Honda Motor Co.'s newest sedan has an efficient four-cylinder engine and its marketing plays up features like Internet radio, not power or speed.
This isn't the new Honda Civic. It's the Acura ILX, a car built on a similar foundation as its parent company's Civic that Acura hopes will give it a head start in the market for diminished luxury.
The Acura ILX, and rivals such as the Buick Verano and Lexus CT 200h represent a bet by some auto makers that demand is pent up for cars that are small and frugal like economy models, but come equipped with some of the comfort features, flourishes and badges of a luxury brand.
Is the 'Near Luxury' Car Buyer Myth or Reality? - WSJ.com
Joe White on Lunch Break looks at the release of the new Acura ILX and the "diminished luxury" class of cars that auto makers are now promoting. Photo: Acura.
Acura executives say they believe the "near premium" segment in which the compact ILX will compete could grow by as much as 16% a year, on average, through 2017—faster than any other luxury-market segment.
And Honda isn't the only company taking aim at consumers looking for status on a budget. German luxury brands have said they plan to bring to the U.S. more economical compacts and subcompacts they sell in Europe.
General Motors Co. recently launched its entry in the near-premium segment, the Verano. Based on the Chevrolet Cruze, the Verano is the first compact model offered under the Buick brand in the U.S. since the slow-selling Skylark was dropped more than a decade ago. GM also has a new, smaller Cadillac model due out in the fall, the ATS, that it is positioning as a rival to BMW's 3-series.
Honda's vice president for national marketing, Mike Accavitti, says the ILX is a response to a change in the mind-set of many affluent consumers.
"Since the Lehman shock, we have seen a fundamental shift in luxury buyers' philosophy," he says. "We are seeing more rational behavior in purchases."
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The 2012 Buick Verano represents a wager by some auto companies that there is demand for small, fuel-efficient cars that come with some of the comfortable features and flourishes found in more expensive models offered by German luxury brands and other auto makers.
Acura also wants the ILX to lure members of Generation Y, the buyers between 18 and 34 years old who have landed decent jobs, want a luxury-brand car with a distinctive design, but don't really care how fast it goes—or so Acura executives believe. This target customer lives in or near a big city such as New York, Los Angeles or Chicago, where much of the time cars can barely get past 40 miles per hour in rush hour traffic.
The ILX starts at $26,795 (including freight charges), and ranges up to $35,295 for a loaded hybrid. That looks like a reasonable price if the competition is defined as German luxury cars like a BMW 3-series, which starts at about $35,000.
But the success of the ILX and similar cars will depend on buyers who may not fit the molds imagined by marketing departments.
"There's kind of a move for people to go to these smaller cars and still get the bells and whistles," says Rob Troxel, a longtime Honda fan who's looking for a replacement for the loaded 2009 Civic EX his wife drives. "Miles per hour is not as important as miles per gallon," he says.
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The 2013 Acura ILX 2.0L is another model that represents a "near premium" segment.
Mr. Troxel might sound like a member of a focus group that gave Acura's marketing department the template for its target customer profile. But he's 65 years old—a baby boomer, just like most of the people who buy new cars in the U.S. And while he likes the concept of an economical luxury car, he is on the lookout for telltale shortcuts that betray a car's cheaper origins.
He tried a Verano, he says, but rejected it because the seat recliner was a manually operated, Chevy-style handle, not a smooth power device.
As for the Acura ILX, he says if the price is much over $30,000 he'd consider Acura's more-powerful—and expensive—TSX. Mr. Troxel also questions why the Acura only offers a five-speed automatic, not the six-speed its rivals typically feature.
Edmunds.com says 16% of people who used the car-shopping site to research the ILX in March also looked at the TSX. The next most cross-shopped cars against the ILX were the Acura TL and the Honda Accord. Among models offered by Honda rivals, ILX customers looked most at the Lexus CT 200h, a compact hatchback that Toyota Motor Corp.'s luxury brand is aiming at the same younger buyers Acura wants.
On the road, the 2.0 liter, four-cylinder, 150-horsepower ILX is quiet and the steering is precise. But even standing on the gas pedal doesn't produce much excitement. The 201-horsepower, 2.4 liter model is more responsive, but it only comes with a six-speed manual transmission, a deal-killer for most buyers.
The Buick Verano, like the ILX, is aimed at drawing a younger customer to the Buick brand. It comes with a four-cylinder engine, with greater horsepower than the ILX, 180. The Buick offers a six-speed automatic to the Acura's five-speed.
The real challenge makers pushing econo-luxury autos is that many cars without luxury badges on the hood offer many of the "luxury" features, and often more power, for less money. And power still matters.
Danial Hyder, 32, works in corporate finance at the Detroit area offices of Robert Bosch GmbH, a big German auto-parts supplier. Mr. Hyder says he owns an Acura MDX and a 2006 BMW 5-series. He looked at the ILX but concluded that the car didn't measure up to rivals in the same price range.
The car he ordered: a 2013 Taurus SHO, the 365-horsepower muscle car version of Ford's sedate, large sedan.
Is the 'Near Luxury' Car Buyer Myth or Reality? - WSJ.com
This isn't the new Honda Civic. It's the Acura ILX, a car built on a similar foundation as its parent company's Civic that Acura hopes will give it a head start in the market for diminished luxury.
The Acura ILX, and rivals such as the Buick Verano and Lexus CT 200h represent a bet by some auto makers that demand is pent up for cars that are small and frugal like economy models, but come equipped with some of the comfort features, flourishes and badges of a luxury brand.
Is the 'Near Luxury' Car Buyer Myth or Reality? - WSJ.com
Joe White on Lunch Break looks at the release of the new Acura ILX and the "diminished luxury" class of cars that auto makers are now promoting. Photo: Acura.
Acura executives say they believe the "near premium" segment in which the compact ILX will compete could grow by as much as 16% a year, on average, through 2017—faster than any other luxury-market segment.
And Honda isn't the only company taking aim at consumers looking for status on a budget. German luxury brands have said they plan to bring to the U.S. more economical compacts and subcompacts they sell in Europe.
General Motors Co. recently launched its entry in the near-premium segment, the Verano. Based on the Chevrolet Cruze, the Verano is the first compact model offered under the Buick brand in the U.S. since the slow-selling Skylark was dropped more than a decade ago. GM also has a new, smaller Cadillac model due out in the fall, the ATS, that it is positioning as a rival to BMW's 3-series.
Honda's vice president for national marketing, Mike Accavitti, says the ILX is a response to a change in the mind-set of many affluent consumers.
"Since the Lehman shock, we have seen a fundamental shift in luxury buyers' philosophy," he says. "We are seeing more rational behavior in purchases."
The 2012 Buick Verano represents a wager by some auto companies that there is demand for small, fuel-efficient cars that come with some of the comfortable features and flourishes found in more expensive models offered by German luxury brands and other auto makers.
Acura also wants the ILX to lure members of Generation Y, the buyers between 18 and 34 years old who have landed decent jobs, want a luxury-brand car with a distinctive design, but don't really care how fast it goes—or so Acura executives believe. This target customer lives in or near a big city such as New York, Los Angeles or Chicago, where much of the time cars can barely get past 40 miles per hour in rush hour traffic.
The ILX starts at $26,795 (including freight charges), and ranges up to $35,295 for a loaded hybrid. That looks like a reasonable price if the competition is defined as German luxury cars like a BMW 3-series, which starts at about $35,000.
But the success of the ILX and similar cars will depend on buyers who may not fit the molds imagined by marketing departments.
"There's kind of a move for people to go to these smaller cars and still get the bells and whistles," says Rob Troxel, a longtime Honda fan who's looking for a replacement for the loaded 2009 Civic EX his wife drives. "Miles per hour is not as important as miles per gallon," he says.
The 2013 Acura ILX 2.0L is another model that represents a "near premium" segment.
Mr. Troxel might sound like a member of a focus group that gave Acura's marketing department the template for its target customer profile. But he's 65 years old—a baby boomer, just like most of the people who buy new cars in the U.S. And while he likes the concept of an economical luxury car, he is on the lookout for telltale shortcuts that betray a car's cheaper origins.
He tried a Verano, he says, but rejected it because the seat recliner was a manually operated, Chevy-style handle, not a smooth power device.
As for the Acura ILX, he says if the price is much over $30,000 he'd consider Acura's more-powerful—and expensive—TSX. Mr. Troxel also questions why the Acura only offers a five-speed automatic, not the six-speed its rivals typically feature.
Edmunds.com says 16% of people who used the car-shopping site to research the ILX in March also looked at the TSX. The next most cross-shopped cars against the ILX were the Acura TL and the Honda Accord. Among models offered by Honda rivals, ILX customers looked most at the Lexus CT 200h, a compact hatchback that Toyota Motor Corp.'s luxury brand is aiming at the same younger buyers Acura wants.
On the road, the 2.0 liter, four-cylinder, 150-horsepower ILX is quiet and the steering is precise. But even standing on the gas pedal doesn't produce much excitement. The 201-horsepower, 2.4 liter model is more responsive, but it only comes with a six-speed manual transmission, a deal-killer for most buyers.
The Buick Verano, like the ILX, is aimed at drawing a younger customer to the Buick brand. It comes with a four-cylinder engine, with greater horsepower than the ILX, 180. The Buick offers a six-speed automatic to the Acura's five-speed.
The real challenge makers pushing econo-luxury autos is that many cars without luxury badges on the hood offer many of the "luxury" features, and often more power, for less money. And power still matters.
Danial Hyder, 32, works in corporate finance at the Detroit area offices of Robert Bosch GmbH, a big German auto-parts supplier. Mr. Hyder says he owns an Acura MDX and a 2006 BMW 5-series. He looked at the ILX but concluded that the car didn't measure up to rivals in the same price range.
The car he ordered: a 2013 Taurus SHO, the 365-horsepower muscle car version of Ford's sedate, large sedan.
Is the 'Near Luxury' Car Buyer Myth or Reality? - WSJ.com
