[TSX69]

Rocky ILX Launch Has Acura Execs Plotting Quick Changes

Acura sales are climbing again after last year's earthquake-caused inventory crisis, but the launch of the ILX compact sedan has been a disappointment for Honda's premium brand.

Now Acura is planning a powertrain change for the ILX and will highlight technical features on the RLX flagship sedan due next spring as part of a strategy to return brand sales to the 200,000 level.

The ILX "is not hitting its sales expectations," said John Mendel, American Honda executive vice president.

The ILX is based on the Honda Civic platform. And although some Audis borrow from Volkswagen and some Lexus models take from Toyota, the ILX's roots may be a bit too evident against the BMW 1 series and Lexus CT 200h.

The car was meant eventually to replace the aging, slightly larger TSX. But November was only the 2nd time since the May introduction of the less-expensive ILX that it outsold the TSX, which is still going strong.

The ILX is being outsold by the Buick Verano, Volkswagen CC and Audi A4, though it has an edge on the CT 200h and the outgoing Audi A3.

Last month Acura sold 2,108 ILXs, compared with sales of 3,574 Veranos, 3,343 A4s and 2,197 CCs.

The main problem: The base and midgrade ILX have a 2.0-liter engine that is "underpowered, and consumers don't see the value," Mendel said.

What's more, the upmarket 2.4-liter engine only comes with a manual transmission. Though it's pitched as a performance feature, few Acura buyers actually want to row the gears.

"The car was planned for a 2.4 automatic, and we're working to fulfill that," Mendel said, though he could not say when.

"We're looking to sell about 30,000 units a year, and we're probably closer to 22 or 24 right now," Mendel said, speaking of the annual sales rate. "We're hitting two-thirds of our expectations, but we're growing every month and catching on more."

Fortunately for Acura, the redesigned RDX compact crossover -- also launched this year -- is off to a stronger start. It is outselling the Audi Q5 and Volvo XC60, and is hot on the heels of the BMW X3.

Although it shares some components and a platform with the Honda CR-V, the RDX has a more distinctive interior. The jerky turbo-4 engine has been replaced by a smoother V-6 that has more power and better fuel economy.

The launches of the ILX and RDX set the tone for the redesigned RLX flagship sedan due next spring.

The current RL has been a flop, averaging just 35 sales a month for the past 2 years. Mendel wants to market the RLX as a technical tour de force, but with the twist that it offers "technology that improves your skills, not that takes them away."

That means pushing items like the RLX's standard Precision All-Wheel Steering (PAWS) system, which allows the rear wheels to have independent toe control during cornering. The rear wheels have their toe-in angles adjusted by electronic actuators while cornering, giving much crisper handling.

"The RLX has the right package to compete with more expensive vehicles," said Art St. Cyr, American Honda's head of product planning and logistics. "The previous RL didn't match what the customers were looking for."

Most luxury manufacturers have allied themselves with premium audio suppliers, and Acura is no different. The RLX will feature a system by Krell, which sells home stereo speakers for upwards of $65,000 a pair.

"We have to discover more ways to get this vehicle in the hands of people," said Mendel. "We need to get butts into seats."

Mendel is looking at expanding the loaner program Acura has with the W hotel chain. Currently, the program only offers guests a ride in the MDX crossover. But the RLX's much larger backseat allows that vehicle to be used as well, he said.

Acura sales were in free fall during the recession. In 2010, Acura sold barely half of its 2005 peak of 209,610 units. This year, sales are up 27% and the brand should easily break 150,000 units. And executives have said 200,000 units is a near-term goal.

Should RDX sales continue to be strong, and if the RLX does well, Mendel expects to hit that number in the next year or 2 -- especially with a redesign of the MDX mid-sized crossover coming next year and the redesigned TL mid-sized sedan and new NSX sports car coming in 2014.

"We have never had a true flagship sedan," said Mendel. "We're in a position now where we can build that flagship, and in a couple years we get the [NSX] sports car. It's when we need it that we will be delivering our signature in terms of smart luxury."

 

[TSX69]

Update

Acura to Tweak ILX in Quest to Shed Near Luxury Label

Acura is set to begin the uphill climb to remake its image and secure more firm footing in the competitive American luxury vehicle marketplace, with planned changes to its new entry-level sedan in 2013.

The ILX was intended to attract a younger, more affluent buyer, but sales have missed the mark. Acura finished 2012 with 12,251 deliveries of the ILX, well short of the 30,000 originally targeted.

“(The ILX is) not hitting our sales expectations,” American Honda President John Mendel says during a discussion with reporters at November’s Los Angeles Auto Show. “Consumers have told us they like the 2.4L and they wish they had an automatic, but they say the midrange vehicle is underpowered and they don’t see the value in it.”

The model currently is offered with a choice of 3 powertrains: a 2.4L with a manual transmission; a 2.0L with automatic transmission and a 1.5L hybrid variant with a continuously variable transmission. Mendel says the ILX originally was going to debut with an automatic transmission option with the 2.4L engine, and engineers are “working to fulfill that.

“We’re doing some value enhancements on the car,” he adds. “We’re planning some as we go forward. But I think, overall, we have a good plan for ILX. It is bringing in buyers to Acura we had wanted, as in 1st-time luxury (buyers) or move-ups.

“We had a little bit overestimated the size and the growth of that segment to begin with. But it’s probably getting 2/3 of our (volume) expectations. The nice part is that it’s increasing every month, catching on more. It’s accepted. It’s kind of a growing segment.”

Despite targeting upwardly mobile male drivers in a recent ad campaign, more women have been drawn to the car than expected. And the model was the highest-selling sedan in Acura’s lineup in December, outpacing the TL by just 239 deliveries.

Acura has been dogged for years as a “near-luxury” brand, having premium prices without the premium perks. Top Honda executives are well aware of the derisive claims and have devised a strategy for Acura to better compete with BMW, Infiniti and Lexus without matching them pound for pound and dollar for dollar.

This year, the brand will emphasize “smart luxury” to erase the near-luxury label stuck on drivers’ minds.

“The near-luxury label is fine, if that’s what you want to be,” Mendel says. “We talked about this idea of smart luxury. That’s the intelligent use of technology intuitively. It’s the synergy of man and machine…where you dynamically feel at one with your car, but it doesn’t take over your skills.”

Acura’s short-term success also rides on the RLX fullsize sedan, which assumes its place at the top of the chain from the outgoing ZDX midsize cross/utility vehicle. Mendel and Honda Chief Engineer Art St. Cyr acknowledge there was a misstep with the poorly received ZDX.

“The RLX is a true flagship,” St. Cyr says. “The ZDX was a very nice vehicle that (arrived when) the market changed. That car was a very good car; the customers that bought it really liked it. It just didn’t resonate in the market that we have.”

“ZDX did not have an existing segment,” Mendel notes. “It kind of sat in that unique area. It had some issues with rear-seat access. RLX comes into that luxury segment to compete against the true luxury interior” and will come more well-equipped than the previous RL sedan.

The luxury market will be watched closely this year. Lincoln is in the midst of a massive image makeover, Cadillac will introduce a premium electric vehicle and Infiniti revamps its nomenclature for future models. Mazda has said it could enter the premium segment as well.

“I perceive everybody as competition,” Mendel says. “Mazda’s been down that road before. We know how difficult it is to try to break through to that luxury thing, as do others. Certainly they could be competition if they get it right.”

Mendel does not reveal plans about future product, but does say Acura will defer to a size hierarchy that could possibly lead to the discontinuation of at least 1 of its current models.

“1 of the problems that Acura has had is this sort of overlap. (With) TSX, TL and RL, you could hide one behind the other (and) behind the other; they were kind of the same size, same dynamic.”

The RLX, Mendel says, has a BMW “5-Series exterior and 7-Series interior,” and will target affluent buyers through a variety of marketing, including the auto maker’s current partnership with the upscale W hotel chain.

“We have never had a true flagship sedan. And almost all luxury brands are defined by their luxury sedans or sports cars,” he says. “At a time when we need it, we will be delivering to the marketplace our signature in terms of smart luxury and the products that embody this synergy between man and machine.”

 

[TSX69]

Update

Honda Says It’s ‘High Time’ to Boost Sagging Acura Demand

Honda plans to introduce its 2015 model TLX sedan next month at the North American International Auto Show in Detroit, Iwamura said. A modified ILX compact sedan with a more robust powertrain will follow, and Acura’s NSX “supercar,” a high-performance coupe, returns in 2015. Iwamura declined to detail changes to the youth-oriented ILX model.