The Acura dilemma

Acura is putting hurdles in the path of Honda marketing the new NSX in countries outside North America. As we first reported back in October of last year (more here), Honda's North America-only brand is refusing to budge on allowing Honda to sell the new NSX badged as a Honda, even outside North America. Apparently there's a view among the dealers and staff at Acura that the NSX sold as a Honda in other markets would dilute the brand and reduce the car's efficacy as a brand-builder.

At the launch of the City light car last week, we caught up again with Fumihiko Ike, Honda's COO in the Asia/Pacific region for further background.

"NSX is kind of a commercial objective... to make Acura a brand image that's a so-called 'Tier One' premium brand, like the German makes or like Lexus/Infiniti..." Ike advised the Carsales Network, but he admitted that without global sales of the car, "it doesn't make any commercial sense".

"The current situation: If we could foresee this global economic crisis lasting only a year or two, we could just [bear with] it, but the problem is that nobody knows how long it will last."

With US sales down across the board, in other words, a low-volume specialty car like the new NSX needs sales elsewhere to amortise development costs.

And the astounding aspect of a contrived subsidiary holding power over the parent company is that Acura isn't even perceived to be the prestige player that Lexus and Infiniti are -- outside the sphere of Acura employees and owners.

Ike explained that Acura -- established in the US back in 1986 -- was a separate sales stream to overcome legislative obstacles to Honda expanding its existing dealer network to take advantage of increased sales.

"The Acura franchise was initiated on purely commercial grounds -- to increase the dealer network in the US, to expand the dealer network," he said.

"Because of the regulatory limitations, we couldn't set up the same franchise within the same area, so we had to differentiate the [dealers with] different [franchise names]. We set up new dealerships. That was the original background of the Acura franchise.

So while Honda set up Acura to be an Audi to Volkswagen or a Pontiac to Chevrolet, the child company's brand image has got away from the original plan.

"Today people perceive Acura as slightly lower, compared to the German makes or Lexus/Infiniti."

"People's expectations, or even a franchise dealer's expectations, is to make the franchise as high as Lexus/Infiniti, so in response to that kind of requirement... we started to develop new cars purely for the Acura franchise."

Honda decided that rather than drawing the Acura brand image back to where they had originally planned it to be, they would capitalise on the extra (unexpected) cachet of the franchise -- undoubtedly watching newcomers Lexus and Infiniti as they did so.

"The dilemma with Acura is that we cannot market exactly the same car outside the US with the Honda badge," says Ike.

"Except China, we don't have the Acura brand outside the US, so if we tried to put the Honda marque on the Acura-brand car, the Acura dealer will [protest]."

Based then on a brand image that can hardly be justified, Acura management and staff are wagging the dog. The cars are built in Honda factories and models such as the MDX and the TSX (the latter known here with different detail styling treatment as the Accord Euro) have been sold in other markets as Hondas. This is where the Acura story differs markedly from Lexus, which went to considerable lengths to distance itself as a brand from the parent company, Toyota.

Even more interesting, according to Ike, Honda's management and staff are beginning to grow restless with Acura's intransigence.

"Right now, Honda franchise people are upset; 'Okay, that car's a Honda car, we should be taking care of it'..."

Acura is a symptom of a developing cross-cultural problem within Honda. As we reported about 12 months ago (more here), it's harder for American design and engineering teams to see the need for RHD versions of cars they're developing. For a company that began in an RHD market (Japan), that's self-defeating.