When Honda's Acura brand shows off its new flagship RLX sedan at the Los Angles Auto Show on Wednesday, it will be confronted with a marketing conundrum — how to brand the car as a luxury rival to BMW or Lexus rather than just a more expensive Honda.
It's a problem of Honda's own making. When it launched Acura back in 1986, Honda conceived an "intercept" brand.
"It was to be the next step for the Accord owner," said John Mendel, executive vice president of American Honda Motor Co., "a place to move up without going to the European luxury models."
That proved successful for years. Acura sales peaked at nearly 210,000 in 2005, according to automotive website MotorIntelligence. But as luxury car competition grew more varied and fierce, Acura became what Mendel called a "tweener" brand: upscale but not quite luxury. Sales plummeted to barely 123,000 last year — about half the annual volume of each of the top luxury makes: BMW, Mercedes-Benz and Lexus.
"Acura is not defined, other than to be a step up from Honda," said Thilo Koslowski, an automotive analyst at research firm Gartner Inc. "It needs a place within the premium domain. They need to be unique and differentiated."
Honda officials need look no further than the L.A. Auto Show to see the stiffening competition in selling cars to the affluent. Volkswagen's Audi division is rolling out 4 new models with powerful and efficient diesel engines, an increasingly sought-after drivetrain. BMW is showing off 2 fast and slick concepts, an electric and a plug-in hybrid. Jaguar and Land Rover, newly owned by Indian automaker Tata Motors, are together bringing 3 new models: a sport convertible, a flagship sedan and the latest Range Rover.
In all, 42 auto brands are bringing hundreds of new models to the show this week, which opens to the media Wednesday and Thursday, and to the public Friday through Dec. 9. About 50 of those models, including the flagship Acura, are world or North American debuts. The show, expected to draw about 1 million people to the Los Angeles Convention Center, also is a showcase for the latest automotive technology and for aftermarket makers of custom cars and parts.
The stakes are high for all the automakers bringing fresh models to 1 of the world's leading car shows. But no car means more to any automaker than the RLX means to Acura.
The RLX will define a brand that needs an identity. Other luxury leaders have well-established personalities, Koslowski said. BMW is known for design, sportiness, driving dynamics and technology. Lexus has carved out comfort, customer service and reliability. Jaguar has captured style, status and sportiness.
"That doesn't leave much room for Acura," Koslowski said.
Mendel wants to position Acura as a "smart luxury" brand. Mendel defines that as efficient and useful technology, wrapped in an elegant package that doesn't scream excess. He believes that the last recession changed consumer appetites for luxury goods. They pay for quality but are less interested in "look-at-me" consumption.
This means that the luxury market, while still growing, will downshift in both size and price. Fewer buyers will opt for, say, the stretched S class Mercedes-Benz or the long 7 series BMW sedans. Most of the recent growth in luxury brands owes to crossovers and cars at the entry point of the luxury segment, said Larry Dominique, president of ALG Inc., an auto industry data and consulting company.
That plays to Acura's strategy as a value-oriented luxury brand, said Dominique, the former vice president of product planning for Nissan in North and South America. It has 1 of the top small SUVs in the segment, the RDX, and is expected to announce a redesign of the larger MDX next year. Its newly released ILX sedan hits that entry point for the luxury segment but has not earned high marks from the automotive press.
That further raises the importance of the RLX, a stately sedan with a gentle "S" curve across the side body panels, giving the car a sense of motion.
Powering the RLX, which will go on sale this spring as a 2014 model, is a new 310-horsepower direct-injected V-6 that's expected to get fuel economy ratings of 20 miles per gallon in the city, 31 on the highway and 24 combined. Honda has not provided specific pricing but did say the sticker prices will start at less than $50,000.
Later in 2013, Acura will offer an RLX all-wheel-drive hybrid producing 370 horsepower and achieving 30 mpg in all conditions.
Hoping to brand Acura as having "efficient technology," as Mendel put it, the RLX will offer safety features that protect passengers and prevent collisions. These include lane departure warning, forward collision warning and automatic braking, as well as adaptive cruise control that keeps the vehicle at a constant distance behind other cars and various blind-spot information systems, such as a rear-view camera.
"Acura has always lived off the crumbs of Honda," Mendel said. "Now it needs to be a real destination brand."
Volkswagen provides a model with its revamping of Audi into 1 of today's hottest luxury brands, Dominique said.
"By going to unique design, unique powertrains and unique tuning, VW has done a good job of getting separation between VW and Audi," Dominique said.
For now, the RLX will carry Acura's identity. That starts with a cleaned-up dashboard, replacing 1 much-criticized for offering too many buttons and complicated controls.
"It is a massive simplification and will be more intuitive to use," Mendel said.
Sometime in the next 3 years, Acura will also launch the next NSX, last produced in 2005. The new version will be an all-wheel-drive hybrid supercar with styling evocative of a Ferrari or Lamborghini.
"NSX will be the sizzle for the brand," Mendel said. "You will think that anybody who can do that can make a real cool passenger car."
Acura makes some very nice cars for sure but the styling as of late seems to have taken a turn for the worse and I'm not so sure that hasn't hurt overall sales as well. That RLX, and there's just no other way to say it, is straight ugly. One thing that I can really key in on is the grills of some of the cars they are making and another example is this RLX. The first thing that prospective new car owners look for is a visual attraction, just like when you're prospecting for a new girlfriend, and if the cars are butt ugly they sales numbers are going to reflect that.