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By Earle Eldridge, USA TODAY
Acura, the first Japanese luxury brand, has been falling behind competitors, hurt by a product lineup light on trucks and an image that lacks sizzle.

Of the seven major luxury brands, Acura, created by Honda in 1986, is the only one with declining sales this year. Acura fell to No. 5 among luxury brands last year from No. 3 in 1990.

It is a rare misstep for one of Japan's automakers, which have been grabbing U.S. market share from their Detroit counterparts.

For mainstream automakers, having a luxury brand is seen as a way to hold onto buyers ready to move to upscale models as they mature.

Beyond that, Acura has been an avenue for Honda to show its technical strength. Among the Japanese luxury brands — Acura, Toyota's Lexus and Nissan's Infiniti — only Acura sells a truly exotic car, the $89,000 NSX two-seater, which can reach speeds of more than 170 miles an hour.

But except for engine and handling upgrades, the car is basically the same as the one that first went on sale in 1991, and Acura sells only about 200 a year.

Acura says two new models, one that went on sale this week, will help revive the brand. Tom Elliott, executive vice president of American Honda Motor, is so optimistic about the redesigned TL sedan and the new TSX sports sedan, that he's predicting Acura will pull out a record sales year.

A pair of roadblocks

But to do that, it will have to overcome two obstacles:

• Acura is still at least two years away from adding a second sport-utility vehicle to its lineup, making it less competitive in the segment which has fueled sales for other luxury brands.

During the mid- and late '90s, when most major luxury brands added one or two SUVs to their lineups, Acura sold a jazzed up Isuzu Trooper, the Acura SLX. While the Trooper did fine as an Isuzu, it was less than what Acura buyers expected.

Acura finally came out with its MDX sport-utility vehicle in 2001. Although late to the game, it has been a hit. It is still hard to get and selling at close to its $36,000 sticker price.

MDX represents almost a third of Acura's sales this year through September. Without MDX, Acura's 2.2% sales drop from the same period a year ago would be worse. Overall, the auto industry is off 1.6% from a year ago, according to Autodata.

Elliott, who says Acura is developing a smaller SUV that will be on the market in about two years, says part of the problem is finding production capacity to build another product.

Jeff Schuster, head of North American forecasting for J.D. Power and Associates, doesn't think TL and TSX alone can revive the brand in the near term.

"Not with another sport-utility vehicle not due for another two years," he says.

• Acura has a problem with its image — or lack of it. "Acura has no distinguishing image," says Art Spinella of CNW Marketing/Research. It "comes out being so neutral to shoppers as to be invisible. It doesn't even show up as a brand people don't like."

Elliott says Acura knows exactly the image it wants — that of a luxury performance brand.

"The image of Acura may not be as clear as Mercedes or BMW, but we don't have the history those companies have," he says.

"The direction we want to establish for Acura is performance and luxury combined. You will see it moving more in the direction of Audi and BMW," he says.

The new TL, for instance, has more character in its exterior styling, including bolder wheels, than its predecessor. Horsepower climbs to 270 from 225 for the basic version of the previous model, 260 for the S-Type sporty version.

The TSX, an all-new model in the Acura lineup on sale since April, has a 200 horsepower engine. Both TL and TSX are available with six-speed manual transmissions.

Elliott says Acura wants to compete in the $25,000 to $45,000 market, which represents 80% of luxury vehicle sales.

Depending on options, Lexus and Infiniti's top models are priced above $60,000.

Driven by Honda

In a recent survey of the value owners place on their vehicles, Acura fell to No. 10 from No. 4 in 2002, according to Strategic Vision, a San Diego-based consulting firm.

Dan Gorrell, vice president of Strategic Vision, says the drop is partly because Acura offers fewer buyer incentives, which makes Acuras seem expensive when cross-shopping luxury brands.

But Gorrell also says Honda needs to invest more money in Acura. "Honda is a very conservative company," he says. "That culture really does well for the Honda brand. But in terms of maintaining a luxury brand, you have to keep up with the rest of the market."

Elliott doesn't deny that Honda comes first. The company, he says, has rightly focused on keeping Honda competitive.

"Honda has to succeed first and then Acura," Elliott says. "Without Honda, there is no Acura."

Artical
 
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