Team One/Lexus USA Update

YTD LUXURY SALES REVIEW*

June YTD ‘06June YTD ‘06 JuneYTD ‘05JuneYTD ‘05 % Change% Change

Lexus #1 150,741 142,006 +6.3%

BMWBMW 137,220137,220 120,754120,754 +12.0%+12.0%

MercedesMercedes 114,935114,935 95,39695,396 +17.0%+17.0%

3

OBJECTIVES

1. Increase Cachet of the Lexus Brand2. Sedan Category Leadership 3. Own Hybrid Technology4. Remain at Forefront of Consumer

Engagement

4

OBJECTIVES

Background Results

Strategy

• Lexus continues to lead the luxury market in QDR, yet we rank behind MB and BMW on scores of “Prestige” “Innovation” and “Performance.”• With new launch opportunities and product innovations, we are in perfect position to increase the cachet of the brand.

• Position Lexus as the premier luxury brand of the 21st century by demonstrating our commitment to innovation and progress. To achieve this, we will evolve all of our consumer-facing communications: objects of desire, the way we present Lexus visually, the way we speak, the way we behave—all will ‘turn the camera’ back on the product and elevate Lexus to a brand people dream about.

1. Increase Cachet of the Lexus Brand

Share of Buyers: HHI $300k+

Goal: 100

Source: CDS MY2005 Q1-4

Cadillac12.4%

Acura8.3%

BMW17.7%

Mercedes18.5%

Lexus19.3%

Audi6.5%

Infiniti5.7%

Lincoln4.0%

Jaguar3.2%

Volvo4.4%

Wealth Skew: Luxury Brands

5973 69

137

11191

106

Mercedes BMW Lexus Cadillac Acura Infiniti Lincoln

14% 16% 18% 14% 11% 8% 7%Mkt

Share

Lux Buyers HHI $300k+

MktShare

Goal: 100

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OBJECTIVES

Background Results

Strategy

• Lexus continues to lead the luxury market in QDR, yet we rank behind MB and BMW on scores of “Prestige” “Innovation” and “Performance.”• With new launch opportunities and product innovations, we are in perfect position to increase the cachet of the brand.

• Position Lexus as the premier luxury brand of the 21st century by demonstrating our commitment to innovation and progress. To achieve this, we will evolve all of our consumer-facing communications: objects of desire, the way we present Lexus visually, the way we speak, the way we behave—all will ‘turn the camera’ back on the product and elevate Lexus to a brand people dream about.

1. Increase Cachet of the Lexus Brand

Cadillac9.6%

Volvo9.2%

Infiniti9.6%

Lincoln4.5%

Audi4.5%

J aguar1.5%

Mercedes

13.0%

BMW19.6%

Lexus14.5%

Acura14.0%

Age Skew: Luxury Brands117

96

122123

7080

66

Acura BMW Infiniti Mercedes Lexus Cadillac Lincoln

Lux Buyers Age 35-49

11% 16% 8% 14% 18% 14% 7%Mkt

Share

Goal: 100

Share of Buyers: Age 35-49

• We are focusing on a younger share of market in order to add prestige to the brand.

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2. Sedan Category Leadership

OBJECTIVES

Background Results

Strategy

• In the late 90s, sales of trucks began surpassing cars in the U.S. However, due to increasing gas prices and concerns over fuel economy, the pendulum is now shifting back toward a popularity in sedans.• Lexus is in perfect position to take advantage of this new consumer trend with the launches of the GS, IS and ES.

ES: Reposition the Lexus ES as a dynamic statement of personal style & luxury.CREATIVE IDEA: Engineering Desire

IS: Establish the IS as a real, relevant performance vehicle.CREATIVE IDEA: Why Live in One Dimension?

ES & IS Sales May '06 vs. May '05

6,027

430

9,500

4,557

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

ES IS

May 2005May 2006

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OBJECTIVES

6-Month Intentions

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0.35%

0.40%

RX Hybrid

Q1 05

Q2 05

Q3 05

Q4 05

Q1 06

3. Own Hybrid Technology

Background Results

Strategy

• The ‘04 launch positioned the RX400h as “The World’s First Luxury Hybrid,” to own category leadership.• New research shows consumers:

- Need further hybrid technology education (ride and drives)- Need to seek knowledge on their own terms- Need proof that Lexus provides all of their needs in one box: performance, luxury and styling along with the social responsibility aspect a hybrid has to offer

•Amplify the message that Lexus hybrids (GS, RX, LS) represent a whole new class of vehicle: the High Performance Luxury Hybrid that “Gives More to the Driver. Takes Less from the World.”• Use multiple means to educate consumers that the expanding hybrid line-up serves as proof that high performance hybrids can exist in any luxury application – Lexus can put the right technology in the right box.

Source: Alison Fisher

Hybrid Sales May 05 - May 06

0500

1,0001,5002,0002,5003,0003,500

May

2005

June 2

005

July 2

005

Augu

st 200

5

Septe

mber 2

005

Octobe

r 200

5

Novem

ber 2

005

Decem

ber 2

005

Janua

ry 20

06

Febru

ary 20

06

Marc

h 200

6

April

2006

May

2006

• Intentions are on the rise with each quarter, and sales remain steady.

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LS 460 - SWB (Loyalty Model) Target: Existing Advocates/LS owners/luxury move-ups~70% of volume

LS 460L - LWB (Conquest Model)Target: Tier 1 Luxury BuyersUpgrade model to reward LS owners, reduce defection and conquest new buyers ~30% of volume

LS 600h – LWB Hybrid (Conquest / Image Model)Target: Super Affluent BuyersV12 alternative model~ 200/month

LS MODEL ROLES

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10.20 LAUNCH

Kick off Initiatives: TV flight begins

Newspaper Spreads

OOH installations

Simultaneous Dealer Launch Events

LS Web site launches

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OOH Installations

10.20 Event “Party in a box”

Pop Up Boutiques

Google Launch Site

BIG IDEAS

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OUT OF HOME INSTALLATIONS

Overview Bring the LS features to life in a stunt-like execution Execution will simulate 2 technological features from the MY ’07 LS :

Four-zone automatic climate control with infra-red sensors Face Tracking Driver Monitor

Chairs will be bolted in a circle in a high-traffic area. Attached plaques will tease the arrival of the LS for 1-2 weeks. Finally, the LS will appear in the center of the circle with a plaque that reads “The new LS 460 from Lexus. The wait is over.”

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10.20 Comprehensive Launch Concept

Beginning with the Pebble Beach Concours d’Elegance in August and continuing through preview parties & “best customer” events, we will build interest and anticipation for 10.20 and the new LS.

10.20 will mark the arrival of the LS 460. By creating intrigue and excitement around this date, the launch of the new LS becomes more than just an on sale date. 10.20 will create a sense of magnitude and becomes a captivating celebration

EVENTS

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POP-UP BOUTIQUES

Overview

We are currently developing a plan to take over high-end retail storefronts in order to provide consumers with a non-traditional experience from the Lexus Brand.

These storefronts will reside in affluent areas in Lexus’ top four markets:

NY, LA/San Fran, Florida, Chicago

Launch 10.20 and continue for 3 weeks in each city.

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GOOGLE EARTH

Website Overview

Dynamic use of Google Earth Application* as primary interface into LS model information & content

Potential applications beyond LS model information, could include event support, dealership identification, and additional launch efforts

Affluent consumers lead the curve in technology adoption, and the Google Earth application and corresponding LS idea has the potential to be break though for both this audience and Lexus’ ability to deliver content is the most imaginative, and useful ways

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COLLATERAL

LS FlyerCovers LSh, LWB, SWB Quantity: 100k In dealerships now

LS Brochure Delivers 9/19/06

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PRE-LAUNCH ONLINE BANNERS AND PREVIEW SITE

Objectives Deliver Vehicle information

and sign-up opportunity to coincide with Detroit autoshow

Provide sneak peek to enthusiasts on Autospies.com, to drive early handraisers to database

Support autoshow reveal video for information seekers

Preview Site Results 324K unique visits since

launch on 1/8/06 (thru 4/11) 14,776 handraisers as of 4/9,

43% in first two weeks 4.6% handraiser ers

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PRE-LAUNCH SITE, PHASE I

Objective Replace the more straightforward

Preview site with an elegant, highly visual pre-launch site that supports both the LS 460, 460L and the LS Hybrid

Support the Detroit Autoshow reveal of the LS460 and 460L

Continue to generate handraisers for LS, as well as provide the ability to forward to friends

4/12 launch to coincide with NY Autoshow

Phase 2 scheduled for July launch – could move to mid August to pre-seed 1010 idea

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BLUNT INITIATIVE CREATIVE

Mini Book Overview 12-page high-end, highly

stylized Direct Mail Piece designed to created intrigue about the possibilities of what vehicles could do in the future

Sent to 75K BMW 7 Series and S-Class modeled owner look-alikes (50% actual owners) – HHI $150k+

Call to Action will be to visit a specific URL for more information

Deploys July 2006

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BLUNT INITIATIVE CREATIVE – ONLINE AD UNITS

Online Advertising

Rich Media executions placed on key competitive set model pages in auto research /shopping sites

Targeting competitive set shoppers through behavioral targeting within Yahoo network

Engaging reveal of various key features of all new LS

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BLUNT INITIATIVE CREATIVE

Website Overview Zoomify technology utilized to enable users to

zoom in on both exterior and interior high quality images of vehicle

Site to demo key product features as well as offer handraiser component

Launches May 23, 2006

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TELEVISION

“VISION”

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TELEVISION

“VISION”

25

TELEVISION

“VISION”

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TELEVISION

“VISION”

PRINT STYLE

PRINT STYLE

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PRINT STYLE

AND BEYOND…

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THE BRAND IN 2007

Following the launch of the LS in October, a delay in new vehicle

launches will allow us to focus on the Lexus Brand as an object of

DESIRE.

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The Future

Lexus will change the game, again! And versus aiming to simply better Mercedes and BMW, the luxury brand that knows no limits will set its sights on competing amongst the world’s top tier luxury brands.

2006 and Beyond: Situation Analysis

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The New Landscape

Chanel, Louis Vuitton, Apple, Evian, Surface Magazine, Beverly Hills, Bulthaup, Poggenpohl, Viking, Jimmy Choo, Leica, Hermes, Takashimaya, Taschen Books, Maison Du Chocolat, Patek Phillippe, Panerai, Frette, Bliss, Frederic Fekkai, Bergdorf Goodman, Mont Blanc, Virgin Atlantic, One & Only Resorts, Aman Resorts, The Pierre, Thad Hayes, Charles Gwathmey, Frank Gehry, Cohiba, Tanqueray, Veuve Clicquot, Krug, Opus One, Kristal, BOSE, PSP Jean Georges AOC, Bastide, Melisse, Koi, The Peninsula, The Ritz, The Dorchester, Hotel Costes, Four Seasons, Bvlgari, Mikimoto, Harry Winston, Cartier, Burberry, Post Ranch Inn, Callaway, Ping, Per Se, Alain Ducasse, Canyon Ranch, Monaco, St. Tropez, Bali, The Maldives, St. Barths, Bora Bora, Fiji, Moorea, Harbour Island, …

2006 and Beyond: Situation Analysis

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Not Representative

Evocative Organic

Not rigid

2006 and Beyond: A New Design Language

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Not Lifestyle Not frat house

Style Club house

2006 and Beyond: A New Design Language

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Not Literal Not giving it away

Conceptual Mystery and intrigue

2006 and Beyond: A New Design Language

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Object Object of desire

2006 and Beyond: A New Design Language

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2007 COLLATERAL

A New Direction Lexus is the #1 luxury manufacturer, yet it does not have the

level of cachet some of the European heritage brands do.

With MY ’07, we are focusing on a fresh approach to collateral that reflects a bolder, new brand aesthetic – one that evokes prestige and innovation more than ever before.

The Challenge:

Turn the pursuit of perfection from a practical justification

into an emotional attraction.

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NEW LOOK 2007

Size is 9x12 (slightly smaller than MY ’06) with maximum 24 pages

Inside cover will feature a pocket which will house 8 plates

Each brochure will focus on up to 10 pertinent features/areas of the vehicle

Inside back cover features easy-to-use contents list

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PROGRESS WILL CONTINUE

“As for the future, your task is not to foresee but to enable it.”

- Antoine de Saint-Exupery

“Progress is what happens when impossibility yields to necessity.”

- Arnold J Glasow