Acura Looks to Get Back on Track

After a lackluster January-July period, in which only the MDX large CUV and RLX mid-large sedan were in the black, Acura is looking to get back on track in the year’s remaining five months.

MDX growth of 55.5% and RLX gains of 7.1% through July were in stark contrast to the brand’s other models, which all posted declines.

The midsize RDX CUV was flat through last month, down 1.0%. Acura’s car lineup, which includes the entry-level ILX and flagship RLX sedans, as well as the departing TSX and TL 4-doors, was running 34.4% behind January-July 2013’s volume.

But with the TSX/TL replacement, TLX, now arriving at U.S. dealers, Mike Accavitti, senior vice president and general manager for Acura, is expecting better days ahead.

“You know you can’t sell pavement in this business,” he tells WardsAuto in a recent phone interview, referring to the sell-down of the TSX and TL, and the later-than-expected arrival of the TLX.

“We dialed back production of the outgoing models in anticipation that the TLX would be here a little bit sooner, and we literally sold out of the TSX and the TL,” he says, pointing to this as the primary reason for the 1.8% decline in U.S. Acura sales through July.

“The back half of the year is going to be strong for Acura,” Accavitti believes, noting the TLX began arriving at dealers July 31.

Acura pushed back the TLX introduction from midsummer to late summer. No specific explanation for the delay has been given, but brand officials say it wasn’t due to the car’s ZF 9-speed automatic transmission. Another ZF 9-speed auto bedeviled Jeep last year, causing the Cherokee’s on-sale date to be delayed from summer to fall.

TLX Sized at Heart of Segment

The new TLX should provide an immediate boost in the midsize-sedan segment for Acura, Accavitti says. He noted at a TLX media preview last month in Virginia that the car is the right size to take on competitors, including the BMW 3-Series and Audi A4.

The outgoing TSX and TL were smaller and larger, respectively, than the Germans’ Lower Luxury entrants.

Sales of the RDX, typically a strong performer for Acura, should rebound soon, Accavitti promises, noting sales dipped as stocks of the CUV dropped during the changeover from the ’14 to ’15 model year.

A fix for the entry-level ILX is planned, although he won’t go into detail. Acura refreshed the car for ’14, and for ’15 has killed the hybrid variant.

“It wasn’t received well by the marketplace, so it was something that we felt wasn’t contributing to the sales and the brand image,” he says of the ILX hybrid. Acura sold 306 units of the car through July, down 69.5% from like-2013.

The RLX, too, is a model not living up to its full potential, but Accavitti is mum about what Acura has up its sleeve for the car.

AutoPacific analyst Dave Sullivan sees opportunity for Acura to raise the bar in the entry-luxury sedan segment by offering a model with a more premium interior than what’s in the current ILX, or the Audi A3 and Mercedes CLA.

“I think in both of those (German) cars the interiors are spartan…there’s an opportunity for someone to come in and offer a premium car that feels like a premium car,” he says. Lessening the ILX’s noise, vibration and harshness also is a needed fix.

As for the RLX, Sullivan believes slow sales could be corrected with better marketing.

“Nobody knows that car exists – it’s not on anybody’s radar,” he says, also blaming the car’s price and size.

The RLX for ’14 ranges from $48,450 to $60,450, but Sullivan notes the leaders in the class, the Mercedes E-Class and BMW 5-Series, have transaction prices near $70,000.

The RLX also suffers from the same problem as the TSX and TL in that it doesn’t match the physical size of its competitors. Its wheelbase is about the same size as the less-expensive Mercedes C-Class, making either the Benz look like a good value or the RLX look “quite pricey,” Sullivan says.

Under Accavitti, the brand has been engaging in more marketing activities than it traditionally had in the past.

For the new TLX, Acura is undertaking its biggest advertising campaign ever in terms of money spent and the duration and frequency of messaging, supplanting last year’s launch of the next-generation MDX, which also was billed as the brand’s biggest campaign.

Getting the budget from Honda Japan headquarters isn’t getting easier, however.

“Oh no, that doesn’t change,” Accavitti says when asked if the MDX and TLX campaigns are an indication Honda is loosening its purse strings.

“The bottom line is the management of Honda and Acura – they’re just business people,” he says. “And with all business people, you have to justify what you’re doing. As far as management is concerned, as long as we can demonstrate here’s what you’re going to get – and we build some credibility, they’re willing to make the investment necessary that we recommend.”

After years of trying to figure out its positioning, in 2009 Honda CEO Takanobu Ito made known Acura no longer was pursuing Tier-1 luxury status.

However, Accavitti told media two years ago there was a difference between a premium and luxury brand, and Acura still wants to give its models a luxury, not near-luxury, aura.

“From an image standpoint, nobody aspires to be mediocre or good enough,” he said in a January 2012 interview.

Accavitti today says Acura is making headway with consumers on this front, saying internal surveys show people increasingly perceive Acura vehicles as prestigious and luxurious.

However, in the recent J.D. Power & Associates’ Automotive Performance, Execution and Layout (APEAL) survey, which measures how gratifying a vehicle is to own and drive, Acura fell near the bottom of the luxury roster.

In the 2014 survey, which saw luxury marques take the top 11 spots, Acura placed 10^th, just ahead of Volvo but behind Cadillac and Infiniti, which tied for 9^th place.

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