Written by | Li Yimeng
Edit | Routing Agency
Despite the official secrecy, the withdrawal of the Acura brand from China has basically entered the countdown.
According to Autohome reported on Monday (March 7), Japanese luxury car brand Acura is "about to withdraw from the Chinese market, and dealers are waiting for the final notice of manufacturers."
In response to the above news, Guangqi Honda, the operator of the Acura brand in China, did not respond positively, only saying that there are currently "no official documents and statements released".
On the other hand, the "merger" of acura 4S stores by the Honda brand and the "clearance" of inventory cars by 4S stores confirm the upcoming large-scale withdrawal from the side.
A quiet parting
For Acura, the more tragic point seems to be that most Chinese consumers do not feel much about this parting.
"I usually see Acura's car sporadically on the road, but I only realized after watching the recent news that 'Oh, there is such a brand'." An ordinary consumer living in Shanghai said.
The remarks of these people may largely restore the reality that Acura faces: in the past two years, the brand's footprint in the world's largest auto market is becoming almost imperceptible.
According to the statistics of the Association, Acura achieved a total of 5762 new car sales in the Chinese market in 2021, which is almost "waist cut" compared with 2020, a drop of 48.6%.
In the previous year, the brand's cumulative sales for the whole year were 11,193 units, a year-on-year decline of more than 30%, to 31.73%. That's a far cry from the automaker's 2015 sales target of "100,000 units" for 2020.
"Or rather, the Acura brand has never really been supported in China." Lu Shuai, an automotive analyst at Pisces Consulting, commented.
According to historical sales data released by Honda China, acura's sales peak in the local market since it entered the Chinese market in 2006, reaching 16,348 units.
The year also coincided with a major year for luxury car sales in China.
For reference, the sales of German luxury car brands Audi (including Hong Kong), BMW (including MINI brand) and Mercedes-Benz (including Smart brand) in China in the same period were 597,000, 594,000 and 611,000 units, respectively.
Among them, even luxury sub-brands such as MINI and Smart, which are known for producing small cars, have sold 35,000 new cars and 23,000 units respectively.
Even in the most beautiful year of the market, Acura still ranked at the bottom of China's luxury car sales list.
Freezing three feet is not a cold day
"Acura's long-standing situation has been the result of the superposition of multiple factors, until now it has reached the point where it is difficult to return." Lu Shuai said.
He believes that the failure to establish a symbolic brand image is the biggest reason for the failure of the Acura brand.
Compared with volvo, Lincoln, Cadillac and other competitors who are also growing brands, Acura's brand profile is extremely vague. This is true even when compared to the sibling brand Lexus.
"When people talk about Volvo, they talk about human care; when they talk about Lincoln and Cadillac, they think of free-spirited American culture and design; and Lexus changes the Chinese's contempt for 'craftsmen' since ancient times." Lu Shuai analyzed, "But Acura obviously lacks this kind of foothold that exists at the spiritual level. ”
Decades of hard work have made Volvo's image of "respecting life" deeply rooted in people's hearts
Coupled with the lack of vitality of brand building and marketing work compared to other brands, Acura lost the stepping stone to knock on the door of Chinese heart.
On the material level, the brand's negative new car launch strategy has also led to the shrinking of its product portfolio in China.
In the first few years of entering the Chinese market, Acura's product lineup consisted of imported models.
In 2016, the establishment of GAC Acura brought benefits to the brand's localization in the Chinese market. In the following years, three models, including TLX-L, CDX, and RDX, were domestically produced, making substantial contributions to the increase in Acura's sales in China.
From 2017 to 2019, Acura ushered in the "golden three years" in the Chinese market. Despite slight fluctuations in new car sales in 2018 (from 16,300 units to 9,424 units), Acura was able to achieve an average of nearly 14,000 new car sales per year during this period.
However, since then, Acura has significantly slowed down the pace of introducing new cars to the Chinese market, directly resulting in the brand's current sales of only two models.
"In this way, the decision left for consumers is no longer which one to buy, but only the two options of 'buying' or 'not buying'." Lu Shuai said.
Sell American Japanese cars without thinking
Of course, in Honda's decision-making, the "last straw" that is really enough to crush Acura may be the brand's performance in China and the North American market.
In 2021, U.S. new car sales data shows that the cumulative sales of the Acura brand in the United States reached 157,408 units, an increase of 14.9% year-on-year. In contrast, U.S. brands Lincoln and Cadillac sold 86,929 and 118,310 units in the U.S. during the same period.
In fact, Acura has always had a good sales performance in the US market.
In 1987, the newly founded Acura brand quickly became the national champion in the sales of imported luxury cars.
This achievement has also prompted two Japanese automakers, such as Toyota and Nissan, to follow suit, announcing the establishment of luxury car brands Lexus and Infiniti for the world.
The Acura Legend was one of the first two models for Acura to launch in North America
In the North American market, Acura's brilliance spanned almost the entire 1980s-1990s. But in Japan, the Acura brand almost never exists. In 2005, Honda had planned to introduce Acura into the Japanese market in 2008, which ended in abandonment.
"Although Acura is a Japanese brand, from the day it was born, it has been positioned as a brand based on North American radiation around the world, and it is an American brand in its bones." Lu Shuai said, "Therefore, the development and design philosophy of the model is the same as that of the United States. ”
As a luxury car brand with a career in the North American market, Acura has long left the development and design dominance of global models in North America.
According to a source who once worked for GAC, even for Acura's domestic models, the voice of GAC Acura Division and Chinese technicians is quite limited.
"For model development, Honda Technology Research Guangzhou R&D Center will indeed cooperate with Honda's overseas R&D center to do some work, but it is limited to suggestions and has no decision-making power." She said.
Gac does not care much about the development of Acura itself. For GAC and GAC Honda, Acura domestic production is largely a decision of last resort.
After the brand entered China in 2006, it has been in a state of few products, sluggish sales, low sales network coverage and low brand awareness for a long time, and once experienced a large-scale withdrawal of dealers.
Faced with this unfavorable situation, the two partners decided to establish GAC Acura, and in the case of annual sales of less than 5,000 vehicles, they decided to localize Acura.
"Acura has always misjudged the real needs of Chinese consumers." Lu Shuai commented.
He said there is a huge difference in the consumption behavior of Chinese auto consumers and American auto consumers. These differences are manifested in, and are not limited to, the understanding of luxury cars, aesthetic preferences for interior and exterior design, the need for digitalization, the sensitivity to fuel economy, and many other aspects.
"In China, is it okay to sell an American-style Japanese car without thinking?" Lu Shuai concluded.
Who will be out next?
Judging from Acura's encounters – or cause and effect – the brand's departure may not be as lonely as imagined.
As the Chinese public matures in luxury car consumption, it will be difficult for this segment to inevitably activate the end-of-the-road elimination mechanism. In the future, the length of the list of luxury brands "dissuaded" will undoubtedly continue to expand.
This makes the public wonder: Who will be next?
Let's start with a set of data:
- DS: In 2021, the cumulative sales volume in the Chinese market will be only 757 units – which is also based on the year-on-year increase of 136.6%;
- Infiniti: In 2021, it sold 8,696 new vehicles in China, down 66.2% year-on-year;
- Jaguar: In 2021, 18,229 new vehicles were sold in China, down 9.5% year-on-year.
In the 2021 China luxury car brand sales list, the poor performance of the above three brands also attracted the attention of the routing agency.
If Acura is included, the four luxury car brands sold a total of 32,687 vehicles in China last year.
In contrast, Porsche, an ultra-luxury brand with higher bicycle prices and a long purchase decision process, sold 95,671 new cars in China during the same period, nearly three times the combined sales of the four major brands. Maserati's sales in China in the same period also reached 7280 vehicles, higher than the DS and Acura brands, and close to Infiniti.
Dismal sales performance and increasingly marginal market positions are calling into question the necessity of the existence of these luxury car brands.
"Maybe it's time to ask these questions: Do Chinese consumers really need these brands?" What is the difference they bring to the market? What is the unique value to the user? A veteran automotive media person sighed.
"Happy families are all similar, unhappy families have their own misfortunes," Tolstoy said. At the bottom of China's luxury car market, this judgment also applies.
Since PSA Group decided in 2014 to use China as a testing ground for DS to transform high-end brands, domestic consumers have used annual sales of no more than 1,000 units for many consecutive years to make the brand's French executives understand what it means to "not be done".
In the view of Liu Rui, an independent automotive analyst at the Troyes University of Engineering and Technology (UTT) in France, the most significant problem of DS lies in "origin".
Born from the Citroën brand DS, it was originally a high-end model under the former. Liu Rui said that the success of Citroën Fukang in the early years led Chinese to set a "value ceiling" for the brand that was difficult to break. Therefore, when DS is independent from the Citroën architecture and operates independently as a high-end brand, its market persuasiveness becomes quite limited.
Citroen ZX, after its introduction to China, was named Beverly Wilshire
"This determines that the DS side needs to spend more than other new brands to build the expected brand tone." Liu Rui explained.
In addition, from Changan Peugeot Citroen to Baoneng, the change of ownership of DS's China business has also caused the market to lose stable expectations for the brand.
Infiniti's frustration was caused by many constraints caused by unreasonable corporate structure. As early as 2014, when Dongfeng and Infiniti established a joint venture, the issue of how to allocate costs has never been clarified between the two parties to the joint venture.
In the case of the unclear answer to the question of "who should pay for the upfront research and development of the product", the Nissan behind Infiniti has become less and less active in product and capital investment.
At the beginning of this year, Dongfeng Infiniti was officially included in the management system of Dongfeng Nissan, becoming the third brand under Dongfeng Nissan after Nissan and Venucia.
From an independent luxury brand to a business unit owned by Dongfeng Nissan, Infiniti's implementation of its business decisions may become more difficult after this "downgrade".
On the other hand, frequent quality problems have also disappointed Chinese consumers with Infiniti. Complaints about the abnormal sound of the transmission and brake pads, the owner forum of the brand that has long been flooded, has caused great harm to the brand image after the exposure of the CCTV 3·15 evening party in 2021.
Due to the frequent failure of the CVT gearbox, Infiniti was exposed by CCTV
"Probably because of its focus on the U.S. market, Infiniti doesn't fit our traditional perception of Japanese cars in terms of quality." An auto media person who has used Infiniti products for a long time said, "I also found that there are many small problems in The Car in the process of using the car. ”
Let's look at the jaguar situation.
Only from the perspective of sales, including domestic and imported models, although Jaguar has 6 models on sale, neither domestic nor imported models can provoke the beam of sales performance.
Behind this is a more complex issue. There are long-term negative effects such as the decline in user reputation caused by product quality defects, the brand damage caused by the price-for-volume exchange at the sales terminal, and the low retention rate of second-hand cars, as well as the lag in market decision-making caused by the game between the two sides of the joint venture, as well as the ambiguity of marketing strategies.
What is more fatal is that in the process of the jaguar brand's full transition to electrification, not only did the pilot model I-PACE not successfully open the market situation, but the CEO of Jaguar Land Rover announced at the end of 2021 that the brand will not launch new models until 2025.
Can the lack of green and yellow on the product line allow Jaguar to survive this period of intensified differentiation in the luxury car market? Undoubtedly, it has added new variables to the departure of the Jaguar brand.
Don't recommend macarons to all diners
If you want to find commonalities among these frustrated luxury brands, a set of "macaron theories" that prevail in the French chef world may give a valid clue.
"Don't recommend macarons to all diners." Since the founding of the Institut Ferrandie in Paris, the largest culinary school in Europe, in 1920, this phrase has been transmitted orally among the school's teachers and students.
As a national treasure of France, macarons are strongly sweet and heavily stylized, and do not meet everyone's tastes. At the same time, this dessert has the characteristics of complex production process, low yield and high production cost. Therefore, in the absence of certainty about diners' preferences, experienced chefs will never rush to recommend a macaron.
Macarons are not suitable for the tastes of some people due to their high sweetness
The same principle applies to luxury car brands such as Acura, DS, Infiniti and Jaguar, which are in a bad situation in China.
Taking DS as an example, the design of the model that deviates from the "Chinese aesthetic" has brought great trouble to the brand's trip to China.
Lu Shuai believes that many times, the exquisite and elaborate style carefully created by designers on the car will become a burden in turn.
"On the bright side, they have smart lines, rounded corner treatments, or meticulous interior decoration that can distinguish them from other brands at a glance." Lu Shuai explains, "But from a bad point of view, the excessive pursuit of design can easily make people overlook the engineering strengths of french cars. Especially when compared with German cars, they can be put at a disadvantage. ”
When Chinese consumers turn to the muscular feel created by lines and profiles, DS products are still rounded
Sales data has also repeatedly proved that Chinese consumers have not shown the strong interest expected by the brand for Jaguar, which is the main British style, as well as the ambiguous Acura and Infiniti of "Japanese and American identities".
From this point of view, too strong a foreign style, such as failure to effectively match the preferences of local consumers, will eventually lead to market failure.
In addition to design, the "water and soil" of such brands is also manifested in the shaping of brand influence.
According to a research report by IHS Automotive, an automotive industry consultancy on China's luxury car market, DS cars are less than 3% recognized among Chinese consumers, and fewer than 10% of users who have been interested in it will eventually choose to buy. Even in China's first-tier cities, consumer awareness of Infiniti and Jaguar remains at only about 20%.
"The vast majority of potential owners of luxury cars don't know that DS, Infiniti and Jaguar are luxury brands and have never even heard of them." Ian Fletcher, an analyst at the institution, said, "The situation is particularly serious in some less developed parts of central and western China. ”
John Humphrey, vice president of JD.Power, who has studied China's auto market, believes that the lack of effective means of publicity for such brands and the "divisiveness" between marketing and pricing strategies are the biggest reasons for this phenomenon.
Also taking DS as an example, the brand has always used words like "Charles de Gaulle's car" and "French presidential car" to enhance the brand's luxury attributes around the world. In China, people's memories of DS in brand marketing are still stuck in 2015.
At the time, the brand tried to shape the brand image of DS through film and television stars such as Sophie Marceau. However, the overly politicized brand positioning and the aging of the spokesperson make it difficult for such publicity to achieve the desired effect.
Although the "goddess" is good-looking, its influence among Chinese users is limited after all
Infiniti and Jaguar have adopted a "price for volume" business strategy for several consecutive years due to sluggish sales. This has also had a sustained negative impact on the brand image and vehicle retention rate to a certain extent.
Now that we know the problem, why don't these car brands actively adjust to the situation in the Chinese market?
Liu Rui pointed out that although the above four major brands have achieved domestic production to varying degrees, due to the limited voice of Chinese operators, the development logic of their products is still modeled on the experience of brands in the global market.
"Just as macarons are favored by diners who prefer sweetness, brands can succeed when this existing experience happens to match the situation in the Chinese market, but once they deviate from the mainstream needs of the market, they will inevitably fail." "And for brands, the act of trying their luck is undoubtedly too risky," he said. ”
On the other hand, the too small sales base also makes it more difficult for such brands to localize in the Chinese market – whether it is the localization of products, the adjustment of the Chinese market, or the introduction of new models.
"The sales of four brands such as Acura in China are basically comparable to those of some niche ultra-luxury brands, but in terms of bicycle profits, these so-called luxury brands are difficult to compare with the latter." Liu Rui analyzed.
Take Maserati, for example. According to Stellantis Group's latest annual report, in 2021, the brand delivered 24,269 new vehicles worldwide, while its adjusted operating profit was as high as 103 million euros (about 710 million yuan).
Luxury car brands like Acura are gradually finding it difficult to make money from the Chinese market, and even large-scale losses. "Correspondingly, when they need to invest additional resources in the Chinese market, decision-making becomes difficult." Liu Rui said.
As a result, a vicious circle has quietly formed in all aspects of market adaptation, brand building, product launch, sales growth and profitability, and eventually led to such brands being forced to withdraw from competition in China.
"It's like macarons are reluctant to take the initiative to improve them because of their high production costs." Liu Rui said, "When diners show signs of not liking sweetness, their only countermeasure is not to do the business." ”
Imports are still long-term torture of domestic production
It is true that the scale of China's luxury car market is still expanding year by year, but in the luxury car field that is still dominant, we also see a different picture.
According to the data of the Association, in 2021, the cumulative sales of luxury cars in China were 2.6521 million units, an increase of 4.9% year-on-year.
However, if Tesla is excluded and only the sales of traditional luxury car brands in the narrow sense are examined, then the corresponding data will drop to 2.168 million units, while there will be a year-on-year decline of 9.08%.
China's luxury car market is showing an olive-shaped distribution with two narrow ends and a wide middle. To be precise, this is an "olive" that is shrinking in size - the market space it has freed up is giving way to emerging high-end brands of smart electric vehicles such as Tesla, Weilai, and Zhiji Automobile.
A few head brands control the vast majority of market sales, and most brands will compete for the remaining small sales.
In this process of two-eight differentiation, the fierce competition for luxury cars in the second tier and below has intensified significantly. Coupled with the increasingly mature car purchase concept of Chinese consumers, the high-end product categories and choices in the market are becoming more abundant, and the lack of competitive brands is gradually "dissuaded", which will also become the result of a natural choice.
For luxury car brands operating across borders, providing targeted package solutions around the consumer needs of Chinese users is still the most effective way to enhance competitiveness at this stage.
Among them, it is particularly crucial to improve the localization rate of products and establish a reliable localization supply chain.
On the one hand, the localization of product manufacturing can accelerate the brand's response to market trends and expand the space and freedom of its product improvement; on the other hand, in the face of the complex and changeable international situation, as well as the instability brought by the public health situation to transnational trade, a higher localization rate will also enhance the brand's ability to resist risks.
Also take the Acura brand as an example. When the brand completely stopped importing cars in China in 2018, one of the reasons behind it was that the trade friction between China and the United States was showing a growing trend at that time.
As the United States unilaterally raised trade barriers, china also responded. As a result, if Honda insists on importing products into China, they will have to pass on 40 percent of the cost of tariffs ( at least a significant portion ) to Chinese customers.
For Acura, which has long been in a weak position in the Chinese market, this is obviously not a good choice.
When Honda chose to sell only domestic Acura models in China, although some parts of its products still need to be imported from the United States and subject to a 40% tariff, the price of the new model is still 20% cheaper than a 100% imported product. Although this price "concession" is not enough to save acura's fate of eventual delisting.
From this perspective, luxury brands such as Lexus, Genisesy, and Porsche, which currently only sell imported products in China, may not be able to sit back and relax in the next few years.
Although Lexus and Porsche sales in China are still strong, and Genissy also lacks reference data because it has just entered the Chinese market, the strain restrictions and cost control difficulties derived from de-localization may form a long-term obstacle to its further development in the Chinese market.
It can be seen that the delisting of Acura may trigger a domino effect. The significant commonalities of luxury brands that walk on the edge of the market also make this "to be retired" list likely to continue to expand.
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