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Honda postpones Acura selling in Japan, seriously affecting dealers

8, 13. 2007

   Honda Motor Co. has postponed selling of its luxury Acura cars on the Japanese market, which was originally planned to start in the autumn of 2008. The reason for the postponement was that the company decided to give the priority to the completion of the unification of its sales networks "Honda Cars", which comprises three channels, in view of the current sluggish movements on the domestic market. The putting off of the marketing of Acura is seriously affecting the morale of the managers of Honda sales companies who were expecting the sales of luxury cars, which had been the weak point of Honda, would be vitalized by opening of Acura shops. The sales company managers are even becoming suspicious about Honda's domestic sales policy.

Postponement is by about 2 years, till 2010 or later

Honda postpones sales of luxury brand Acura cars in Japan  (shown in this photo is a U.S. model)
Honda postpones sales of luxury brand Acura cars in Japan (shown in this photo is a U.S. model)

   Honda was in the vanguard of inaugurating premium brands by Japanese carmakers when it introduced Acura in 1986. It comprises the most luxurious sedan "RL" (known as Legend in Japan) and SUV "MDX". They are sold mostly in the United States. The sales in the U.S. expanded after 2004 to reach about 200,000 units a year.

   The sales of Acura affected other Japanese automakers. Following Acura, Toyota Motor Corp. introduced Lexus, while c also started selling Infinity.

   Honda initially planned to start selling Acura cars in Japan in 2008. The domestic sales networks were to be worked out by the autumn of 2007 at latest. The company decided recently, however, to postpone the domestic sales till 2010 or later.

    A main reason for the postponement is the sluggish market condition in the country. For the Acura-brand car models planned to be put out by 2011, the company predicted sales target could not be reached. If the models to be sold as Acura brands are subtracted from the domestic Honda brands, "Honda Cars" will have no high-profit models in the cars they are dealing with. If this would be the case, the company judged the Honda brands would be threatened.

Sluggish sales of Toyota Lexus at initial stage also affected

   The sales of Toyota Lexus was also taken into consideration in Honda's making the postponement decision. Lexus cars which were introduced to the domestic market in 2005 did not sell well as the sales of the middle sized sedan IS and GS, which had been expected to become mass sellers, turned out to be sluggish. Until the flag-ship luxury sedan model, LS460, was introduced in 2006, the sales of Lexus had fluctuated below only half the level of the target.

   Unlike Lexus, the line of cars under Honda's Acura brands are of sporty and distinctive types. The two types of cars under Lexus, that did not sell well, have something in common with the Acura cars. This is why Honda, which judged Toyota's introduction of Lexus cars into the Japanese market was a failure, became cautious about selling its Acura cars on the home market.

   Honda's domestic dealers are discouraged at hearing the report about the postponement of the Acura introduction to their market. Up to now, two Honda car dealers have been able to be in business even if they were adjacent to each other because they were on two different sales channels. As all three sales channels of the Honda sales networks were unified, however, one of such two dealers would have either move or close down. There were some Honda dealers which closed down to wait for dealing with Acura brand cars.

Some dealers believe, "Honda gave up the home market."

   A story spread among Toyota's sales companies that operate shops to sell Lexus cars that Lexus car sales saved Toyota from falling into the red for the financial term ending in March 2007 because of a decline in Toyota's car sales as a whole. This was extremely envied by the operators of Honda car sales companies. While the domestic market for new cars is shrinking, the operators of the Honda car sales companies are placing a high hope on the premium brand Acura. They were intending to stabilize their business by opening shops to sell Acura cars. There were employees who wanted to become staff members of Acura car dealers.

   Suddenly, however, Honda, which was in the vanguard of inaugurating the premium brands, is getting more than five years behind its rival Toyota for introducing the premium brand to the home market. As the domestic market for new cars can not be expected to grow fast, the "postponement" might even turn to "cancellation".

   The domestic car dealers for Honda are looking at the unification of the three sales channels as a shrinking of the sales networks as a whole. Facing the postponement of the Acura car sales in Japan, some of the dealers are suspecting that Honda has given up the home market.

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