Acura Luxury Brand Becomes More Independent From Honda

PETOSKEY, MI – After high school in the 1970s, Mike Accavitti worked the first shift at Warren Truck Assembly, a Chrysler plant near Detroit.

When a production cutback suspended the second shift, the young card-carrying member of the United Auto Workers union knew someone with more seniority from that shift would bump him off his. And they did.

But taking advantage of a UAW educational program, the son of a dry cleaner started classes at Western Michigan University. He graduated as an industrial engineer. He later earned an MBA and law degree. 

Accavitti was working at a plastics company in 1984 when he learned of a job opening for an industrial engineer at Warren Truck. He dashed off a personal letter to Lee Iacocca, Chrysler’s CEO at the time.

“I wrote: ‘I’m an industrial engineer and I know something about that plant because I worked there.’”

Driver-focused ’15 Acura TLX.

It did the trick. He quickly got the call, the interview and the job. The person who interviewed him, unaware of the letter, said, “I’m just curious, who do you know here?”

Accavitti left Chrysler in 2009 and joined American Honda in 2011 as vice president-marketing. This year, Honda named him senior vice president and general manager of its Acura luxury brand. The division just underwent a major reorganization intended to give it a more independent voice within the company. Acura is No.5 in U.S. luxury sales with 165,436 deliveries last year, according to WardsAuto data.

At a media event for the debuting ’15 Acura TLX sport sedan near this northern Michigan resort town, Accavitti, 55, speaks about greater independence from the parent brand, the essence of Acura, the competition, dealers and the latest vehicle in the lineup.  

Thinking Like a Luxury Brand

WardsAuto: What’s the company reorganization all about?

Accavitti: Honda created the Acura Business Planning Office at our R&D operations in Ohio. It has global brand responsibilities. Erich Berkman leads it. His team has executive representation from all the major functions: purchasing, finance, R&D, design, manufacturing and sales.

The other area of reorganization took place at American Honda in Los Angeles. Now, the Acura division handles the brand soup to nuts: service, sales, marketing and parts. I’m fortunate and honored to lead that.

WardsAuto: So what’s the point of it all?

Accavitti: We’re closely associated with the Honda brand, a great mainstream brand to be associated with. But there was a lot of mass-market thinking getting into our luxury organization. The problem with that is you don’t necessarily take into account what the luxury customer wants.

Honda is a very successful brand. We can kind of think: “If it is good enough for Honda, it’s good enough for any company.” But Acura has to be the best that Honda has to offer. This reorganization will allow us to accomplish that.

WardsAuto: What did you mean when you spoke earlier of “possible disconnects through misalignments?”

Accavitti: Because we were organized by function we had, as an example, a marketing group within the brand-marketing function and a marketing group within the sales function.

Those two functions have different objectives. The short-term thinking that is necessary to sell a car today may run counter to a long-term brand-improvement movement.

It can be quite natural for that to occur. But by now structuring by brand, we are able to take that into account. So, yeah, we’re going to have sales events for short-term actions, but we’re also going to use the brand philosophy and messaging in those, so there’s consistency in the message to consumers.

Consumers don’t care if you’re organized one way or another. They just say, “This is what I think about this brand. This is how this brand speaks to me.” We want to make sure we are sending consistent messages.

Going Up Against Mercedes, BMW

WardsAuto: How do you compete with luxury-segment leaders Mercedes-Benz and BMW. They seem so powerful. Can you give them a run for their money?

Accavitti: We have in the past. We’re debuting the TLX, but the TL model we had from 2004 to 2009 was one of the top models in the segment. We sold 77,000 in one year. So we feel we can achieve top-tier success. With our MDX and RDX, we have the strongest 1-2 punch in the luxury-SUV segment. We have demonstrated the capability to do it, when we have the right product and the right messaging. That is what we are going to be focusing on moving forward.

We’re not out to out-Mercedes Mercedes. Acura is a different kind of luxury brand. It is for individuals who like to express themselves in a different matter. They like nice things, but they don’t necessarily associate the badge with that nice thing. It’s like: “I want a nice car with a good value.” It’s one of the areas we think we can beat the rest of the guys with.

WardsAuto: Is the difference also that Mercedes and BMW are luxury brands without mainstream-brand parents?

Accavitti: There are a lot of reasons those two companies are successful. They’ve been around a long time. They’ve established a heritage of luxury that goes way back. Mercedes is part of Daimler (AG), and (Gottlieb) Daimler invented the car. BMW has been around for a long time, but it really just got its stuff together in the last 20 or 30 years. They’re both great marques.

We’re only 28 years old. We’re the millennial of car companies, born here in the U.S.A. We can speak differently to the luxury audience because we are different. We always have been. We don’t have to try to make that up or change ourselves. We can go out and be ourselves and attract customers who are smart, affluent independent thinkers who want to drive a great car.

WardsAuto: When you speak to that audience, what do you tell them?

Accavitti: With the TLX, we’re telling them this is a great car that is focused on providing a thrilling experience whether it is looking at it or driving it. It’s a car centered around the driver. It’s exhilarating to drive.

WardsAuto: Was the reorganization a Japanese home-office idea or did it come from American Honda?

Accavitti: It actually came from Japan. Every year we go there and present to the board of management our plans for the next year and what our obstacles and challenges are. Last year at one of those meetings with the chairman and CEO, we talked about Acura and how we could improve the brand.

Shortly afterwards, we started having discussions on what we needed to do organizationally to accomplish that, because the existing organizational structure was holding us back.

We made the decision to put in place the best and the brightest to focus on Acura and bring out all its potential. Not to turn it around, because we’re a good brand with positive consumer perceptions.

Dealers Do Their Part

WardsAuto: What are dealers telling you these days?

Accavitti: Our dealers are excited. One of the best parts of my job right now is that I get direct contact with dealers. We have 273 dealers. We communicate more and deeper than before. We’re getting them excited about the brand and product. They like the direction we are going.

WardsAuto: Do you like what they’re doing?           

Accavitti: They are a tremendous body of businessmen and women. Just this summer, they underscored my belief that they are top-notch.

WardsAuto: How?

Accavitti: The TLX was delayed for a couple of months because of some technical issues. In the meantime, dealers didn’t have any TLs to sell because we had built out the outgoing model. So they came together. We put out some programs. They did some things and retained salespeople to assure that when the TLX came out, it would be received well.

We had this drought. Our sales were down for the last two months because of lack of inventory. We started the year off great. We were up almost 6%, outpacing the industry, and then we ran out of the TL inventory.

In September, we are going to see the year-over-year gains we like to see. We’ll close the year out super strong. Dealers are demonstrating they can really sell the TLX. They have a lot of preorders and they’re selling them off the trucks. They are demonstrating the ability of turning vehicles at an incredible rate.

[email protected]