iforyou

iTrader: (1)

The 2G RL was successful in its first year or two in comparison tests and sales figures. Others came out with new models very soon and the 2G RL suddenly became outdated and failed hard.

BDoggPrelude

At the RLX's current rate of sale, it's going to take about 4.5 years to meet the 2G RL's first year sales numbers.

jhr3uva90

The world was a much different place in 2005. There were people who could afford Acura RLs back then who probably couldn't afford it today.

GoHawks

Oh come on, you're making excuses.

"people buy BMWs and Mercs for status"
"People are more concerned about brand as opposed to RWD"

Now your saying people can't afford buying RLXs

People seem to be able to afford the other luxury brands.

At least the 2nd gen RL got some consistently positive reviews and did very well in several comparo tests.

The RLX has had.... What? Maybe one or two OK reviews, with the rest being lukewarm or outright negative.

This car is going to be a flop and it will be difficult for the SH-SH-AWD version to overcome all the negativity.

jhr3uva90

It isn't an excuse. Here's an explanation. Acura's sales peaked in 2005 according to an article I read:

http://articles.latimes.com/2012/nov...ubles-20121128

The real estate bubble was also peaking around that time. What does that mean? It means there were people who used their newly-found home equity (generated by the real estate bubble) to finance car purchases. Some of those folks would have bought Honda Accords under normal circumstances, but bought Acuras during the "boom times." And some of those buyers chose RLs. Once the bubble burst and the recession set in, the buyers lost their ability to buy more expensive cars so they are either holding on to the Acuras they bought in 2005 or they replaced them with cheaper cars.

By contrast, those people who did not need to rely on home equity to buy expensive cars bought BMWs and Mercedes. Many of those people were unaffected by the recession or the real estate bust. And they can still afford BMWs and Mercedes in 2013. In economics terms, BMW and Mercedes products show less elasticity than Acura products. And the strength of those two German brands contribute to that.

To use the Infiniti M as an example again, the current generation debuted in 2010 to positive reviews as a 2011 model. It never outsold the 5-Series, E-Class or Lexus GS and now it is being outsold by the FWD Cadillac XTS. Infiniti sales also peaked in 2005 and I assume the current generation M never sold as well as its 2005 predecessor.

Brand matteers a LOT, especially when it comes to the luxury market. This applies to cars just like it does purses or shoes.

db22

But you can't put a BMW badge on a Kia.

jhr3uva90

You probably could put a BMW badget on a Kia and call it a 1-Series. 1-Series customers generally don't know the difference.

WheelMcCoy

Heh heh. Slightly off topic, here's a story about a police department in China that disguised their Mercedes fleet cars with Honda badges. They didn't want to appear to be spendthrifts to their citizens. It didn't fool anyone and the cops were "busted."

http://www.autoblog.com/2011/07/09/c...-to-avoid-tax/

jshaw

On a related note, Mercedes dealers in south Africa used to use a locally assembled Honda Civic to prop up their own local dealerships (understandably, sales volumes of Mercedes vehicles in the early 90's were low in South Africa, too low to sustain the dealers on their own).

noobie

Seems like a bit rationalization going around here with home equity, bubbles, brand. Bottom line is people are still buying luxury autos, just not the RLX. Whatever the reasons people think,they don't matter; the only thing for sure is, this thing ain't selling.

jhr3uva90

The shrinking American middle class is a rationalization? Are you serious?

Yes, luxury car sales are doing better so far this year than last year at this time. However, there are fewer people in the USA who can afford luxury cars compared to before the Great Recession. Those people who can afford to buy (or more likely lease) luxury cars with a base price over $50K USD are going with BMW, Mercedes, and Cadillac -- brand names that have existed for several decades. Infiniti, Acura, and Lexus can make sedans in that price range, and they can even make sedans that emulate BMW and Mercedes. I just don't see how those Japanese-branded sedans will ever come close to BMW/Mercedes in sales, though.

In this economy, most regular folks have a hard time justifying the Acura TL or RL when the new Accord is so good. Some probably wonder why they should buy an Infiniti M when the Nissan Maxima has a similar size and look. Even though Lexus has brand cache, the ES make the GS a tough sell for some.

If I ran Honda, knowing what resources it can spend across its car, motorcycle, and power products lines, I would hesitate to use up a lot of capex on rear wheel drive. I would more likely continue the success of the RDX by making it a little bit more upscale, create a new SUV below the RDX, enhance the floundering ILX, put P-AWS in the upcoming TLX and call it a day. The rest of the money I would spend on marketing promotions. But that's just me.

noobie

Right, the shrinking middle class is the reason why the RLX is not selling..... Couldn't possibly have anything to do with making a car people want to buy.

jhr3uva90

Okay, so why isn't the Lexus GS selling? It's year to date sales (as of May 31, 2013) are down 18.9%. And what about the Infiniti M?

So I guess every car maker except BMW, Mercedes, and Cadillac are making $50K sedans that no one wants. The facts suggest otherwise.

KeithL

If Honda did tha twith Acura they would die a slow death. Competition dictates they need. As you stated the Accord and main stream family sedans have raised the bar, the near luxury and luxury class need raise the bar as well and they have. Look at the new Q50, Lexus IS the CTS and a new Genesis coming, mean Acura needs to step up.

I have said this before, they don't need to spend R&D on a full RWD platform they could have tweaked what they had into a AWD platform. Look at the Audi A6 it is a FWD platform and AWD platform. Get some decent and consistent styling across the car line and they could do something and go far.

Colin

... and yet we've sold 3 in the last two days. Must be our market.

jhr3uva90

I would like to see more AWD Acura, but the market apparently disagrees. That's why Acura has started offering the RDX with FWD and so far, that option seems to be helping RDX sales. The MDX will also be offered with an FWD options, so we will see what the affect it. Lexus has been offering FWD versions of the RX SUV for many years and the FWD models outsell the AWD models.

Well-run companies usually go with their strengths instead of trying to be everything to everyone. Acura's strength is SUVs and that is where they seem to be putting most of their efforts.

KeithL

Not sure about why the GS is down, but the M is in its 39th month of this gen so I expect sales to fall off. I do know I have been cross shopping the GS lately and I am not a fan of the interior design as well as that dumb mouse controller. Also the GS tech is not on par with wha some of the competition offers. The GS does not have lane keep assit, crash mitigation, etc. I see adaptive cruise on the web site, but does not seem to exist on any car.

Also I have not looked, but while the GS is down, it probably is selling 3-4x what the new RLX is.

jhr3uva90

The GS is still in the first year of its current generation, but YTD sales are down nearly 20%. Doesn't that say something? And is it worth it for Honda to create a RWD platform?

KeithL

Keep in mind that Audi, BMW and MB are agressivley going after each other and Lexus. I also think the GS Is a bit bland, nice styling from the front, but side and back and just bland. I will say I love being in this market right now, I have Audi dealers killing each other for my order, Lexus calling me all the time trying to get me back to look at the GS, Infiniti wanting to keep me with offer after offer.

One thing about Lexus is I think they have expensive dealerships to maintain so dealers are not always cutting best deals since their overhead is high. Audi is in this rejuvenation mode, 2 of the 4 dealers in my area are building new "Lexus like" dealerships. They have cars that people want. I have seen them referred to as the Hyundai of the Germans and can see why.
I was thinking of ordering a new M37/Q70 and with sport touring and tech, basically fully loaded is $64K. For $65K I can get an A6 Prestige that has Quattro, lane departure warning, blind spot warning, adaptive cruise with stop and go, navi with google earth, in car wifi hotspot, full LED headlights, etc.
A GS would be up in same range. Sure the Japanese cars may be a tad more reliable, but the Germans have a car tha is a bit more fun to drive.
So with all that you have Acura bringing a knive to a assault rifle gun fight.

neuronbob

Rocket_man

In May the GS sold 2,015 cars. Without doing the math that looks about on average the same as 2012. In May 2012 it sold 1,996. I think it took a bit to get their supply in the channel. If the RLX sold 2,000 in a month Acura would be ecstatic. Unfortunately that is never going to happen.

http://www.goodcarbadcar.net/2011/01...s-figures.html

I like the GS far more than the RLX. If I had to choose between only those two I'd pick the GS.

jhr3uva90

Unfortunately, YTD sales of the Lexus GS are down:

http://lexusenthusiast.com/2013/06/0...-sales-report/

I test drove the GS and REALLY liked it. If I had to buy a car to replace my RL today, it would be a close competition between the Lexus GS and the Infiniti M. I don't know which one I would choose. I really like both of those cars. On the other hand, I would only buy the P-AWS version of the RLX if I got a REALLY good deal. I hope the upcoming SH-AWD version of the RLX is impressive.

noobie

Are you saying that the shrinking middle class is responsible for low GS and M sales too? This is getting really far fetched here.

In any given year hundreds of thousands or midsize luxury cars are sold in the US. Here is a summary of 2012 sales.



It doesn't matter what models you consider in or out of the segment; the bottom line is that the market is still large and Acura RL/RLX has a tiny share of it (less than 1%)

People buy these cars because they want to. It's a combination of many factors including features, price, brand, service, reliability, image, driving dynamics, lease rates, newness of model, uniqueness, technology, etc. Different people will have different priorities of the factors, but the company that gets the mix right for the largest number of people looking for these cars, sells the most. It's that simple. Mercedes and BMW get it right. Audi is getting it right. Lexus is doing OK and Infiniti is so/so. Acura RL/RLX is miserable.

For interest here are the sales numbers for 2010 and for the large really high end segment. The RL gets it's butt kicked by everything including the Panamera.

noobie

Yep, they need to do something, or Acura will fade away into the sunset. Not having enough resources compared to BMW, Toyota and Mercedes is a cop out. Innovation and creativity is what they need. Honda has way more resources than Tesla, yet Tesla has created and the fastest selling luxury car. They got the formula right, Fisker did not. And it's not just about electric cars. Nissan and Chevy both have mediocre results with the Leaf and Volt.

jhr3uva90

How many models does Tesla make? How many do they sell? And how long do you think they will be around? I like Tesla, I like their product, and I live about 40 minutes' drive from their HQ in Fremont, CA. However, Tesla is a niche player with a niche product. They don't even have a dealership network and might be banned from states like North Carolina as a result. You can't really compare Honda to Tesla.

And about Acura fading away to the sunset: aren't their overall YTD sales higher than last year? Acura is giving American customers what they want. And what do they want? Smooth, soft SUVs. The new RDX has annoyed car enthusiasts, but sold much better than its predecessor. The new MDX will probably be a hit. I believe that, like Apple pulling out of the enterprise server market, Acura should consider minimizing its presence in certain markets (like sedans with a base price over $50K).

One more thing: the car business is very capital intensive with major fixed costs. This is why very few small companies are truly independent anymore. Honda must be doing something right if they have avoided Nissan's fate so far.

jhr3uva90

And yes, as the middle/upper class shrinks and "economy" cars improve, there will be fewer buyers of luxury brands. Those buyers will more likely buy the more established brands. That leaves the less established brands like Infiniti and Acura with niche markets. It looks like Infiniti's niche will be RWD sporty cars, like a Japanese BMW. Acura's niche appears to be SUVs.

This scenario applies to most luxury goods, from purses to cars. We are in an hourglass economy.

http://www.inc.com/minda-zetlin/how-...s-economy.html

jshaw

More excuses.

If it's not the buyers who are too poor, it will be the economy (that did not stop Toyota from launching Lexus in the middle of an economic recession). If it's not the economy, it will be society.

No amount of excuses will change reality: Acura, and by relation, Honda, do not know how to make big luxury cars.

Even Volvo, for crying out loud, know how to sell more of their biggest luxury sedan than Acura does (and that's after abandoning it for about as long as Honda has). The pipe dream of people buying more "economy" cars... I wonder why Honda cheapened the Civic, eh? Before anyone posts back about how MB and Audi are "now" chasing the lower end of the market: they were always there. Both companies simply neglected it (only in the USA) during the early 2000s, and are coming back.

hondamore

Acura has done a great job of building luxury cars with the RL and now the RLX. The fact that they are so closely associated with their Honda roots that they lack the snob appeal to draw sales among the luxury segment is more a question of psychology than engineering. Don't forget that Mercedes and BMW are worldwide brands that have had a 50 year head start in building their "luxury must have" image.
I will concede that Acura has lost their way somewhat in the styling department, but their engineering and technology are world class.

GoHawks

Agree on all points but somehow Lexus, who FOLLOWED Acura as a premium brand, did a better job of cultivating their image as a luxury marque. This, in spite of the fact that Imthink Acura makes more engaging cars to drive.

noobie

Exactly you can't compare Tesla to Honda. They have no right beating them. Telsa had no brand name, used start up capital and has no dealer network for distribution. Yet they manage to build a car that people that capture's people's imaginations and overcome huge obstacles in the process. To use your terms a company like Tesla doesn't have the resources to compete with big mighty Honda, yet they kicked their butt in the luxury car segment. Build something that people want.

The middle class in US is disappearing The US market is still the most important in the world as influencing brand and sales and design. But the market has slow and limited growth. The future is in China, India and other growth markets. People is these markets look to western markets (for now) as to what to buy and what is hot. Acura selling SUVs to the US only has limited growth. Outside of US, Acura is non existent. There are no Acura SUVs outside of US. But guess what you see Land Rovers, Lexus and Toyota Land Cruisers in these growth markets.

What does a Honda and Nissan comparison have to do with RLX not selling?

WheelMcCoy

First quarter sales of
Tesla: 4,750
Mercedes S-Class: 3,077
BMW 7 Series: 2,338
Audi A8: 1,462

http://money.cnn.com/2013/05/13/auto...udi/index.html

Not a bad showing.

jhr3uva90

Tesla sold and estimated 1,800 Tesla S cars last month. Apparently, it is unknown how much profit each unit makes. I hope Tesla is successful and I wish I could buy an S. However, I'm not sure if Tesla will continue as an independent company long term.

People don't believe real wages are declining in the USA? Do you not see the numbers? Are you people serious?

http://money.cnn.com/2013/03/05/news...ges/index.html

I compared Honda to Nissan because Renault's investment of Nissan gave them substantial money that Nissan has used to invest in new platforms. Honda does not have any outside corporations taking over it or investing heavily in it anytime soon. That affects what capital Honda has available.

Again, I just don't think it would be prudent for Honda to create a mid-sized RWD sedan with an option V8. I think if such a car would sell about as well as the Infiniti M and might not be worth it to Acura, especially with Americans making less money than before.

Colin

Ummmm.... it also had US taxpayer money. With $465,000,000 they could sell every car they build at a $30K "loss" and operate for years.
http://www.slate.com/articles/busine...nvestment.html

Colin

This is very true, but they're also a much larger corporation and always have been (remember that one of young Honda's first jobs was providing piston rings to Toyota). They were fortunate that they already had the RWD Toyota Crown in the JDM inventory when it was time to launch Lexus.

There is a different corporate philosophy, for Honda it's always been "how to use engineering to do more with less" This means using a V-6 where other use a V-8, or a 4 where other use a 6. This means making FWD perform as well as RWD. This means environmental stewardship, (CVCC was designed to meet the US Clean Air act in the '70s) even a Type-R Integra or S2000 met all emissions, and if I remember correctly were actually Low Emissions Vehicles. It also means safety, most if not all Honda and Acura are top safety picks. These values are not new.

Not directed to anyone in particular: there are a lot of things people seem to grumble about. And they're the same arguments over and over and over again. Maybe it's time to understand that Acura sells best with 'bland' styling? That 'image/snob appeal' isn't a top priority? That they will never offer 'line by line' options, build a V-8, or RWD sedans. I simply don't see it happening.

noobie

We can start another tangent about loans and repayment by GM, Chrysler, banks, AIG,etc and debate this too

http://money.cnn.com/2013/05/22/auto...ent/index.html

The point was that Tesla created a hot car. If Tesla can do it, Acura should be able as well.

noobie

Just to clarify, haven't been grumbling about RWD, V8s, image for quite a while. And it's not grumbling, just observing what others have that are more successful. The fact is undeniable. The RLX is not selling. If they want it to sell; they need to to do something different and make something that people want to buy. I bought up Tesla as an example. They are not about V8s and are about alternative power. We perhaps should be discussing ideas as to how they can create a successful platform rather than rationalizing.

We seem to forget that many years ago, having a Prius was a cool image car; a Honda Insight, not so much. We many disagree on how, but I think we all agree on wanting more success from Acura.

noobie

Tesla made a profit last quarter, however profit on the Telsa S is still not there until volume ramps up, but they are on their way

http://money.cnn.com/2013/05/08/auto...ngs/index.html

http://www.csmonitor.com/Business/In...-electric-cars

I never said I didn't believe you about the declining wages; I said it was a poor reason why the RLX is not selling. I also agreed with you on the shrinking middle class and why selling "American" SUVS was not a way to long term success, but a slow decline.

Doesn't have to be V8, RWD and huge capital to be successful, the Tesla example was a counterpoint success to BMW and Mercedes.

jhr3uva90

1) In my opinion, Honda is a motor company and Toyota is a marketing company. They are much better at the 4 P's of marketing (product, place, price, and promotion) than Honda is. Also, Toyota has the resources to make their marketing work. That's why the Prius succeeded where the Honda Insight failed and why Lexus (which came AFTER Acura) was able to become such a popular brand in the USA.

2) I have mixed feelings about the whole taxpayer money thing, so I'll leave that alone. But I am glad that Tesla exists. Like people said earlier, Tesla is a very innovative American company. Also, I'm glad they took over the NUMMI plant in Fremont, CA and provided some jobs. God bless them.

3) It isn't that Honda can't make a car as good as the Infiniti M and the Lexus GS (both great cars, IMHO). It's just that, as a relatively small car company that does not get investment money from a large parent company (Audi/VW) or an outside company (Nissan/Infiniti/Renault), I don't know if it would be the best use of Honda's money to build such an Acura. I would be especially hesitant considering the new economy we Americans must face (not to mention economic issues over in Europe). I do hope the SH-AWD RLX becomes sort of a "poor(er) man's Tesla" using very advanced hybrid technology.

4) I would like for Acura to take more chances on their industrial designs. I wish they had the automotive industry equivalent of Jonathan Ive. That being said, I'm kind of glad they were conservative with both generations of the RL and the new RLX. Conservative designs tend to age better, in my opinion. I've had my RL for 8 years and I still get an occasional compliment. I've seen 2000 Acura TLs that still look fairly modern. The same with 1996 Acura RLs. That's a good thing for those of us who either buy cars that are already 3+ years old or buy a car and hold on to it for darned-near-a-decade.

5) I think Acura should continue its push into SUVs. Why? Because: a) SUVs are apparently what customers really want, b) both the RDX and new MDX are made in the USA, c) Acura has shown it can build excellent SUVs. Maybe Honda/Acura can find a way to innovate SUVs that are subtly good for the environment, meaning SUVs that help the environment in ways people don't immediately notice.

Great discussion everyone! As usually, I've learned a lot from all of you!

Colin

Maybe if someone gave Acura $465,000,000 they could do it was well? That was my basic point, it's (relatively) easy to be innovative/successful if you're spending someone elses money. As Solyndra showed, it's also easy to fail. Tesla HAS done a good job, not trying to take anything away from them. I only wanted to correct that they didn't only do it with start up capital.

dwboston

The only reason Tesla is profitable right now is because it is selling mileage credits to other auto manufacturers. The company admitted this in it's most recent quarterly earnings report. There's no way its car manufacturing operations are profitable at such low volumes.

Tesla makes a great car, but it's a toy for the rich. Its buyers are also getting $9k electric vehicle tax credits, subsidized by low- and middle-income taxpayers. It's perverse.