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No Acura for Japan (yet), as Honda announces moves overseas

July 19, 2007
By Ken Worsley


Given the success of Toyota’s luxury Lexus brand thus far in Japan - in June, Lexus and Suzuki were the only two domestic badges to see an increase in sales against June 2006 - I thought that Honda’s introduction of the Acura brand to the Japanese market would be a no-brainer.

But, it’s not going to happen. Yesterday, Honda announced that due to the slump in domestic auto sales, it would postpone introduction of the Acura line to the domestic market for about two years. So, if you had been waiting to get a new NSX next year, it will have to be under the Honda badge.

What is Honda doing instead? For starters, Japan’s second-largest automaker announced plans to increase annual global production from the current 3.9 million units to about 4.7 million by 2010. In order to do this, Honda will be making a push into the Indian and Thai markets by building a new plant in Thailand, at a cost of about 23 billion yen, as well as also spending about $230 million to build a second production plant in India.

Then, the firm announced plans to build an assembly plant in Argentina, which would be Honda’s first non-motorcycle focused plant in that country. Together with an existing production facility in Brazil, Honda would be better poised to sell more vehicles in the growing South American markets.

I have to applaud these efforts, as it seems Honda is making moves that focus on long-term growth rather than rushing to compete in the already crowded luxury car niche market domestically (though it should do that when the time is right). Realistically, I wouldn’t put Acura’s sales in Japan over 20,000 units for the first year, and building brand awareness would be a very expensive process. Making these moves into India, Thailand and South America, despite the large cost outlays, seems to have better a risk/reward ratio.

At least, Honda seems to think so.

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Comments

One Response to “No Acura for Japan (yet), as Honda announces moves overseas”

  1. Contrarian on July 21st, 2007 11:53 pm

    Introducing Acura to the Japanese market would be foolish. Unless things have changed since I last look, Japan has a serious demographic problem and wasting resources to cater to the Japanese market is not strategically prudent. Focusing on markets with emerging wealth (like Honda is doing) is incredibly prescient.

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