Acura a failure? WTF?
04-10-2003, 01:35 PM
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Acura a failure? WTF?
http://www.forbes.com/2003/04/01/cz_jf_0401flint.html
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.
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.
04-10-2003, 02:15 PM
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There's a long discussion about this on the NSX boards. I have to agree with most of what the author is saying here.
It's obvious Honda doesn't want to compete with brands like Lexus and BMW. They're niche is basically quasi-luxury at a cheaper price. I don't consider the RSX a real Acura either.
It's obvious Honda doesn't want to compete with brands like Lexus and BMW. They're niche is basically quasi-luxury at a cheaper price. I don't consider the RSX a real Acura either.
04-10-2003, 02:16 PM
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IMO, Honda should have stuck with the names and scrapped the alphanumeric designations. The NSX (I know that's not a name, but it seems fine in this case), Legend and Integra seemd to say something about the cars. Nowadays, I can't tell what is what with their names. Also, remember that the Acura line is not a worldwide thing. Most of the world knows them as Hondas.
04-10-2003, 03:04 PM
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I know I'm going to get crucified on this board for saying this but... I think the writer is mostly correct.
AHMC had a huge leg up with the initial success of the original Legend and Integra. Today, that's been all but squandered. There is no Legend (the RL is basically an Japanese Buick and about as exciting to drive as an Avalon), there is no Integra, the Acura just announced its killing the CL, and even at deeply subvented pricing Acura can't give away new NSX's. The bright spots in the inventory are the TL (which I think sells well purely on value and does not really cater to the enthusiast (at least not this one) even in Type S format), and the run away hit MDX.
AHMC has refused to go RWD even though the market wants it and been very, very conservative in styling their cars. The latter choice isn't necessarily bad but it has made it near impossible for Acura to have cars that "stoke the fire" of enthusiasts.
So there's the product. Now what about ownership experience? I had the last great Legend (a LS coupe 6spd), an Integra GS-R, and my wife has owned 2 Integra LS's. All were great cars. But our collective dealership experience can be summed up simply as "mediocre". Not bad, but not great. These 4 vehicles were bought from three different dealerships. We ran the gauntlet with respect to finding competent salesmen and F&I people. Our cars were always serviced fine but nothing to write home about. I should note that we did not buy an MDX in 2001 specifically because our dealership experiences (at both the dealership we bought and serviced our last two Acuras at and a new dealership) was so bad. My wife went by herself to look at cars and was treated like crap. I went back the next day, and professionally and calmly spoke with the GM. His response.. "I don't care that you're a repeat customer who services your cars with us, we can't keep the MDX in stock so tough for you". That's a bit of an exaggeration but not by much.
Compare that experience to the experiences my wife has had at Lexus. Not only was the purchase process enjoyable. Yes, I said enjoyable. But ownership has been a dream. My wife is treated like royalty and I'm telling you she's probably been converted to a Lexus customer for life. Its that good. I know that not all Lexus dealers are going to be the same but since my folks have had 4 LS, 1 RX and 1 SC (bought and serviced by several dealers in S. CA and N. CA), I know that our experiences aren't rare.
IMO, the average buyer (even the enthusiast) puts a premium on the quality of the car he/she is buying and the ownership experience. If you're spending $30K + (in some cases way +) you want to feel good about your purchase. Acura does a better job of this than Honda does but they're way behind Lexus, Infiniti or BMW.
So at the end of the day, you have quality products that fail to really excite you. Again, they're good and mostly offer incredible value but save for the NSX what Acura prodcut really makes you feel like you have to have it? None, for me at least. The purchase experience is only ok. The ownership experience is alright but not great. How long can this continue while others improve?
I'd say not long. And I'd point to AHMC's recent announcement that its killing the CL as concrete evidence. The CL (esp. in Type S form) is a great value. Its powerful, quick, comfortable and roomy. It has a lot of standard equipment and is generally viewed as a good bang for the buck. So why can't Acura sell them?
1) Looks. The product was designed to be non-offensive but not inspiring. I'm not saying pull a Mangle, er... I mean Bangle and design a train wreck like the Z4, but give the customer something he wants to go back to his garage and stare at late at night.
2) Spec's. BMW sells damn near every 3 coupe it can muster. Infiniti seems to be having no trouble selling the G35 coupe. On paper, the CL was a much better bang for the buck than the BMW and about as good as the Infiniti. Yet, most drivers (and mag writers) ignore the Acura product. The American market wants a RWD car. Cadillac is getting the message, Infiniti is getting the message, hell... even Chrysler is getting the message. Acura refuses to move. To make matters worse, the upcoming RL will continue to be V6 powered and FWD. I'm willing to be that it will also continue to languish on dealer lots.
Luxury car buyers want to be catered to. They want products that they're passionate about and that make their neighbors go "oooh...ahh...". They want power, refinement, and balance. They care about the environment, sure. But probably not much further than how much and how often are they filling the tank. Not enough for them to feel good about buying a V6 for an incremental 2mpg when the guy down the street has a V8.
my 2 cents.
AHMC had a huge leg up with the initial success of the original Legend and Integra. Today, that's been all but squandered. There is no Legend (the RL is basically an Japanese Buick and about as exciting to drive as an Avalon), there is no Integra, the Acura just announced its killing the CL, and even at deeply subvented pricing Acura can't give away new NSX's. The bright spots in the inventory are the TL (which I think sells well purely on value and does not really cater to the enthusiast (at least not this one) even in Type S format), and the run away hit MDX.
AHMC has refused to go RWD even though the market wants it and been very, very conservative in styling their cars. The latter choice isn't necessarily bad but it has made it near impossible for Acura to have cars that "stoke the fire" of enthusiasts.
So there's the product. Now what about ownership experience? I had the last great Legend (a LS coupe 6spd), an Integra GS-R, and my wife has owned 2 Integra LS's. All were great cars. But our collective dealership experience can be summed up simply as "mediocre". Not bad, but not great. These 4 vehicles were bought from three different dealerships. We ran the gauntlet with respect to finding competent salesmen and F&I people. Our cars were always serviced fine but nothing to write home about. I should note that we did not buy an MDX in 2001 specifically because our dealership experiences (at both the dealership we bought and serviced our last two Acuras at and a new dealership) was so bad. My wife went by herself to look at cars and was treated like crap. I went back the next day, and professionally and calmly spoke with the GM. His response.. "I don't care that you're a repeat customer who services your cars with us, we can't keep the MDX in stock so tough for you". That's a bit of an exaggeration but not by much.
Compare that experience to the experiences my wife has had at Lexus. Not only was the purchase process enjoyable. Yes, I said enjoyable. But ownership has been a dream. My wife is treated like royalty and I'm telling you she's probably been converted to a Lexus customer for life. Its that good. I know that not all Lexus dealers are going to be the same but since my folks have had 4 LS, 1 RX and 1 SC (bought and serviced by several dealers in S. CA and N. CA), I know that our experiences aren't rare.
IMO, the average buyer (even the enthusiast) puts a premium on the quality of the car he/she is buying and the ownership experience. If you're spending $30K + (in some cases way +) you want to feel good about your purchase. Acura does a better job of this than Honda does but they're way behind Lexus, Infiniti or BMW.
So at the end of the day, you have quality products that fail to really excite you. Again, they're good and mostly offer incredible value but save for the NSX what Acura prodcut really makes you feel like you have to have it? None, for me at least. The purchase experience is only ok. The ownership experience is alright but not great. How long can this continue while others improve?
I'd say not long. And I'd point to AHMC's recent announcement that its killing the CL as concrete evidence. The CL (esp. in Type S form) is a great value. Its powerful, quick, comfortable and roomy. It has a lot of standard equipment and is generally viewed as a good bang for the buck. So why can't Acura sell them?
1) Looks. The product was designed to be non-offensive but not inspiring. I'm not saying pull a Mangle, er... I mean Bangle and design a train wreck like the Z4, but give the customer something he wants to go back to his garage and stare at late at night.
2) Spec's. BMW sells damn near every 3 coupe it can muster. Infiniti seems to be having no trouble selling the G35 coupe. On paper, the CL was a much better bang for the buck than the BMW and about as good as the Infiniti. Yet, most drivers (and mag writers) ignore the Acura product. The American market wants a RWD car. Cadillac is getting the message, Infiniti is getting the message, hell... even Chrysler is getting the message. Acura refuses to move. To make matters worse, the upcoming RL will continue to be V6 powered and FWD. I'm willing to be that it will also continue to languish on dealer lots.
Luxury car buyers want to be catered to. They want products that they're passionate about and that make their neighbors go "oooh...ahh...". They want power, refinement, and balance. They care about the environment, sure. But probably not much further than how much and how often are they filling the tank. Not enough for them to feel good about buying a V6 for an incremental 2mpg when the guy down the street has a V8.
my 2 cents.
04-10-2003, 09:18 PM
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Originally posted by koala
Uhm. They START at $26,500. then add in any accessories or options and you're at 30k.
Uhm. They START at $26,500. then add in any accessories or options and you're at 30k.
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04-10-2003, 10:16 PM
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Originally posted by koala
Uhm. They START at $26,500. then add in any accessories or options and you're at 30k.
Uhm. They START at $26,500. then add in any accessories or options and you're at 30k.
04-11-2003, 04:02 AM
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I would buy an Accord over the TSX. I won't even look at the TSX until the type s version comes out. Even then, hopefully it won't be priced too high to put it in other cars' price ranges (like the MUCH better, much more powerful G35 copue).