Flaw in NSX marketing/pricing

[Teej]

nsxtasy,
Thanks, I no longer feel like I'm on crack. I knew the price had changed, I just thought it started high, then lowered, then got high again, instead of steadily get higher from a lower price.

 

[Nsxotic]

Just pointing out that this is the most interesting/well thought out thread I've seen on this site in years. Great job guys. (especially the references to Hyundai

as I am the number 1 volume Hyundai dealer in the entire Southeastern region this year and number 4 in the country out of 562 dealers.) Just had to float my boat a bit. Thanks for letting me. You guys are really make good sense of this topic. It's nice to see some non-car guys truly understand the car business. All of you make correct observations and intelligent assumptions. Ken, you are showing off again.

[This message has been edited by Nsxotic (edited 28 March 2003).]

 

[nsxtasy]

The Acura brand bears exactly the same relationship to Honda as Lexus does to Toyota, as Infiniti does to Nissan, and as Lincoln does to Ford. It is the luxury marque from the same manufacturer, with a lot of design and engineering in common across both makes.

However, there are two things that Acura did different from Lexus: (1) They included one more moderately priced model (Integra/RSX) in their line-up; and (2) they originally introduced models with names (Integra, Legend) rather than alphanumeric model designators. They subsequently blamed those model names for the lack of prestige and reputation of the brand, because owners would proudly say that they have an Integra or a Legend rather than an Acura, and changed all the model designations for that reason.

Which name has more prestige? I think the Honda name has more prestige than any other non-luxury brand name. I think the Acura name has only slightly less prestige than Lexus, and as much prestige (and is more widely known) than Infiniti.

I believe that the Acura brand has a lower average selling price (weighted) than Lexus. This is not just because Acura sells the RSX; this is also because all of Acura’s models sell for less than those of Lexus (e.g. the $54K LS430 vs the $43K RL). The disparity is even greater when you compare models that are comparably equipped; Acura has a lot of features as standard equipment that are optional on Lexus and other luxury brands such as BMW. Thus an Acura CL-S or TL-S for ~$32K is would compare to a similarly-equipped Lexus ES300 or BMW 3-series for ~$38-40K.

Originally posted by BB:
Acura has added a number of models over the years that compete directly with cars like the Honda Accord (such as the CL and TL.) The reason for this is likely because the high-end sell isn't working too well for them. How many new RL's and NSX do you see on the streets? The fact is, their dealer network would crumble if the dealers didn't have these cheaper cars to sell. i.e. the public refuses to pay alot of money for a car that says "Acura". But many will gladly pay up for a top of the line Lexus that's really no better.

Nonsense. The reason Acura has these “entry luxury” models in its lineup like the CL and TL is that it’s easier to sell them than the more expensive cars, and they want to have a full range of prices. That’s the exact same reason that Lexus sells the ES300 and IS300. In this respect, there is no difference between Acura and Lexus.

Originally posted by BB:
As witnessed by their product line-up, Acura is trying to sell some expensive cars. However, it's not working. Instead all they're selling is mostly the cheaper RSX and the like.

Actually, Acura sells relatively few RSXs. In 2002, Acura sold 165,552 vehicles, and only 30,117 were RSXs. The biggest sellers were the TL, with 60,764 vehicles – a direct competitor of the Lexus ES300 – and the MDX, with 52,955 vehicles – a direct competitor of the Lexus RX300. So again, regarding whatever “is working”, it’s working the same for Acura as for Lexus.

Originally posted by Teej:
Thanks, I no longer feel like I'm on crack.

Great! Now, remember the ten steps, and feel free to call your mentor and come back to the meetings any time you feel like it.

 

[jaytip nsx]

i believe that the ONLY reason for honda's low volume sales with the NSX is pedigree.
if the NSX was launched with a Ferrari badge on the nose and was labeled as a 348 replacment then it would have been hailed as an even bigger success than it was,and if it was labeled as a ferrari it would have been considered as a bargain considering the aluminium construction.it comes down to badge snobbery,Most people would rather spend about the same amount of money and get a Porche or used Ferrari 355.
people stop and stare at my car because it IS a stunning car.when it is parked up and people see me walk away from it they ask me what it is,when i say a Honda they can hardly believe it.bottom line is for that amount of money most people would rather say they own a car that is instantly recognisable(sp?) by its name.

 

[NSX2F1]

It is hard for any Japanese automakers to gain any credibility in the good ol' US of A wihtout a V8 engine. Acura will never be considered in the same breath as Lexus or Mercedes without a V8. Even Infiniti has a V8. They did worse than Acura and Lexus in terms of sale because their product execution and planning were terrible. For example: In 1990, when the V8-engined Q45s came out, they didn't come with genuine wood dash like the LS400 or the 735i. The grill-less front end was also a big NO NO for luxury sedan.

But today, they are gaining ground thanks to better products like G35 and FX. And if you read any magazine comparison for full size or flagship luxury cars, they won't even include the RL. The Q45 usually finished next to last in these comparos, but at least it was included and mentioned in the same pages as flagships from Lexus, Mercedes, BMW and Jaguar. I know that Honda doesn't like a V8. But unfortunately, they have themselves to blame if Acura is not taken seriously as a luxury brand. If Infiniti managed to pull out a better V8-powered Q45, they too will be regarded as more luxurious than Acura.

 

[nsxtasy]

I really don't think most people judge one brand to be better than another simply because one of the cars in the model line-up has a V8 in it. That's like saying that people think Acura is better than Lexus because Acura has a world-class sports car and Lexus doesn't. Might be nice, but it's just not true.

Originally posted by NSX2F1:
If Infiniti managed to pull out a better V8-powered Q45, they too will be regarded as more luxurious than Acura.

I just don't think so. Infiniti is an also-ran in the luxury car market, selling barely half as many vehicles as Acura (87,911 vs 165,552) and nowhere near as many as Lexus (234,109), BMW (256,622), Mercedes-Benz (213,225) or even Volvo (110,670).

[This message has been edited by nsxtasy (edited 28 March 2003).]

 

[matteni]

Outside of the obvious difference Ken pointed out (Retail vs Stree Price) my only complaint is it is ridiculous to have a halo sports car like the NSX and then come up with a higher performance version of the high performance halo car - the internationaly proclaimed "TypeR".

Then decide to not bring the highest performance car to the US.

At 200 cars per year there can be little economic reason NOT to allow the TypeR to the states. The Honda TypeR name has the pedigree that many people are looking for IMO. That and a little advertisement of the actual street pricing and we might have a different story these days.

 

[john576]

I believe ACURA had a great idea back in 1991, to offer a "supercar" right from the getgo. I admire Honda for building a car in celebration of their success(read: not intended to generate big bucks) Frankly, Im glad the car was not marketed widely for now I feel part of a cultish (rare and good way, of course) car club.
When the next gen Skyline comes to the states it is supposed to be an Infinity; furthermore, if Toyota ever builds their next Supra-like replacement it will likely wear a Lexus badge...Interesting the timing of marketing supercars by the respective companies.

 

[Jimbo]

I think another aspect to all this is that Acura was the first and had a different goal and target.

If you look back to those original Acura cars - they hardly seem like luxury vehicles today. I don't even think you could really call them luxury cars back then.

When Lexus came along I think it's fair to say that they leapfrogged over Acura and landed squarely into the luxury car space.

Acura blazed the trail with modestly higher content cars that competed with Volvo and Audi while Lexus came into the game aimed squarely at Mercedes.

I think that distinction between Acura and Lexus still holds today.

-Jim



------------------
1992 NSX Red/Blk 5 spd #0330
1991 NSX Blk/Blk Auto #3070 (Sold)
1974 Vette 454 4 spd Wht/Blk
1976 Honda Accord 5 spd, 3 door Blue/Blue
1977 Honda Accord - Custom - Under Construction
2003 MINI Cooper S - On Order - All Black
1986 Chevy Suburban
http://homepage.mac.com/jimanders/PhotoAlbum1.html

 

[nsxtasy]

I think it's also worth noting that even in the luxury car segment, few carmakers play in only one price category. Mercedes-Benz, which many consider the most prestigious luxury car maker (aside from niche players like Rolls Royce and Bentley), makes everything from the $25,670 C230 to the $127,320 CL600. And the trend has been to expand the model line in both directions; just a few years ago, Mercedes didn't offer cars under $30K, but now they do, Lexus introduced the IS300 below the ES300, and BMW is looking at introducing the 1-Series.

At the other end of the spectrum, even Mercedes thought it necessary to create a new division and dealer network to sell their megabucks Maybach model. So even being the top of the heap doesn't mean you can sell in any price category.

 

[Jimbo]

Ken,

You're right. And look at VW. Even with Audi to represent their higher end cars, VW is going to soon try to sell very expensive luxury cars and SUVs.

With the addition of the new Phaeton and Touraeg the VW line will span pricing from $16K to $65K.

Obviously, VW doesn't think they need a different name to sell high-end cars.

-Jim

 

[Jonathan]

For what it's worth, I also think one major contributing factor to the dissapearance of the NSX in the supercar world of today is mainly due to the lack of a fresh debut with the NSX badge in 13 years.

There is something to be said for "if it ain't broke don't fix it", or "the NSX has a timeless design", or any other cliche you want to apply, but it is hard to get excited about something that has been around in generally its original form for over a decade.

I do believe that a well hyped, equally impactful launch of a new NSX would gather a lot of attention and activity around the Acura name once again. But I do believe there is something to be said about the Acura brand playing a role.

While Mercedes is eager to have a $20K+ car and a $100K+ car in their product line up, Ferrari / Porsche sure aren't, and given the target market, it could play a role that the RSX and NSX share a heritage, while Ferrari and Porsche have always kept the elite sports car status that they promote today.

It is quite possible that while a C230 and SL500 can sell under the same badge at a $90K difference, a supercar target market may not be as accepting to having the NSX and RSX roll out of the same lot.

 

[Jimbo]

Jonathan,

Porsche absolutely felt the need to introduce a lower-cost car...it was called the Boxster. There's even talk of a less expensive Porsche too.

-Jim

 

[Sketch]

Originally posted by Jonathan:
For what it's worth, I also think one major contributing factor to the dissapearance of the NSX in the supercar world of today is mainly due to the lack of a fresh debut with the NSX badge in 13 years.

I think the same thing has happened with a lot of other sports cars, just that most of them were discontinued (at least here in the US), rather than continuing to be sold in very small numbers. A couple of examples:
http://1.3-liter-turbo.com/fun/fd/RX7ProductionNumbers.htm
http://users.tvcablenet.be/personal/tvcn6155/specs/produc.htm

I suspect this happens to all cars to some extent, but moreso with sports cars since many people are primarily concerned with their looks.

 

[huckster]

on the marketing issue, customer perception topic, I had the opportunity to sit in on an acura owner focus group about two years ago.

the other owners comments were interesting. they perceived acura as being a 'good value', not a prestige brand. some of them liked the fact that they werent as prestigious as mercedes, bmw, and lexus. That wasnt particularly my perception, so i was surprised to hear how acura was name branded by this small sampling.

In truth, i think a competitive RL or high end acura equivalent would really help acura all-around. I dont think they have 'the whole price range' covered right now (nsx excluded). A little more 'prestige' in the lineup would capture a larger share of the market.

 

[huckster]

afterthought; recently someone i hadnt seen for a couple of years said "wow, youve got a volvo s-60. I thought you had an acura tl." he went on to say 'how well' i must be doing. HIS perception obviously was that the volvo was more prestigious than the acura. go figure.

 

[Jonathan]

Originally posted by Jimbo:
Jonathan,

Porsche absolutely felt the need to introduce a lower-cost car...it was called the Boxster. There's even talk of a less expensive Porsche too.

-Jim

I don't disagree, Jim, but if the S2000 was the cheapest entry in an 'Acura' line up, I would say similar interest were pursued as Porsche, however, the Boxster, while a lower cost, is still not a $25,000 car.

 

[nsxtasy]

Originally posted by Jonathan:
I don't disagree, Jim, but if the S2000 was the cheapest entry in an 'Acura' line up, I would say similar interest were pursued as Porsche, however, the Boxster, while a lower cost, is still not a $25,000 car.

I'm sure many of us can remember when Porsche's lineup included the 911, the 928, and the 944 (NA and Turbo), and they re-introduced the 924 because they felt they needed a model under $20K. Granted, this was years ago, but...

 

[Jimbo]

Yep. I owned a 924 (dk green with saddle interior) and a 924 Turbo (pewter with blk interior) way back then.

They were OK for their day.

-Jim

 

[mason@tirerack]

Even at the $55,000 starting price the NSX was a bargain. I think that pricing it at $35,000 like was suggested on this thread would have been a huge mistake. You cannot try and sell a car to challenge a Ferrari at $35,000 and still have an exclusive model that has a certain exotic appeal. Part of an exotic car is a higher price. By contrast, if the NSX was around the $65,000 price range new now, I doubt the sales numbers would be as weak as they are. They would still be low, but not as low.

------------------
Mason
Tire Rack sales...contact me for all your wheel and tire needs.
1-800-428-8355
Ext. 619

1991 Acura NSX (auto)
2002 Honda S2000

 

[BB]

The Acura brand bears exactly the same relationship to Honda as Lexus does to Toyota, as Infiniti does to Nissan, and as Lincoln does to Ford. It is the luxury marque from the same manufacturer, with a lot of design and engineering in common across both makes.

Agreed. Both divisions seem to have the same goals.

Which name has more prestige? I think the Honda name has more prestige than any other non-luxury brand name. I think the Acura name has only slightly less prestige than Lexus, and as much prestige (and is more widely known) than Infiniti.

I totally disagree with the notion that the Acura name has only slightly less prestige than Lexus in most consumers minds-- it has significantly less. See below for possible proof...

I believe that the Acura brand has a lower average selling price (weighted) than Lexus. This is not just because Acura sells the RSX; this is also because all of Acura's models sell for less than those of Lexus (e.g. the $54K LS430 vs the $43K RL). The disparity is even greater when you compare models that are comparably equipped; Acura has a lot of features as standard equipment that are optional on Lexus and other luxury brands such as BMW. Thus an Acura CL-S or TL-S for ~$32K is would compare to a similarly-equipped Lexus ES300 or BMW 3-series for ~$38-40K.

While I agree with you that Acura probably offers better value for the money than Lexus, what do you think the reason for this might be? To answer that question, take a look at Korean makers such as Kia. Their products are cheaper than competitors not because they have some special know-how at making cheaper vehicles. Rather it's because consumers don't think much of the brand name.

Your example above of how the Lexus is priced similar to the BMW, yet a comparable Acura costs far less is compelling evidence that Lexus has achieved a brand name equal to that of BMW, but Acura has not. In a sense, Acura is the "Kia" of luxury automobiles. (Eh, I'm probably going to get flamed for that one!)

Until Acura improves their brand name, I don't see how they can ever successully sell $85,000 NSXs for a sustained period.

Here's an interesting counterpoint to the idea that consumers won't buy an expensive car badged with a non-prestige marque: The Chevy Corvette. Chevy, the same brand name that graces the Cavalier and El Camino is certainly not that well regarded. So GM has tried to build the name Corvette to stand on it's own. Look at the newest Vette's, they don't even say Chevy anywhere on the back-- just CORVETTE in big letters.



[This message has been edited by BB (edited 30 March 2003).]

 

[huckster]

for the most part, i agree with you. Acura does not have the name parity with Lexus. I think this is unfortunate because Acura's quality seems just as high as Lexus.

Does Lexus offer more 'bells and whistles'?

Is it because Lexus has the Lx470 with the high pricetage? Other models with higher pricetags than acura?

 

[nsxtasy]

It's definitely not because Lexus offers more "bells and whistles"; if anything, they offer fewer as standard equipment.

I think Lexus was more successful than Acura in establishing its brand name, partly because (as mentioned above) they had alphanumeric designators from the start, so people would associate the car with the brand name rather than the model name; partly because they did not (initially) go after the low-priced end of the market the way Acura did with the Integra; and partly because they were more consistent with establishing higher levels of customer service right from the start. It was Lexus, not Acura (or Infiniti), who broke into the market with a big splash by, among other things, coming to customers' homes to pick up their cars for service and dropping them off afterwards (a policy since abandoned). And I think they have just done a better job at customer satisfaction in both sales and service than Acura does. Acura has many excellent dealers, but also has some that are decidedly not so excellent at all (right, Lud?). You don't tend to hear the same about Lexus.

 

[Silver F16]

Another point of Lexus name plate success over Acura:

The Lexus PRODUCT

Lexus execution is very consistent. Customers know that with Lexus, they are surrounded by Luxurious ammenities. Interior surfaces are top notch, well damped ride, and the quietest cabin. Lexus had been consistent with this theme (with exception of new vehicle intros that were rebadged Toyotas, ES250, IS300). By being consistent in creating the overall luxurious package, customer come to accept they are a premium make and well deserve the higher price. Lexus understand that it's not about how many Bell and whistles come as standard options. The sum of all the bells & whistles does not add up if the execution is flawed and lack a consistent theme.

Acura lacked a consistent theme in their line up.
NSX is ultra sport with so-so luxury (not the best leather, same grade carpet as Accord). RSX/Integra is sporty, TL is sporty/entry level luxury, RL/Legend started out as sporty/Luxury sedan and became a detuned luxury wanna be missing a V8 and lost the initial sporty edge. CL is an ugly coupe doing a poor job trying to do Luxury and sport at the same time. With Competition like G35 coupe here, CL is saying Farewell after 2003MY.

With exception of the NSX, and Legend, Acura's execution has a very vanilla bland flavor. Their products do everything well, but it lacks a "Stand above the crowd" execution. The DNX is a step in the right direction.

 

[nsxtasy]

Acura's execution has a very vanilla bland flavor. Their products do everything well, but it lacks a "Stand above the crowd" execution.

The MD-X, which you don't bother to mention, is widely regarded as the best mid-sized SUV in the business, and does indeed "stand above the crowd" (and I am not referring to its physical stature).

And the NSX "stands above the crowd" more than anything that Lexus has produced.

Name one model at Lexus that is considered truly outstanding, and better than its competitors. Can't do it...

There is an image that Acura has, which is a combination of luxury/prestige, performance, and value. Lexus only has luxury/prestige, but they do it very well. No one thinks of Lexus for performance, and no one thinks of Lexus for value. Ever.

The relationship between Acura and Lexus is a lot like the relationship between BMW and Mercedes-Benz. Lexus is known for a soft ride and for isolating the driver from the "chore" of driving. So is Mercedes-Benz. BMW is known for building driver's cars, cars that give a lot of feedback to the driver and have a firm suspension that grips the road well. So is Acura. As a result of these qualities, the median age of the Mercedes-Benz buyer is several years older than the BMW buyer - just like the Lexus buyer is significantly older than the Acura buyer. All of which is part of Acura's reputation. And all of which is out there, no matter how much you attempt to deny it.