ILX launch has Acura execs plotting quick changes

 

LOS ANGELES -- Acura sales are climbing again after last year's earthquake-caused inventory crisis, but the launch of the ILX compact sedan has been a disappointment for Honda's premium brand.

Now Acura is planning a powertrain change for the ILX and will highlight technical features on the RLX flagship sedan due next spring as part of a strategy to return brand sales to the 200,000 level.

The ILX "is not hitting its sales expectations," said John Mendel, American Honda executive vice president.

The ILX is based on the Honda Civic platform. And although some Audis borrow from Volkswagen and some Lexus models take from Toyota, the ILX's roots may be a bit too evident against the BMW 1 series and Lexus CT 200h.

The car was meant eventually to replace the aging, slightly larger TSX. But November was only the second time since the May introduction of the less-expensive ILX that it outsold the TSX, which is still going strong.

The ILX is being outsold by the Buick Verano, Volkswagen CC and Audi A4, though it has an edge on the CT 200h and the outgoing Audi A3.

Last month Acura sold 2,108 ILXs, compared with sales of 3,574 Veranos, 3,343 A4s and 2,197 CCs.

The main problem: The base and midgrade ILX have a 2.0-liter engine that is "underpowered, and consumers don't see the value," Mendel said. What's more, the upmarket 2.4-liter engine only comes with a manual transmission. Though it's pitched as a performance feature, few Acura buyers actually want to row the gears. "The car was planned for a 2.4 automatic, and we're working to fulfill that," Mendel said, though he could not say when. "We're looking to sell about 30,000 units a year, and we're probably closer to 22 or 24 right now," Mendel said, speaking of the annual sales rate. "We're hitting two-thirds of our expectations, but we're growing every month and catching on more." Fortunately for Acura, the redesigned RDX compact crossover -- also launched this year -- is off to a stronger start. It is outselling the Audi Q5 and Volvo XC60, and is hot on the heels of the BMW X3. Although it shares some components and a platform with the Honda CR-V, the RDX has a more distinctive interior. The jerky turbo-four engine has been replaced by a smoother V-6 that has more power and better fuel economy.

The launches of the ILX and RDX set the tone for the redesigned RLX flagship sedan due next spring.

The current RL has been a flop, averaging just 35 sales a month for the past two years. Mendel wants to market the RLX as a technical tour de force, but with the twist that it offers "technology that improves your skills, not that takes them away."

That means pushing items like the RLX's standard Precision All-Wheel Steering (PAWS) system, which allows the rear wheels to have independent toe control during cornering. The rear wheels have their toe-in angles adjusted by electronic actuators while cornering, giving much crisper handling.

"The RLX has the right package to compete with more expensive vehicles," said Art St. Cyr, American Honda's head of product planning and logistics. "The previous RL didn't match what the customers were looking for."

Most luxury manufacturers have allied themselves with premium audio suppliers, and Acura is no different. The RLX will feature a system by Krell, which sells home stereo speakers for upwards of $65,000 a pair.

"We have to discover more ways to get this vehicle in the hands of people," said Mendel. "We need to get butts into seats."

Mendel is looking at expanding the loaner program Acura has with the W hotel chain. Currently, the program only offers guests a ride in the MDX crossover. But the RLX's much larger backseat allows that vehicle to be used as well, he said.

Acura sales were in free fall during the recession. In 2010, Acura sold barely half of its 2005 peak of 209,610 units. This year, sales are up 27 percent and the brand should easily break 150,000 units. And executives have said 200,000 units is a near-term goal.

Should RDX sales continue to be strong, and if the RLX does well, Mendel expects to hit that number in the next year or two -- especially with a redesign of the MDX mid-sized crossover coming next year and the redesigned TL mid-sized sedan and new NSX sports car coming in 2014.

"We have never had a true flagship sedan," said Mendel. "We're in a position now where we can build that flagship, and in a couple years we get the [NSX] sports car. It's when we need it that we will be delivering our signature in terms of smart luxury."

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