Popular Honda gears for luxury car competition with its new Acura brand
Honda is reaching far beyond its Civic, Prelude, and Accord lines with its new upscale Acura division. Despite its quality, the Accord is still a mass-market car. The Japanese automaker wants the Acura Legend to appeal to the buyer with more money in his wallet. What Honda seeks is a dual identity: Cadillac and Chevrolet.
But there is some anxiety among Honda management in the United States about whether Acura (a-KOO-ra) will go as far and as fast as the company wants. There is also the question of whether the ``we make it simple'' automaker has opted for too much complexity.
The Acura Legend, at a base price of under $20,000, is aimed directly at the luxury-sports-sedan market, typified by such cars as the Mercedes-Benz, BMW, Audi, and Volvo.
``We're not trying to take business away from anyone,'' says Cliff Schmillen, executive vice-president of American Honda Company.``It's an expanding market and that's why we're getting into it.
``While we're not really competitive with anything that Detroit is yet offering,'' he says, ``the Ford Taurus and Mercury Sable are gaining on us as well as the Pontiac Grand Am and 6000 STE.''
The Acura Legend and Integra are just the beginning, says T. Chino, president of American Honda. ``We are going to add more models in the future.'' One possibility is a midengine two-seater. ``Such a car would be right in line with the quality and advanced high-tech image that we want to nurture for the Acura division,'' he says.
Honda has an image of quality and value that has enabled many import dealers to inflate prices because of high demand and short supply. A much stronger yen has driven up prices as well. Honda has upped the price of its cars some 8 percent in the last few months, absorbed some of the loss itself, and stepped up the efficiency of its production lines.
Honda, moreover, faces keener competition today. General Motors revamped its sales organization more than a year ago. South Korea's Hyundai, which has just delivered its first cars in the US, hopes to sell 100,000 Excels within the next 12 months, while the Yugoslavian-built Yugo is pulling in buyers because of its low price.
Honda was the first Japanese car company to build an assembly plant in the US and is studying plans for a second plant. This year it expects to sell some 570,000 to 580,000 cars in the US, not including the Acura Legend and Integra, compared with 550,000 in 1985. With both car lines, the importer's five-year plan calls for 900,000 sales in the US by 1990.
Honda has been able to increase the output of its car factories without adding new equipment. It now is producing 150,000 cars a year in its Marysville, Ohio, assembly plant, but ``by 1988 we'll be producing 360,000,'' says American Honda president Chino. The original capacity of the Ohio plant was 300,000 cars a year. Some of the output could be Acura division cars.
``Another target is to increase production to 380,000 and even 400,000,'' says Chino. ``We're asking the factory to find some more production increases.''
In Japan Honda builds 2,100 cars a day, or 500,000 a year, at each of two assembly plants. Instead of building another factory there, it has chosen to boost production by 30 percent this year by streamlining the existing facilities.
While Honda still imports about half of its cars from Japan -- mainly the engine and transmission -- the company will soon begin producing 60,000 Civic engines in Ohio for some 1987-model cars. Engine output will gradually rise.