Colin

Maybe, maybe not. We're pretty far into the product cycle so it's likely the development costs have been amortized. They also seem to only run the line when they have sufficient orders to make a full production run (whatever that # is). I would guess as long as they can use the line for something else and it's not sitting idle, they're probably OK cost wise. Fulfilling orders is another issue that this production strategy creates.

neuronbob

Darn, Colin beat me to it.

Bottom line, every single RL sold is pure, golden profit to Honda.

Colin, have you heard a peep about the 3G RL?

Colin

Nothing! It's too far out right now. I outlined my thoughts on my site if you want to see some speculation: http://bit.ly/satoauto2012 While you're there, check out this experience: http://bit.ly/satoautoDV

Hapa DC5

Cool vid Colin!

speedemon90

Chrysler's been doing really well, especially jeep.

I've seen quite a few new jeeps.

I love the way the new grand cherokee looks!

PortlandRL

Agreed.

I got a chance to check out the Grand Cherokee Overland when I was in California back in March (feels like yesterday) and was supremely impressed. I'd certainly take it over many of the other SUVs offered in that price range.

SSFTSX

Well one of dealer is offering Eqqus Ultimate at $58k $7k price cut just on website price. there is price cuts on all others.
i still think Hyundai sells is due low price, competitor aging models and supply issues. nothing to do with brand itself


http://www.cammisahyundai.com/Vehicl...el=&search=new

JS + XES

iTrader: (1)

^ Yeah, it certainly has nothing to do with the brand.

neuronbob

AWESOME video, Colin! Thanks for sharing it.

You've got interesting thoughts on the new RL. I'll take a hybrid to atone for my time in the CTS-V.

Legend2TL

Unknown unless you work in the finance department of Honda. Typically there is a amortization schedule for a car which includes all the design/development/testing/marketing and the costs of any loans/bonds to cover it. Once a vehicle is in production those cost get averaged out. Some tooling (mostly plastic and metal dies wear out) and need to be replaced.

Most of the time the building and heavy tooling (very large metal presses nad large robots) are considered a business capital expenditure. Sometimes not, the original NSX plant was purposely built just for the NSX and hence had a limited capability since the cars were hand assembled (similar line for the Dodge Viper).

I've told this before but the NSX never made a profit according to a Wall Street Journal article and the Honda board was furious so when the S2000 was pitched to the board they wanted far better market analysis and assurances it would make a profit. Supposedly the S2000 was profitable.

IDNK, but I beleive the 2G RL was probably profitable. Too large a volume in the early years for it not to be.

biker

^ Even if all up front costs have been paid for (unlikely), I don't see how they can make money selling 50/mo.

Legend2TL

Hard to say, there's a couple other factors. i don't believe the RL line is a exclusive assembly line in Japan.

Most production contracts with sub-contractors have a price/quantity clause. Lower volume higher prices pretty simple, some have additional charges as well. A line charge is the cost of setting up a manufacturing line to build a given component, so even if you want to build one you pay the full line charge. So when sales volume gets low or is a low rate production car most manufacturers will buy in larger lots of components. Problem with that is you expense those parts over a longer period of time and it makes it harder to do a model upgrade. Honda has majority ownership in many of it's component vendors (Showa, Kiehi, ...) so that helps some. It's really hard to make cars in low production numbers.

NSX story it was the old man's car, but the board didn't have the same feelings toward it. One of the Honda board members was highly annoyed at the losses on the NSX. There were explicit instructions at the plant grounds that when he was chauffeured onsite to not drive past the NSX assembly building.

One of my best friend's old neighbor used to be a senior manager at the Baltimore GM plant in the 70's and I remember he said that the cost analysis for a given product at GM was heavily scrutinized by the finance folks so as virtually everything GM made back then had a decent profit.

SSFTSX

RL is not some thing unique. Most of subcomponents are shared.
It is not Eqqus/Genesis

biker

The most important indicator to me that the RL is a money loser is its cancellation in other markets. I think Honda is keeping it around in the US to save face, regardless of cost. It's not just the actual manufacturing cost but even small things like printing of brochures that take money away from potential profits. And recently, the surging yen is just adding to Honda's misery.

At this point it is just embarassing to offer a car in the segment that sells 50/mo.

neuronbob

Quoted myself agin for truth.

2G RL was released in 2004, seven years ago. Since then:

--SH-AWD is now in three other models (RDX, TL, MDX)
--Navi software trickled into ALL Acura models with navi
--ANC is in the TL if I recall correctly.

The amortization of costs is more than the hardware to make the RL. It's also in the tech that has been propagated down the line to other Acuras. The RL was the show horse for new tech that has made it into other Acuras. Expect more of the same from the 3G RL when it is finally released.

I submit again that every since Acura RL made is pure profit for Honda Motor Corp.

biker

Oh how Honda wish that were true. If that was the case why would they not sell it everywhere? True, they may not need to invest a whole lot to carry it from MY to MY, but it is far from a great profit maker. Just cranking up the production line (and then running it for just a couple of days) must have some significant costs. On most pedestrian models the break even point is somewhere north of 100K units. No one but the bean counters know the real answer to this.

My point is that the profitability is secondary to the embarasing sales level.

Pure Adrenaline

iTrader: (2)

No offense, but you dont have any of the numbers so it is impossible to accurately assert that they are pure profit units. Just running a manufacturing facility in terms of utilities costs tens of thousands per day. At 50 units, it doesnt even pay for electricity.

True, the RL is a flagship and a rolling test bed of new technologies. But that doesnt mean they necessarily make money. If its a moneymaker, then it would have been updated after the regular Honda product cycle. Makes no sense to keep a moneymaking flagship stagnant for so long... its because there is no profit, therefore no additional R&D funds.

SSFTSX

RL is not every where because others like TL/MDX/ZDX are not every else either. so there is little point in offering some thing for six cylinder. RL does not have 8speed auto uniquely to it. 6speed is pretty much standard now except TSX/RDX. RDX is in last model year.
Honda are pioneer in flexible manufacturing. they could potentiall produce RL in single month for whole year distribution.
It is still on China Acura website.

http://www.acura.com.cn/rl/index.html

Legend2TL

But as you (and I previously) stated unless you have the numbers you don't know. So you don't know if 50 units a day covers the electricity bill, or the electricity bill, or if there is a profit.

Bottom line you need to see the books and how Honda's accounting system works.

YEH

Yep - Toyoda wanted to kill the GS for that very same reason.

SSFTSX

C&D has new comparision test of 2011 Accord with Passat, Sonata 2.0T. Accord despite being the heaviest with 5speed managed to get 27mpg. better than 6speed 2.0T Sonata. turbo simply lacks the refinement of V6. 6speed Auto V6 will be ideal in fuel economy and performance.
Passat without V6 is not upto task as Honda 4cylinder is simply more efficient and reliable.
http://www.caranddriver.com/reviews/...3.6_sel_page_4

YEH

^ So, it's an issue when the Sonata is lacking a more refined V6, but not so for the TL and RL in lacking a more refined V8? lol

biker

Once again the thread veers off topic.

Hapa DC5

you had to expect that after you've seen who posted....

oonowindoo

I am surprised that Hyundai hasnt sold more cars..

Went to test drive a 2012 Genesis Sedan 5.0 R-spec over the weekend. I cannot think of a better car in that price range ($46k sticker, $42k market price) that offers similar performance, tech, and looks. The Lexicon sound system just ... WOW.. Best part is every option is standard!!

Go check it out if you havent!!!

biker

^ at the moment, it just doesn't have the "right" badge on the hood.

oonowindoo

with the "right" badge, it would cost at least $20k more.

YEH

Having the "right" badge hasn't exactly helped Infiniti M or Lexus GS sales (but one can argue they aren't enough of a "right" badge as Mercedes and BMW).


The cost of marketing and a new dealer network would add around $8-10K to the price of the Genesis - and that's only assuming they have a higher volume model to sell as well (such as the forthcoming 3 Series competitor).

Would gain buyers, but would also lose some due to the higher MSRP - so in the end either a wash or a slight gain in sales.

What would be more conducive to an increase in sales is getting available AWD - which would increase sales by at least 35-40%.

Pure Adrenaline

iTrader: (2)

I hope this doesn't rub anybody the wrong way, and I'm certainly not making this up.

But by happenstance this week, I've met and had very lengthy discussions about a lot of different things with someone who has worked at Honda/Acura for 25 years.

We talked about the 5-speed transmission issue, the death of the S2000 and the NSX, etc. Curious, I asked him about the RL sales.

His answer was that it is not profitable at 50 units per month. But it doesn't make money, so there is no justification for R&D funds for a new model right now. So it keeps going as it is. There is apparently a lot of disappointment within the company with the Acura brand.

YEH

^ It's the chicken or the egg problem.

Sales of the RL will continue to get worse if Honda doesn't come out w/ a new and greatly improved RL, but there is risk in making such an investment.

But if Honda doesn't make the investment, things aren't going to get any better.

It's the same reason why Toyoda wanted to scrap the GS and the GS had previously sold pretty well.

While the new GS is new in many ways, Toyota didn't go all out - spending most of their development $$ on the interior, the suspension and cutting weight.

JAB00

Acura seriously veered with it's current design language. They may never recover. My next car (currently 3G) will be my last. I will be moving to the Germans.

phile

this is actually surprising because it really feels like the Acura people have been viewing life behind rose colored glasses these past...years.

Edward'TLS

Just kill off the slow-selling RL, and use the otherwise-wasted resources to build up the TL as Acura's new flagship model.

PortlandRL

When a model line-up stops with a mid-size luxury sport sedan, that company moves down a few pegs in public perception. You may recall that Infiniti killed off the Q45 in 2006 and many people thought it would be the end of the brand and it may very well have been. But instead, Infiniti pulled a 180 and began building drop-dead gorgeous cars that were also well-made and stunning to drive and had they not done that, I doubt Infiniti would be here today and especially not with the sales figures they are currently posting. With their present line-up, asking anybody about the Q45 will likely get you a blank stare. Infiniti made the awkward transition from old-school luxury to modern, sporty luxury in record time and grand style.

Unfortunately I don't see Acura doing anything like this. Dropping the RL, no matter how poorly it sells would be a massive blow to the brand's image and no matter what anybody might fantasize about to the contrary, the ZDX will never be taken seriously as a competitor to 4-door luxury sedans. It's simply too polarizing. Nobody ever cross-shops an LS460 with a car that looks like the ship from 'Flight of the Navigator' not to mention the ZDX isn't exactly setting the sales charts on fire itself. If Acura wants to drop the RL, they need to have a rock-solid business plan in place for the entire lineup, not just a flagship, otherwise it will be a long, slow ride to the bottom.

Edward'TLS

Infiniti is different. Never has Infiniti announced it's intention to give up it's hopeless chase to become a True Luxury brand, and, instead, to downgrade it's goal to become a "Smart Luxury" brand whatever that means.

Acura had done it before when it killed off the brand-enhancing supercar - NSX. Now that was a massive blow to the brand's image, price-wise and performance-wise. What makes the RL a better choice to keep than the world famous NSX supercar ?

So kill off the RL sedan, and continue to become a "Smart Luxury" brand, whatever "Smart Luxury" really means other than just another jargon from Honda.

fsttyms1

That makes no sense. So you have a poor selling product. So instead of trying to make a better product you continue to make the one that doesnt sell and loose even more money No wonder why things seem to be going backwards there

TSX69

American Honda Reports Sept Sales

American Honda Motor Co., Inc., posted September sales of 89,532 vehicles, a decrease of 8.0%, the company announced today. American Honda year-to-date sales reached 859,797, down 6.2% versus last year, based on the daily selling rate*.

Honda Division posted September sales of 79,522, a drop of 8.2 percent versus September 2010. Honda trucks posted sales of 41,375, an increase of 7.0% due to strong sales of the CR-V, Pilot and Odyssey. The CR-V was the top-selling model for September, with sales of 19,604, up 9.5%. The Pilot posted a sales increase of 27.9 percent on sales of 10,306. The Accord recorded sales of 18,639, down 13.8 percent and the Civic, which is nearing full production, posted monthly sales of 13,724, down 26.4%.

"Our U.S. manufacturing facilities are finally up to full production and the results are starting to show with increased CR-V, Pilot and Odyssey sales,” said John Mendel, American Honda executive vice president of sales. "Truckloads of new vehicles began arriving the last week of September and shoppers can now feel more confident that they will find what they want at their local Honda dealer."

Acura Division recorded September sales of 10,010, a decrease of 6.6% versus September 2010, and year-to-date sales of 89,146, down 7.9%. The TSX was the top-selling Acura model for the month with record September sales of 3,112 up 37.9%.

http://acuranews.com/channels/acura-...-sales-results

Acura posted September sales of 10,010, a decrease of 6.6 compared to September 2010, based on the daily selling rate*. Year-to-date sales totaled 89,146 units, down 7.9% versus last year.

“Despite challenges, Acura had a strong month,” said Jeff Conrad, vice president of Acura sales. “As inventory levels and vehicle logistics return to normal, we are confident sales will continue to improve for the remainder of the year.”

Total car sales were up 13% with TSX as the top selling Acura model posting 3,112 units, an increase of 37.9% compared to last year. The TL reported 2,507 sales for the month, down 0.3 percent. MDX sales totaled 2,925 units, down 28.3%, and were limited by weather-related shipping delays.

biker

Sedan sales wise the only thing Honda has going for it is the TSX. I'm still wondering if sales will ever come back for the Accord/Civic/TL.

RL/ZDX/Crosstour sales -

dom

Can't recall where but I read that Honda and Toyota had the industries highest incentives for Sept.

Doesn't really show in sales.

EDIT: Not what I read.

Moog-Type-S

More proof that domestics and Korean brands are eating up Toyota & Honda.