Acura dealers look forward to ample supply
Acura dealers, having weathered a troublesome 2011, head into 2012 armed with a fresh stock of inventory and eager for the arrival of two entry-level models in the spring.
Car and truck supplies are getting back to normal after two natural disasters -- an earthquake in Japan and flooding in Thailand -- forced Japanese carmakers to slash production last year. That left dealers without supplies of many key models and sent Acura's sales tumbling to 123,299 vehicles in 2011, down 8 percent from the prior year.
Acura executives hope to reverse that slide this year and have set a sales target of 180,000 vehicles, which would be a 46 percent jump over 2011.
Two newcomers to the market in March -- the entry-level ILX sedan and the redesigned RDX crossover -- could help Acura reach that goal. Acura will redesign the rest of its lineup within the next two years.
For dealers, getting off to a fast start in 2012 is crucial, said George D'Angelo, chairman of the Acura National Dealer Advisory Board.
"Acura dealers are very, very excited," said D'Angelo, whose Acura dealership in Larchmont, N.Y., was among the first Acura stores in the country, opening in 1986.
"There has been a re-energizing of the brand with all the upcoming cars."
D'Angelo, who also owns Subaru and Kia dealerships in Stamford, Conn., spoke with Staff Reporter Christina Rogers.
How was 2011 for Acura dealers?
We were off to a great start in the first quarter of 2011 versus 2010. Sales were up approximately 14 percent and then the earthquake and tsunami hit Japan in March and really impacted the supply of new product. Just as production was normalizing, Acura had dealers who were then impacted by the floods in Thailand. It's been a struggle. But as of Dec. 1, production has normalized. Overall, final 2011 sales were a bit less than 2010 due to the natural disasters.
The good news is first-quarter 2012 production will be higher than first-quarter 2011 production.
Do you feel that because of the short supplies customers have turned elsewhere?
I don't know what the numbers are on what we lost to other manufacturers, but this particular dealership hasn't seen an impact because of the various things we do.
We try to get customers out of their leases early and we do pull-ahead programs. But there was an impact. There is no question about it.
We weren't the only ones faced with this. Toyota was faced with it, as well as a number of the other Japanese manufacturers.
We gave incentives to customers if we didn't have a car in stock so they'd wait for the car, and things of that nature.
What are the big issues for Acura dealers in 2012?
We need to get off to a fast start in 2012 because of the increased production and increased sales level to reach that 180,000 sales goal. We are coming out with a whole new slew of products.
The ILX is going to be a real winner in the category it serves. The RDX is just super. The price point is great. We've got a six-cylinder car now, as opposed to a four-cylinder turbo. And in December 2012 you have the introduction of the all-new RL, and the big buzz naturally is the new Acura NSX.
Are dealers satisfied with Acura?
Dealers are never satisfied. Any product you represented you are never really satisfied. But overall, dealers are satisfied under the circumstances of what happened in 2011, and they're very excited for 2012.
Profitability was good. It's never as high as dealers expect it to be, but the reality of three years of recession have taught us to make money in the face of adversity. I think Acura is at a good point. I think it's a good price point. I think it offers real value for the money, and I think people are recognizing that.
Are Acura dealers profitable?
Yes. I don't know what the percentage numbers are, but they're very high.
Do you expect to be profitable in 2012?
I think 2012 is Acura's year. I really do, with everything we've got going for us: introduction of new models; a good dealer body; good representation as far as Acura's senior management is concerned. They listen to us. I'm on the phone with them numerous times. They make changes and listen to the dealers when changes need to be made.
What are your thoughts about Acura's coming product lineup?
I think it's great. I love the ILX. I think it's a good entry-level vehicle to the Acura line.
The RDX is just going to be a wonderful car. It's going to be a hot, hot seller. And I'm excited about the all-new RL. The MDX is our bread-and-butter car, and it continues to be outstanding. TL and TSX are strong sellers. They're also our bread-and-butter cars. The wagon is going nicely. It's not knocking the cover off the ball, but we never thought it would. We had a certain level we were going to sell every year, and that's it. But it's a good alternative to a station wagon.
What are your Acura store's top goals for the year?
My goal overall for the year is to sell 225 new cars per month on average. That's what we've targeted. We're investing in facilities. We're expanding our showroom. We're expanding our service department. We're investing in the future of Acura -- in our own future.
What are Acura dealers doing to attract service business?
It's a combination of things. We're making hours more convenient. A number of dealers are opening on Sunday. We've expanded our loaner car fleet to the general public.
Acura has a great loaner program, probably the best in the industry. They support it. We're doing direct mail pieces and things of that nature. Also, we're picking up and delivering service cars to customers.
Is Acura encouraging dealers to participate in specific facility improvement programs?
The manufacturers always encourage dealers to enhance their facilities. But I can honestly say, looking around the country, there are a lot of dealers taking it on, on their own initiative, to expand and get their place in order to face the increase in business. [Acura] is encouraging a Gen-Y image program.
It's a whole new facility enhancement upgrade. You have to work with Acura through their architects. There are various levels of incentives.
The factory does give you incentives and rewards their dealers for any enhancements they do to the facilities under their guidance.
What does the factory need to do to help you sell more vehicles?
Increase their national advertising. Keep the pressure on incentives. More incentives naturally support the increase in sales goals. We get great support from Honda Financial Services in terms of residuals, in terms of APR and buying habits.
The major thing is we need to continue to be on the radar and on shopping lists, and that's going to get done with national advertising supported by regional advertising associations.
Does Acura need a sports car? Or a convertible?
The halo car is going to be the NSX for all intents and purposes. Do we want a convertible? Yes. Is there a business case for a convertible? Probably not.
The dealer council has been asking for a convertible for a while, and we get some pushback because making a business case for it is difficult. But I do think you need a convertible in the lineup. It's something people are going to be attracted to. They're going to come in and take a look at it, and we can cross-sell them into another Acura product.
The NSX is a great product. It sort of went dark for five years for a number of reasons. But with it coming back, and as Mr. [Takanobu] Ito said at the [Detroit auto show] press conference, getting back into the racing vein of Acura is going to help the brand and catapult it to where we want it to be.
What's your days supply, and what should it be?
My days supply is hovering at about 58 to 60. With interest rates the way they are, I'm satisfied with the 60-day supply.
The Acura dealers, we're sort of like a family. We do a lot of swapping of cars. If we don't have something we'll swap a car with another dealer. Ideally I'd like to be at an 80-day supply, but I think that's going to be coming up. I think in 2012 you'll see the number be in the 70-day supply range.
Should Acura have more dealerships?
I think the Acura dealer body count is perfect the way it is. You have a lot of good dealers who can cover their markets. There are specific markets that naturally aren't covered, but overall, I think we have a good, good handle and a good representation mix across the country.
How would you rate Acura Financial Services' performance in the last year?
Ten. I truly mean that. My background is in banking, and I've always been involved with American Honda Finance Corp. subcommittees, dealer councils and things of that nature. Now they just set up a different corporation, Acura Financial Services, so there is a commitment to the brand as far as Acura is concerned.
They're very keen on moving the needle on selling product. We get strong residuals, strong APR program and good incentives for the dealers. Acura Financial Services has done a wonderful job over the past three years in the face of adversity. They continue to do that.