20th Acura Anniversary- Acura History
1/7/2006 2:53:00 PM
As Acura celebrates its 20th anniversary, it stands as a leader in the luxury performance market with cars and trucks like the RL, TL, MDX and TSX. By combining technological innovation with world-class performance, contemporary design and luxurious appointments, Acura has captured the public's imagination.
The story of how Acura was created, launched and then grew into a major force in a competitive marketplace is a compelling testament not just to the company's products, but to the people who had the foresight to establish the first premium Japanese luxury car brand. History shows that Acura not only redefined the luxury car, it permanently changed the luxury marketplace from a slow evolution among a handful of brands to fierce competition between many. While today Japanese luxury brands are taken for granted, this was not the case in the early 1980s, when the groundbreaking Legend sedan was still on the drawing board.
The early 1980s were a tumultuous time for the U.S. car market. Gas shortages, economic malaise and new government regulations in the 1970s caused an upheaval in the public's buying habits and the products available to the public changed dramatically. Small was big and Japanese manufacturers such as Honda had forged reputations of reliability, economical operation and low price that were the envy of many competitors. Even the least expensive Honda offered a unique and fun driving experience, and the company's reputation for reliability was second to none. Honda had also established a record of technological innovation- such as the CVCC engine- that consumers embraced and that sent competitors back to the drawing boards.
The success Honda had enjoyed was emblematic of these changes. With the right product (the groundbreaking Civic) at the right time (the gas crisis of the early 70s), Honda sales growth had been phenomenal. Subsequent models such as the Accord and Prelude proved Honda had more than just good timing going for it. Following its philosophy of assembling cars where it sells them, Honda embarked on an ambitious plan to begin assembling cars in the United States and broke ground on a new plant in Ohio in 1980.
As work began on the Marysville, Ohio manufacturing plant, there were signs of change in the car market. The economy was improving, and luxury cars were starting to increase in sales volume. Manufacturers such as BMW, Mercedes-Benz and Audi captured the public's eye with aerodynamic designs that eschewed the chrome and excess of American luxury cars of the 1960s and 1970s. With a blend of luxury and performance, European manufacturers began to chip away at the high end of the market as America's middle class expanded and found themselves with more discretionary income than they could have dreamed of a few years earlier.
Many of these young professionals drove Honda cars when they were young, but as their income grew, Honda did not have a vehicle for them to move up to. Special Edition Accords featured leather seats, but even these limited-edition models couldn't qualify as a luxury car. Instead, Honda owners seeking bigger, more luxurious and more powerful cars were leaving Honda for Mercedes-Benz, BMW, Audi and other European luxury brands.
In 1981, Honda had a new, larger sedan in the early planning stages. It would be bigger than the Accord by a wide margin, feature the first Honda V-6 engine, and be loaded with luxury appointments. It would be sold not on the merits of its economy, but on its ability to thrill its driver. Honda executives viewed it as the perfect vehicle to keep upmarket intenders in the Honda family.
But there was a problem. While the buying public had accepted Japanese nameplates for their reliability and economy, luxury was another matter. Conventional wisdom said that an economy car manufacturer trying to take on the best from Europe was folly. However, Honda, more than any other car company, had found success by defying conventional wisdom.
At the time that Honda was planning its move upmarket, there was little in its product lineup that foreshadowed success. With just three cars- the Civic, Accord and Prelude- it wasn't even a full line manufacturer. While popular with both the public and media, all of its cars were still clearly intended for the budget conscious. Prices were affordable, and even the most expensive Accord sold for well below $20,000. Basic luxury features, such as power windows and leather upholstery, were in short supply in Honda products. While nobody disputed that Honda built excellent vehicles, few thought it had the luxury credentials to compete with the likes of Europe's luxury brands.
The new Honda sedan, later to be named Legend, was known internally as the HX. Under the guidance of Tom Elliott, senior vice president of automobile operations, the HX would become the cornerstone of a luxury car division to compete with the likes of Volvo, BMW and others. The HX 24-valve fuel injected V-6 engine was powerful and sophisticated. Its independent suspension and four-wheel disc brakes promised the handling of a European sport sedan, but with the compliant ride expected of luxury car buyers. And it would boast equipment such as a premium stereo, air conditioning, anti-lock brakes and power accessories. It would also cost nearly $20,000, almost twice as much as the base price of an Accord in the early 80s.
The problem of selling such an expensive car through Honda dealerships was obvious. Not only would it overextend the already busy dealers (which sold on average 600 cars a year), customers would likely balk at the idea of such an expensive car wearing a Honda badge. Ultimately, Honda executives decided that the HX was simply too large and expensive to be sold alongside Civics. Instead, a new division would be created, one tailored to the needs and wants of luxury buyers. It would be entirely separate from Honda, with unique dealerships, first-class customer service and a sales experience that would be second to none. The Honda division would meet the needs of the mass market that shopped for value. The new division would cater to luxury and performance. Internally, the new division became known as Channel II.
The idea of launching the world's first Japanese luxury brand was a gamble. Launching it with only one vehicle- and an expensive one at that- was too risky, so another vehicle was needed to fit below the HX, but without diluting the luxury and performance image that Channel II would ultimately have. Luckily, a solution was found in the Japanese-market Quint-Integra. With a fuel-injected, twin-cam 16-valve four-cylinder engine, sophisticated chassis tuning and eye-catching style, the Integra, was designed to put premium sporty coupes such as the Volkswagen GTI on notice. Its style, technology and performance complemented the HX and the new division.
Later, there were plans for a third car, one that would take on one of the most prestigious and challenging markets in existence: exotic sports cars.
In February 1984, American Honda confirmed its upmarket intentions. Channel II had been the subject of much speculation by the media, and not all of it charitable. Some pundits regarded the idea of a Japanese luxury brand- especially one from a company known mostly for fuel-efficient transportation- as overreaching at best.
Despite media speculation, work continued. It was important to keep the new division as separate from Honda as possible. This meant new dealerships, new service and parts divisions, new sales and marketing...everything. Developing the sales network fell to Ed Taylor, assistant vice president of the new division. Honda boasted an image that appealed primarily to those looking to maximize their dollars. The new division was aimed at European luxury intenders. This meant that dealerships would have to extend a level of customer service expected by a luxury car buyer, and go beyond even that to convince buyers that they were buying more than just an expensive Honda. Paul Pugh, manager of auto field service, handled the creation of the new service network.
The new division needed a name, and the task of naming Channel II fell to Ira Bachrach's Namelab in San Francisco, Calif. The challenge was to create a name that would convey the image and style for which the upscale division would be known. And in September 1984, the new name was officially announced: Acura. The name was derived from "acu," a form from Latin, meaning mechanically precise or done with precision.
In November 1984, potential dealers were gathered for a secret meeting at the Anatole hotel in Dallas. American Honda executives Schmillen, Elliott, Taylor, Pugh and American Honda president Yoshihide Munekuni explained the dealership plan for the first time. The new dealerships had to be separate facilities from existing Honda dealerships, and couldn't even be adjacent to them. They would also have a distinct look and feel separate from that of Honda dealerships.
But there was more in store for the lucky few in attendance that day. For the first time, people outside Honda headquarters would see the HX and Integra. Reaction to the plan was mixed. While the cars themselves were universally well regarded, Honda was a popular brand, and some dealers thought that any car made by Honda should be available through Honda dealerships. However, many more saw the wisdom of separating the new cars into a new division with a new image.
When dealership selection began in February 1985, the criteria were strict. Potential dealers had to have the capital to afford the construction of a new dealership. Acura management insisted that they be located in key markets, such as Los Angeles, New York, Seattle and others around the country where luxury sales were strong.
Acura would introduce new technologies to existing Honda service managers, and Pugh established new service training centers in Los Angeles, Atlanta and New Jersey. Hired in September 1985, service managers had only a few months to master new Acura technology before the cars went on sale at the end of March 1986. And there was a lot of new technology to cover. Not only did Acura feature two completely new engines, including the company's first V-6, but electronic fuel injection, four-wheel disc brakes, double overhead cams and other new technologies would also be standard on all the cars.
As Taylor and Pugh established the dealer, sales and service networks, the newly formed Honda public relations department invited a select group of journalists to Japan for a first look at the cars in November 1985. At the Honda test track in Tochigi, select media were able to drive the Legend and Integra for the first time, and learn the difference between the Honda and Acura products.
The proof was in the driving. While some popular media still expressed skepticism about the viability of a Japanese luxury brand, Motor Trend disagreed, saying, "We think the odds of Acura's success are heavily in Honda's favor, for the Legend is a terrific debut automobile." Everyone who drove the Legend noted that the new sedan was not a copy of a European or American luxury car, nor was it a repeat of larger sedan models sold by Toyota and Nissan at the time. "It is, in truth, a new approach to the market," said Car and Driver. Praise was equally glowing for the Integra. "The Integra falls right into the hotbed of intriguing fun cars priced just a bit over $10,000, and we don't see how it can lose," said Car and Driver.
On March 27, 1986, the public finally got to see for themselves what the automotive media meant. When the first 60 Acura dealerships opened, it marked a turning point in the luxury car market. From that point on, luxury benchmarks would not automatically carry a European nameplate.
When the first Acuras went on sale, doubt still ran rampant among the general media and Acura competitors. On the day Acura opened its doors, Schmillen appeared in a now-famous joint interview on NBC's Today Show with the then-president of Volvo North America, who summed up most European manufacturer's attitudes to Acura: "With all due respect to the tremendous quality of low-priced Japanese automobiles," he said, "I don't think they will ever be able to penetrate the U.S. luxury market." Schmillen remained unflappable. "We weren't even in this market 15 years ago, and we've come from nothing to half a million, and we think we can continue to keep that trend going," he said.
History proved Schmillen right. By the end of its first year, Acura had sold 52,869 cars and had grown to 150 dealers. In 1987, sales continued to climb, and Acura posted sales of 109,470 vehicles for the 1987 calendar year. Not only was this double the previous year's total, it surpassed every European luxury-performance nameplate in the United States including Volvo, silencing even the harshest critics, and proving unequivocally that Acura was a major player in the luxury car market.
Advertising for the Acura line was aggressive, with a look and feel separate and distinctive from Honda advertising. Acura was unafraid to compare itself with the best European brands. The emphasis was on performance and luxury, and the company slogan of "Precision Crafted Performance" was backed up with a strong link between Acura and the Honda Formula One teams.
By the end of 1987 Acura had established its luxury car credentials with an award-winning lineup of sedans and coupes. The Legend and Integra had won comparison test after comparison test, proving the cars' mettle to even the harshest critics. Accolades mounted; the Integra and classic Legend Coupe-added to the lineup in 1987-were voted onto Car and Driver's 10 Best list, the Legend Coupe was voted Motor Trend's 1987 Import Car of the Year, and Road and Track selected the Legend Coupe as one of the 10 best cars in the world.
Perhaps the most significant indication of the new division's success came late in 1987, when both Toyota and Nissan announced plans to add their own luxury divisions.
The Challenging 90s
As the 1980s gave way to the 1990s, Acura continued to make waves. Acura continually topped JD Power's Customer Satisfaction Index Survey, the Legend Coupe remained on Car and Driver's 10 Best list, and sales continued to climb.
At the Chicago Auto Show in 1989, Acura unveiled its crown jewel, the third car in its tri-product approach to the luxury market. Having proved it could compete with the world's best luxury cars, Acura took on the rarified realm of exotics with the all-new NSX. The new exotic showcased Acura technological leadership. It boasted the first mass-produced aluminum monocoque body, the first engine with electronic variable valve timing and lift (VTEC™), and the first production engine with titanium connecting rods. When the media was finally able to drive production versions of the NSX, the car's technological specifications and world-class performance would have garnered accolades by themselves. But what made the NSX special was its undemanding personality. After crowning the NSX the winner of a five-exotic comparison test, Car and Driver said, "The winning NSX has it all: stunning looks, a comfortable and inviting cockpit, a rev-forever engine that's perfectly happy motoring around town, and confidence-inspiring handling." Motor Trend put it more simply, proclaiming that the NSX was "the best sports car ever built."
Acura hadn't sat still with its core products either. While the Legend and Integra had helped redefine their segments and were still strong sellers, both were redesigned in the early 1990s. The 1990 Integra was larger, boasted a more powerful engine, more luxurious interior and more refined ride and handling. It was followed in 1991 by a larger, more powerful and more luxurious Legend sedan and coupe. The new Legend solidified the model's place in the luxury market and helped it maintain its lead as the best-selling luxury import model in the United States for six consecutive years. Both cars expanded Acura luxury credentials without diminishing the company's slogan.
In 1990, when the NSX debuted, the Acura badge appeared on cars for the first time. It was designed to represent a set of mechanical calipers, signifying the precision and attention to detail with which Acura products were made.
But by the early 1990s the luxury market had changed once again. Toyota and Nissan introduced new challengers in 1990, and established European players had realized that both their product and pricing had to change to meet the new Japanese competition. The American economy was facing yet another recession, and the yen had grown so strong against the dollar that the price advantage Japanese cars had traditionally enjoyed all but vanished. As a worldwide economic downturn took hold, the luxury car market began to contract, leaving all manufacturers with declining sales.
Acura was well prepared for these events, and remained a major force in the luxury segment with its core products. Despite the new models and subsequent critical acclaim, Acura wasn't immune to the economic realities of the time.
Acura responded to the harsh reality of yen fluctuations in a unique manner. It insulated itself from the currency market by assembling some of its cars in the United States, becoming the first import luxury brand to do so. The first car designed, engineered and assembled in the United States was the 1996 2.2CL coupe, which was quickly followed by the V-6-powered 3.0CL. As Acura sales began to climb in the latter half of the decade, U.S. production increased, and by 1999 more than half of all Acura vehicles sold domestically were assembled in the U.S.
Acura also began to expand its product lineup. The Vigor was introduced in 1992, filling a gap in price and size between the Integra and Legend. As Acura began to shift its models to alphanumeric naming, the Vigor was succeeded by the TL series. In 1994, a new Integra was introduced that became a perennial Car and Driver 10 Best winner, and solidified Acura in the sporty coupe market. The Legend was replaced by the RL, which moved the flagship considerably upmarket with innovative features such as the first touchscreen satellite-linked navigation system. Acura was also on the leading edge of the burgeoning luxury sport utility market, with the 1995 introduction of the SLX, the first sport utility from a luxury manufacturer.
Acura continued its technological leadership. VTEC, which was introduced on the NSX, quickly found its way to the rest of the lineup. The 1992 Integra GS-R, 1996 CL and the 1999 TL all used VTEC. Today, all Acura engines feature the technology. Acura also blazed the trail with navigation systems. Introduced on the '96 RL and improved over successive generations, Acura continues to lead the category with a GPS system that is acknowledged as the class leader.
A New Millenium, A New Acura
In the latter half of the 90s, the stock market was booming, the Internet was a growing economic reality, and technology was working its way into everyday life like never before. Luxury car sales were increasing, and by mid-decade Acura sales were climbing again.
With a solid reputation for technological innovation, Acura was poised to redefine itself in the crowded luxury marketplace in a way that would connect with a tech-savvy public. The first example of the reinvigorated spirit at Acura was the 1999 TL. Like the CL before it, the TL was designed, developed and assembled in the United States. It boasted a long list of standard features. The only option was a DVD-based navigation system. The new TL was an immediate hit with the public and the press, and became the best selling car in its class for three consecutive years. A year later a redesigned CL coupe followed the TL to critical acclaim. It upped the ante as well, offering a Type-S version that featured a 260 horsepower engine and sport-tuned suspension.
In 2000, Acura again raised the bar with the MDX, its first SUV designed and developed completely in-house. Yet another product developed in the U.S., the MDX was an immediate success. Motor Trend named it SUV of the year, it was voted North American Truck of the Year, and Car and Driver named it the winner of the Luxury SUV category in its 5 Best Trucks competition.
The Acura reputation for innovation expanded with the MDX. The navigation system was the industry benchmark. Its third row seat folded flat into the floor, a feature that competitors simply didn't offer. Variable Torque Management four-wheel drive gave the MDX off-road prowess without sacrificing on-road capability. It was also the first luxury SUV to meet ULEV (ultra low emissions vehicle) standards.
When the CL was introduced in 1996, it marked the beginning of a new era in Acura's history. Designed, engineered and assembled in the United States, the CL set a precedent for future Acura models. The 1999 TL was the second Acura product assembled in the United States, and was quickly followed by the MDX sport utility in 2001, which is assembled in Alliston, Ontario by Honda of Canada Manufacturing. Today, the TL and MDX continue to be assembled in North America, and will be joined by the all-new RDX sport utility when it goes on sale later this year. Since 1999, roughly two thirds of the cars sold by Acura are assembled in North America.
Driver involvement was an important part of the Acura formula. By the 2002 model year, the TL and CL were both available in Type-S editions that boasted a more powerful engine, sport-tuned suspensions and, in the case of the CL Type-S, an available 6-speed manual transmission and helical limited slip differential that Car and Driver said "closes the front-drive versus rear-drive gap by a bunch."
The public responded strongly to the Acura combination of high-tech and driving pleasure. In 2001, Acura posted year-end sales of 170,469, shattering the previous record set in 1991. And despite a short-lived economic downturn in the beginning of the new century, Acura sales remained strong, proving the value of its strategy of assembling cars in the U.S.
Today, Acura boasts the strongest, most extensive product line in its history. The Acura brand appeals to customers whose sense of prestige comes not from traditional status symbols, but from the sense of being ahead. This is because Acura is committed to creating exhilarating, world-class luxury automobiles that use technology not just to enhance the driving experience, but make their driver's lives better. Just as advanced systems such as Super Handling All-Wheel Drive™ and the Collision Mitigation Braking System™ featured on the RL improve the driver's control over the vehicle, technology such as satellite-linked navigation systems with real time traffic updates or HandsFreeLink™ Bluetooth® phone integration give Acura drivers more control over their lives.
The automotive marketplace has changed significantly in the past 20 years, and it will continue to evolve and grow in the future. With new vehicles such as the RDX sport utility vehicle, continued refinement of vehicles such as the RSX, TSX and TL, and future products such as a V-10 powered replacement for the NSX, Acura will remain on the forefront of the luxury performance market for decades to come.