Acura: The Honda That Didn't
04-01-2003, 06:44 AM
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Acura: The Honda That Didn't
Jerry Flint, 04.01.03, 8:00 AM ET
Remember back when Japanese cars were small, inexpensive and unpretentious?
That changed in 1986. Honda Motor (nyse: HMC - news - people ) moved upscale with its Acura division aimed at the luxury market.
Talk about overnight success: Acura was quickly outselling Mercedes-Benz and BMW. And then Toyota Motor (nyse: TM - news - people ) started Lexus, and Acura outsold that, too.
But that was then and this is now.
Where is Acura in today's luxury market? Most of the cars sold are sport sedans and coupes, costing $30,000 or less. Consumer Reports likes them, and testers give them good marks for handling. But most of them aren't luxury cars. Acura's best seller so far this year is a fine sport utility vehicle, the MDX, a $40,000 rival to Toyota's Lexus RX 330, but that's not quite a car; it's a cross between an SUV and a minivan, these days dubbed a "crossover."
What went wrong? It's just hard to score in the luxury market when you refuse to do an eight-cylinder engine, wear undistinguished styling and don't offer a rear-wheel-drive car. Acura's absurd system for naming its cars doesn't help either.
Let's look at these problems one by one:
Honda has an almost religious fervor when it comes to not doing an eight-cylinder car. Its $45,000 (sticker) flagship sedan, the RL, only has a six. But the top competitors in the luxury field also offer eights or even bigger engines. When Acura was new, its luxury model, the Legend, was selling 50,000 per year. Last year the RL, the Legend's replacement, sold only 9,392 units. Honda targets the RL against the Mercedes E-Class and BMW 5 Series. But each of those sold more than 40,000 units last year.
Undistinguished styling: Well, just look at the cars. It's not that they look bad, but they aren't anything special.
Front-wheel drive is another drawback. Luxury cars, with a few exceptions such as Audis and the Cadillac Deville, are rear-wheel drive. Audi gets away with it by making all-wheel drive available. Going front-wheel drive was a screwup that nearly ruined Cadillac. General Motors (nyse: GM - news - people ) is now rectifying that mistake. Not Honda. While Acuras are good handling cars, they rarely come out on top in road tests against rear-wheel-drive models from BMW, Mercedes or Nissan's (nasdaq: NSANY - news - people ) Infiniti. In short, Acura has conceded the driving-enthusiast market to those competitors.
Model names are another problem. This is one of the strangest stories in Acura history. The original Legend was quite successful, but Honda executives decided they had a problem: More Americans knew the Legend name than the Acura name. Honda's bosses also fretted that their competitors in the luxury segment were using alphanumeric designations, such as SE 450, rather than names like Legend, Integra and Vigor.
So what did Acura do? They renamed their most successful car, the Legend, as the RL. This probably was the dumbest naming decision since Nissan abandoned the name Datsun decades ago.
In fairness, everyone seems to be trying to copy the Germans in using alphanumeric model designations, and most of them are awful. Today's Acura models are the RL, CL, TL, MDX, RSX and NSX. It's really hard to keep them straight or develop an interest in them.
Let me show you some figures that will make this clear.
Acura came out in 1986; its first full year was 1987, in which sales totaled 109,000 cars, including 55,000 Legends. The smaller Integra cars were tossed in to make sure the dealers had enough sales to survive in case the Legend bombed.
By 1990, the Acura total was 138,000, including 54,000 Legends. That same year, Mercedes sold 78,000 cars; BMW and Lexus each sold 64,000.
Last year, Acura sold 113,000 cars, about the same as it did in 1994. Its MDX sport utility vehicle pulled in another 53,000 customers, bringing total sales to 166,000. How does Acura currently stack up against the competition?
2002 Unit Sales
Marque Cars Light Trucks Total
Acura 113,000 53,000 166,000
BMW 189,000 43,000 232,000
Lexus 150,000 84,000 234,000
Mercedes 170,000 43,000 213,000
In short, the others just left Acura behind.
Look at the NSX, the Acura $90,000 sports car, which was exciting at first but is now a flop. Acura sold only 233 of them last year, compared to 13,717 Mercedes SL models.
The newest Acura, the TSX, is just coming out. It's really the European Accord, which is smaller than the American Accord. The TSX is a lively performer with a 200-horsepower four-cylinder engine, and will sticker around $30,000. This new sedan sort of fills the product hole created when the four-door Integra was dropped a few years ago. But I don't see this as a high-volume car, and neither does Acura. The sales target is only 15,000 units this year.
Honda didn't want to go where the luxury buyers go; it wanted luxury buyers to go on its road. And that hasn't worked, even for a great carmaker like Honda.
Remember back when Japanese cars were small, inexpensive and unpretentious?
That changed in 1986. Honda Motor (nyse: HMC - news - people ) moved upscale with its Acura division aimed at the luxury market.
Talk about overnight success: Acura was quickly outselling Mercedes-Benz and BMW. And then Toyota Motor (nyse: TM - news - people ) started Lexus, and Acura outsold that, too.
But that was then and this is now.
Where is Acura in today's luxury market? Most of the cars sold are sport sedans and coupes, costing $30,000 or less. Consumer Reports likes them, and testers give them good marks for handling. But most of them aren't luxury cars. Acura's best seller so far this year is a fine sport utility vehicle, the MDX, a $40,000 rival to Toyota's Lexus RX 330, but that's not quite a car; it's a cross between an SUV and a minivan, these days dubbed a "crossover."
What went wrong? It's just hard to score in the luxury market when you refuse to do an eight-cylinder engine, wear undistinguished styling and don't offer a rear-wheel-drive car. Acura's absurd system for naming its cars doesn't help either.
Let's look at these problems one by one:
Honda has an almost religious fervor when it comes to not doing an eight-cylinder car. Its $45,000 (sticker) flagship sedan, the RL, only has a six. But the top competitors in the luxury field also offer eights or even bigger engines. When Acura was new, its luxury model, the Legend, was selling 50,000 per year. Last year the RL, the Legend's replacement, sold only 9,392 units. Honda targets the RL against the Mercedes E-Class and BMW 5 Series. But each of those sold more than 40,000 units last year.
Undistinguished styling: Well, just look at the cars. It's not that they look bad, but they aren't anything special.
Front-wheel drive is another drawback. Luxury cars, with a few exceptions such as Audis and the Cadillac Deville, are rear-wheel drive. Audi gets away with it by making all-wheel drive available. Going front-wheel drive was a screwup that nearly ruined Cadillac. General Motors (nyse: GM - news - people ) is now rectifying that mistake. Not Honda. While Acuras are good handling cars, they rarely come out on top in road tests against rear-wheel-drive models from BMW, Mercedes or Nissan's (nasdaq: NSANY - news - people ) Infiniti. In short, Acura has conceded the driving-enthusiast market to those competitors.
Model names are another problem. This is one of the strangest stories in Acura history. The original Legend was quite successful, but Honda executives decided they had a problem: More Americans knew the Legend name than the Acura name. Honda's bosses also fretted that their competitors in the luxury segment were using alphanumeric designations, such as SE 450, rather than names like Legend, Integra and Vigor.
So what did Acura do? They renamed their most successful car, the Legend, as the RL. This probably was the dumbest naming decision since Nissan abandoned the name Datsun decades ago.
In fairness, everyone seems to be trying to copy the Germans in using alphanumeric model designations, and most of them are awful. Today's Acura models are the RL, CL, TL, MDX, RSX and NSX. It's really hard to keep them straight or develop an interest in them.
Let me show you some figures that will make this clear.
Acura came out in 1986; its first full year was 1987, in which sales totaled 109,000 cars, including 55,000 Legends. The smaller Integra cars were tossed in to make sure the dealers had enough sales to survive in case the Legend bombed.
By 1990, the Acura total was 138,000, including 54,000 Legends. That same year, Mercedes sold 78,000 cars; BMW and Lexus each sold 64,000.
Last year, Acura sold 113,000 cars, about the same as it did in 1994. Its MDX sport utility vehicle pulled in another 53,000 customers, bringing total sales to 166,000. How does Acura currently stack up against the competition?
2002 Unit Sales
Marque Cars Light Trucks Total
Acura 113,000 53,000 166,000
BMW 189,000 43,000 232,000
Lexus 150,000 84,000 234,000
Mercedes 170,000 43,000 213,000
In short, the others just left Acura behind.
Look at the NSX, the Acura $90,000 sports car, which was exciting at first but is now a flop. Acura sold only 233 of them last year, compared to 13,717 Mercedes SL models.
The newest Acura, the TSX, is just coming out. It's really the European Accord, which is smaller than the American Accord. The TSX is a lively performer with a 200-horsepower four-cylinder engine, and will sticker around $30,000. This new sedan sort of fills the product hole created when the four-door Integra was dropped a few years ago. But I don't see this as a high-volume car, and neither does Acura. The sales target is only 15,000 units this year.
Honda didn't want to go where the luxury buyers go; it wanted luxury buyers to go on its road. And that hasn't worked, even for a great carmaker like Honda.
04-01-2003, 07:35 AM
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I think most of the points covered in that article can't be denied, it's hard facts. Acura is not a real luxury car company anymore, considering the Accord has almost just as much anemities as the RL and even more than all other Acuras. Also, it's hard to consider Acura a luxury car company when most of its cars are below $30k.
04-01-2003, 09:15 AM
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Too bad Acura didn't put the Integra out as a Honda model in the US and moved the Prelude to an Acura model...I like Acura stuff, it's more price friendly and more exciting..whereas I find Honda's lineup outside of the Accord V6 coupe right now pretty borning and bland.