated with renting or sharing a car by other means.
The automaker will judge how the service performs in Tokyo before looking to expand it to the rest of Japan.
The Japanese new-auto market has shrunk to roughly two-thirds of its 1990 peak, with Toyota's 2018 sales of 1.56 million units down 40% from 1990. Under conventional sales methods, sales would fall to 1.2 million units by 2025, according to estimates the automaker has shared with heads of distributor companies. Toyota is fighting desperately to keep domestic output above 3 million vehicles a year and sales above 1.5 million units.
"On average, people hold on to a new car for about nine years," said Yasuhiko Sato, a Toyota operating officer.
"If we can shorten that period by one year, sales will rise by about 150,000 units," he said.
The Kinto Select service would help lift sales if demand spreads, since each user can get two new cars a year. The same goes for a new car-sharing service.
Monthly paid subscription models have grown popular in areas as diverse as music, movies and high-end apparel as consumers continue to shift away from ownership. Germany's BMW has launched its own subscription program. Idom, the Japanese company behind Gulliver used-car dealerships, is also launching a subscription service for pre-owned vehicles.
For Kinto, this means competition will come from many directions. "It's possible players from a range of sectors will enter mobility services," Kotera said.