Acura places bet on China but remains focused on US

Acura NSX concept car at the Canadian Auto Show in February.
Rene Johnston | Toronto Star | Getty Images
Acura NSX concept car at the Canadian Auto Show in February.

Honda's long-struggling luxury brand, Acura, reportedly plans to start building cars in China in 2016, targeting what is expected to soon become the world's largest market for high-end vehicles.

But Acura officials insist that even as they look for opportunities abroad, they are increasing their focus on what has been their largest market, the United States. They're backing that up with an assortment of new products that will include an all-new version of the once groundbreaking supercar, the Acura NSX.

Honda plans to invest about $70 million on its flagship plant in Marysville, Ohio, to get ready for the relaunch late next year of the NSX. The sleek, two-seat sports car was once a showpiece of Asian automotive prowess and lent a halo to the Acura division.

But after a 15-year-run, the NSX was pulled from production in 2005. The move coincided with Acura's sharp downturn, leading some to wonder whether it could survive, especially as the automotive market plunged into recession.

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The decision to bring the supercar back, and to power the next-generation NSX with a cutting-edge hybrid drivetrain, highlights Honda's push to rebuild the brand. That decision is supported by a number of new and updated models, including the all-new RLX flagship sedan.

"We witnessed the rise and fall of Acura sales over the last decade," said Mike Accavitti, who joined American Honda as chief marketing officer two years ago and has given much of his attention to the luxury brand. "We began to realize we had to clarify the brand direction which was, over time, diluted."

Though Acura was the first Japanese luxury-car name when it launched in 1986, it has become a weak, second-tier player to Toyota's Lexus, never mind leading European marques such as Mercedes-Benz and BMW.

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The Japanese maker's challenge has been to reposition itself and get back on the radar of potential buyers, who have plenty of other options. While two concept versions of the NSX have been big draws on the auto show circuit over the last 18 months, the vehicle won't be in showrooms for a while.

But Acura has had other new products to talk about, notably the RLX, the most expensive and lavishly equipped sedan it has ever offered. It's meant to showcase Acura's design and engineering strategy, which the brand sums up as "man-machine synergy," or as Accavitti puts it, "vehicles that truly respond to the will of the driver."

While that might come across as marketing-speak, buyers will experience a premium sedan loaded with advanced performance, infotainment and safety technologies. A version of the RLX in final development will be powered by three-motor hybrid system designed not only to boost mileage but to increase performance and even help power the sedan through aggressive turns by shifting torque to the appropriate wheel.

At the other end of the spectrum, Acura has an entry luxury sedan, the ILX, which it hoped would draw young affluent buyers, one of the market's fastest-growing segments. But while ILX sales topped 10,700 in the first half of the year, it has received mixed reviews, at best, suggesting to some that Acura still hasn't figured out what it needs to be.

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The challenge that the ILX may have missed is "getting back to basics and making sure that [Acura] products are very different from those of the parent, Honda," said auto analyst Joe Phillippi of AutoTrends Consulting.

In the first half, Acura had a 6.2 percent year-over-year sales gain. Volume rose to 76,981 units, which was still well behind the numbers of key competitors.

The maker might have done better were it not for the 24.0 percent tumble by the MDX, the luxury SUV that saw sales slip to 18,214 compared with 24,117 in the year-earlier period. Acura officials note that they're wrapping up a model changeover, and they forecast that an all-new version of the MDX will bounce back in the months ahead. That could help Acura outpace the overall U.S. auto market recovery.

To ensure that consumers can't miss the new model, Honda recently launched what it is calling the biggest single marketing campaign in its 27-year history, which coincides with its switch to Mullen Advertising in Boston.

A deeper look at Acura's sales charts show that it sold just 44 of the quirky ZDX models in June, wrapping up one of the company's biggest bombs.

The costly mistake may have served as a much-needed lesson, American Honda's top U.S. executive, John Mendel, suggested. The ZDX was one of several flops marketed by both Acura and the mainstream Honda brand that were originally designed for Japan, Europe or other foreign markets and added to the U.S. lineup only incidentally—with catastrophic results.

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That won't happen again, say both Mendel and Accavitti.

"We're focused on improving our efforts in North America," said Accavitti. Though, he added, "we still see a very global potential."

Acura reportedly plans to launch production in China by 2016, joining the Honda brand in targeting what is now the world's largest auto market. It's an obvious step, as China is expected to also become the biggest luxury-car market by 2017.

The NSX, in particular, could give Acura global traction, but it will not be rolled out for some time. And Acura officials warn that they don't expect a quick return to the first-tier luxury brands.

"These things take time," Accavitti saod. It probably will take "a couple of years to see whether we move the needle."

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By CNBC Contributor Paul A. Eisenstein. Follow him on Twitter @DetroitBureau.