Concern about NSX Marketing Program

Dealers striving for premiums over MSRP today reminds me of the launch of original NSX.
Initially "market premiums", then unsold inventory, then discounting.

In the big picture the biggest stakeholder in the new NSX venture is Honda with investment in the design of the car, and plant and equipment to build it.
Secondly are the customers who laid out $175 K plus on the new NSX
Thirdly are the dealers who have laid out $120K (per Hot Honda) for NSX specific service equipment.

It would seem the best thing for the stakeholders (Honda, the new customers, and the certified dealers) would be for Honda to announce shortly that the initial allocation of NSXs has been sold and no new orders are being accepted for the moment, and a new allocation will be forthcoming.

This approach would protect the value of new NSXs being manufactured beyond the initial order file, protect the investment made by initial buyers and the dealers.
In short all the stakeholders who have a vested interest in the value of the new NSX are being protected.

Dealer's playing around with premiums are effectively raising the retail price of the NSX which will reduce demand.
Reduced demand will hold back the sell out of the initial allocations.
An unsold allocation would likely result in dealers having to back off their "market adjustments" and go back to those alienated customers, trying to make a sale.

The end result, no aura of exclusivity for the new NSX, bad publicity, alienated potential customers (a boon for Porsche, Audi and so one), and ultimately a perception of an unsuccessful car.
If that point is reached Honda will not sell their planned production, prices will become soft, and all the stakeholders will lose something.

Honda Corp can survive a losing NSX and a certified dealership would only lose profit on a small volume seller plus their equipment investment.

I'd suggest the stakeholders who will take the biggest value hit, and who can least afford it, will be each new owner.
And this is the same scenario as what happened with the first NSX buyer who paid MSRP plus at the launch and took a huge value hit a few year later.

I hope I am wrong but I am seeing much more risk in purchasing a new NSX today than a month ago, and had hoped Honda would manage this launch better.

I have no use for dealers that charge over MSRP just because they can. It does leave a bad taste for the customer that they will not forget. Not exactly what you want when you hope to sell future vehicles as well as service over time. We have never charged over retail in 23+ years of selling Hondas. Of course it is a mainstream brand and not exclusive like Acura.:smug: Some of our fellow dealers did it when the S2000 came out. I don't think they did themselves any favors in the long run.

I am the vote with my feet type
When I come across a market adjustment dealer, I just move on and I cross them off the list a someone I would deal with in the future
Acura knows their dealers and knew this crap would go on so the likelihood of an early intervention is low
I do believe this stuff damages the brand and wish they put their foot down before this started
On the other hand, Acura can't even figure out what to communicate and when (like when will folks with a car on order get a test drive)

Yesterday I had a fairly pleasant chat with a local general sales manager (GSM) whose NSX rep had called me to see where I was at. Their approach is that they already ordered the first one for the store owner. For allocations after that, they would be taking the market temperature (love the language). In practice it means that they call up all the interested folks and ask them to bid how much over sticker they will go. I told the guy I had a deal at MSRP out of market and his response was, don't they have the internet (i.e. surprise that they weren't seeking a market adjustment).

I mentioned that some dealers aren't into sticking it to folks, that the Acura product line doesn't really cut it in the luxury car space and this crap hurts the brand. He didn't seem to concerned.

The original NSX wasn't a marketing failure. It was an engineering failure. The reason the first-gen NSX languished was that it was way too long in the tooth, and had nothing to do with the marketing. There is no way the NSX should have lasted that long without a significant re-design. By the year 2000, the NSX was just not competitive with any of its competitors. Hell, even the S2000 was pretty close to the performance stats of the NSX. Everyone else had upped their game and improved their models significantly, while Honda was still offering less than 300hp in a very expensive car, not to mention that it still had a tape deck, even at the end. A FUCKING TAPE DECK. There is just no excuse for what Honda did with the previous NSX.

The market adjustments of the current NSX are just that. It is a capitalistic market and the price will fluctuate until demand meets supply. It happens to pretty much every anticipated product, not just the NSX, and hasn't hurt any long-term sales. Those who charge too much for the initial NSX will soon find out what the market will bear. I don't know why people take it so personally, it is just business. After all, should the dealer get insulted and kick you out of the store just because you offer a price below MSRP on other cars?

Olyar15 said:

The original NSX wasn't a marketing failure. The market adjustments of the current NSX are just that. It is a capitalistic market and the price will fluctuate until demand meets supply. business. After all, should the dealer get insulted and kick you out of the store just because you offer a price below MSRP on other cars?

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I'm only referring to the 91 NSX launch period when the initial cars were sold at MSRP plus, and the original owners who paid a premium were shortly after were confronted by the same dealers discounting prices due to oversupply. I'm not talking about the later years.

Nor am I referring to a Honda Civic or entry level Chevrolet where bargaining below MSRP has been expected and accepted for a long time.
I do get that an Acura dealer wheeling and dealing below MSRP on ILXs, TLXs and so on sees a chance to sell at over MSRP in a new model and wants to get the max for it.

But in the special market segment of exotic cars is this the norm?
In my experience is there's a different standard in place.

I'd expect one of Honda's key yardsticks of a successful NSX launch will be a full order file.
That means the factory runs at the lowest possible cost, demand exceeds supply keeping a wait list, and a chance to raise the price to the factory over time.
I'd think a successful launch of a new halo car is a key part of the Honda re-launch of the Acura/Honda brand worldwide.
One of the reasons Honda is back in F1.
All part of a corporate re-branding that seems to be going on at the moment with product and personnel

If the NSX doesn't sell out the factory capacity what does Honda do?
Decide the car was wrong?
Or at the wrong price point?
Run the factory at lower than capacity at a high cost?
Cut the price to sell more cars?
What does discounting do to the NSX image?
Conclude the car is not a success?

These are pretty big issues with millions at stake for Honda/Acura on their a halo car when they're trying to re-market their corporate brand.

There's been lots of talk on these forums by many saying the NSX at MSRP is overpriced, never mind at above MSRP
And many have said they'll wait until the price comes down.
I'd say the consensus is it'll be a stretch for Honda to sell the NSX at MSRP levels over the longer period.

So while I understand some dealers may want to maximize their profit on an allocation of half a dozen cars in the finest capitalist fashion, is their approach fitting in Honda's overall scheme?
Is their short term approach is costing Honda orders and goodwill?
Do you think dealers are doing Honda a service or disservice by trying to maximize the return on their initial handful of cars?

Can you name a single highly-anticipated car that wasn't marked up at the beginning?

Keep in mind that the dealership is the car manufacturer's customer. And the car buyer is the dealership's customer. Also, in the US at least, the relationship between dealer and manufacturer is set out in franchise laws. These vary by state, but the main principles are probably the same. As a result, there isn't much that car companies can do to prevent dealers marking up prices. And I don't think it will hurt either the car company or the dealer at all. Sure, some people will avoid dealers that mark up prices, and if enough people walk away, they would be forced to lower prices. And some people will always be willing to pay more to be the first to own.

Also, the car isn't really financially important to Honda. It is a Halo car, and apart from being able to put it in commercials, will not have a significant impact on Honda's bottom line. It may get people into dealerships, but anyone shopping for an MDX or TLX will probably not be interested in the NSX.

JD Cross said:

...Decide the car was wrong?
Or at the wrong price point?
Run the factory at lower than capacity at a high cost?
Cut the price to sell more cars?
What does discounting do to the NSX image?
Conclude the car is not a success?

Click to expand...

I'd like to add another question, specifically regarding price point, to all of these which I think are great and important. The technology is there, the looks are there (for many), the performance is there (we believe) but another question that I think should be asked is if the brand is there...meaning can the brand support it (the price point).

Every brand has a min and a max that it can support. From toothpaste to a Rolex to a car. If you go too low you will hurt the perception of your high end products, if you go too high you risk pricing yourself out of the market in which your brand products can definitively support.

In the early 90's when the original NSX came out, their highest priced model (Legend) MSRP was close to $30K ($26,800). Double that...and their brand was able to support the msrp of the NSX ($60,600). And we all saw how dealerships were able to cash-in with that price point platform in the beginning. Fast forward to today, if I'm not mistaken Acura's highest priced model MSRP is $65950 (RLX). Double that and you're at $132,000.

Motortrend had an article in Feb 2, 2012 reporting that the 2015 NSX would do 0-60 in 3.0, have a weight of 3100lbs, and was going to cost $130,000 (link). Obviously, some things changed:wink:.

Instead now triple the RLX amount and you are just shy of $200K which a lot of configurator builds on the Gen 2 have been hovering around at. Can their brand really support long term a product 3 times higher than any other offering they have? In toothpaste dollars, Crest's most expensive product is around $13 bucks for their [HD] Pro Health something or another. Is Crest really that fancy of a brand that they can sell you a tube of tube of toothpaste for $39 dollars? Would you buy Crest at that price point? On the other hand, Theodent 300 is able to sell tubes of toothpaste for $100bucks because their brand supports that. But back to cars, now in all fairness a 2005 NSX msrp was $89,000. Double that and you're at $180K. How does that number look? I'm not saying the current Gen 2 should sell for that I'm just posing the question that, should Acura have made the absolute best car they could have made for that amount to stay within what could be their current brand reach/limit? They still have to prove themselves in this competition genre because they've been outta the game for a decade.

Another example of this was the VW phaeton. In the early 2000's VW was doing quite well and wanted to compete in the prestige market (BMW & Mercedes) since they (B & M) were expanding downwards into VW's market. They made a beautiful car with incredible leg room with all the bells and whistles. I've already mentioned this in another thread but I'd like to mention it here again that in all their at-the-time grandeur, VW ignored that brand affluence can only trickle down, so BMW and Mercedes would become the winners in their market expansion into the economy class and VW's phaeton went down as the loser in the prestige class. So much so that it is considered as being one of Europe's biggest loss-makers in the entire auto industry. As much as we don't like it, Acura is pretty much in that same boat positionally because they are asking/assuming/hoping that their brand can trickle upwards from $89,000 to $200,000 in just one move. It takes everyone else years of repeated performance and lots of "good moves" that are consistent to build the perception of their brand and ultimately demand and sustain a higher price point.

My concern boils down to this, like the Casey Anthony trial where the prosecuting attorneys were too ambitious, over reached and took a big risk by going for the capital one murder charge, they lost and ended up with nothing. Did Acura go too far in bumping up everything to the point where they had to go for the $200K mark? Would it have been better to first achieve some sustainable success at somewhere between $130K to $180K before busting out the big guns? Perhaps they believe they really don't have the luxury of time to work through all that so it had to be go big or go home.

The current car's price point won't be and isn't really what's at fault, rather it's a result and really more of a question of how they got there that might be.

My sense is that the price point is ok.

This car will be sold to a lot of folks who are not current exotic car customers but have the financials to be.

I believe that like myself there is a rich pocket of Americans who liked the original NSX, couldn't afford it when it came out and as their incomes grew, lost interest in it because the car was not supported (as has been mentioned so many times).

Now we have the gen 2 car and the economically advantaged folks ready for it.

Plus we have the I gotta have the newest thing folks and the I am so fed up with reliability/dealer/cost of upkeep/lack of consumer support/etc.. baggage from the current exotic brands to bring people in to order.

Some of the current problem is that you can't just come in and order a car. Acura should allow customers to spec/place a deposit/ and then get into a simple to understand line (ex. yours is the 853rd car on order and we will deliver it to you in 13 months).

What brand of toothpaste does Casey Anthony use, I wonder?

vf2ss

Bob, well thought out comments on this and other new NSX threads.
I learn from your opinions.

At this point there is still a lot we don't know about the new NSX.
However we do know Ted Klaus, Michelle Christensen, and the rest of the NSX team are first rate people.
And I believe they have delivered a first rate car.

The marketing and selling are the responsibility of others and let's hope they get that job done.
Would like to hear in the near future the first year NSX allocation is fully subscribed at whatever prices buyers end up paying.
That would give the car a solid start and the new NSX would be on its way to becoming an established marque in the exotic car marketplace.

The scenario was a little bit different back in the 90ies than nowadays. The first NSX was built in Japan while the 2.0 is built in the US. They can cut the supply more easily in the later case. So they are likely to produce as much cars as demanded with a price at or above MSRP.
The main problem of the first NSX was that it came out when the Japanese economic bubble bursted shortly afterwards and the world economic went into recession. Today with QE the economy is running well (but the question is for how long...).

If you want to be one of the first buyers: noone forces you to buy an NSX. It's up to you if you if you are willing to pay a premium. There are some people who wait for the second batch and some for the used cars.

This is valid for the US. In Europe and maybe the rest of the world the NSX 2.0 will be sold in hoeopathic doses and if I read of dealer investments of 120k in tools...there will be very, very few dealers in Europe who are willing to invest this kind of amount just to sell 2 or 3 cars...

After I purchased my 1st NSX in 1994, my car friends thought I was crazy.

This opinion continued throughout all my time with the NSX.

Best kept secret in sports cars for their day.

This 1991 marketing video w/ James Coburn narration sold me after a test drive:

https://www.youtube.com/watch?v=5v7F0UPredI

JD Cross said:

Dealers striving for premiums over MSRP today reminds me of the launch of original NSX.
Initially "market premiums", then unsold inventory, then discounting.

In the big picture the biggest stakeholder in the new NSX venture is Honda with investment in the design of the car, and plant and equipment to build it.
Secondly are the customers who laid out $175 K plus on the new NSX
Thirdly are the dealers who have laid out $120K (per Hot Honda) for NSX specific service equipment.

It would seem the best thing for the stakeholders (Honda, the new customers, and the certified dealers) would be for Honda to announce shortly that the initial allocation of NSXs has been sold and no new orders are being accepted for the moment, and a new allocation will be forthcoming.

This approach would protect the value of new NSXs being manufactured beyond the initial order file, protect the investment made by initial buyers and the dealers.
In short all the stakeholders who have a vested interest in the value of the new NSX are being protected.

Click to expand...

I think Honda and the dealers who signed up to support the new NSX know exactly what they are doing. I'm sure this has been debated quite a bit all through Honda.

If Honda did as you proposed, it would really only help those initial buyers (as you noted).

If you want to be one of the first to drive around in a new NSX, you've gotta pay to play. I think anybody willing to shell out $250k for a car understands that. If people are stressing about the markups or if the car is a wise financial decision, then it is probably best to wait.

I think Honda could help their image though on their halo car by doing some kind of special delivery program (or at least the option to), maybe give some kind of iPad with the car describing the features or having the owners manual on it (like Hyundai), giving it a better keyfob, having the car personally greet you as you settle into the drivers seat (Good evening, Dave), or a bunch of other little personal touches.

I would also like to see HPD do some kind of factory-supported mods (the exhaust note sounds terrible and it is obvious the thing doesn't have a high redline). SOMETHING to keep owners interested.

As it is now, I have a 2015 MDX with corroded chrome door handles dripping rust down my doors, rattles galore, ill-fitting interior pieces, weird noises from the electric steering and SH-AWD system, occasional farting noises from the VCM system, bad TPMS sensors, wacky infotainment system, etc. There is no way I am going to take a chance on a $250k version of a Honda, now or in the future when it is out of warranty.

Dave

Olyar15 said:

Can you name a single highly-anticipated car that wasn't marked up at the beginning?

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The C7 Z06.

Several national dealers (with Kerbeck being the biggest) took orders at MSRP from the first day orders were accepted by factory. Hundreds of the first cars were sold at MSRP. You take physical delivery at a local dealer and pay a couple hundred bucks for courtesy/paperwork fee to avoid re-registering the car in your home state.

To be sure, cars on showroom floors in big cities were getting premiums, but not ordered cars.

I also took delivery of a BMW M5 (F10) on the first day available in US for ~10% under MSRP (but i had to pick up the car in Munich, so not sure if you would count that).

Anyway, the point is that virtually all *custom-ordered* cars are available at MSRP. Maybe Ferrari is the main exception to this rule. I can't think of any <$200K cars not available at MSRP. My local dealer is taking orders for the 570S at MSRP, for example.

And yet a google search for c7 z06 price gouging turned up multiple examples of dealers adding a markup to the car, just like the NSX. Fact is, in the US, the dealers can charge anything they like, and there is little that the manufacturer can do, other than cut allocations. Just like there are dealers that are selling the NSX at MSRP, there are dealers that are willing to sell other anticipated cars at MSRP. So how is that any different?

Maybe no difference at all. I'm just pointing out my personal experience that it's pretty easy to find dealers to take orders at MSRP, but hard to buy a car off the lot for MSRP when model is new/hot/scarce. That's all. You asked for examples of hot new cars available at MSRP (without markup). I provided some.

I'm getting my local dealer's first allocation NSX at MSRP. I live in the SF Bay Area-- a top market for high mark-ups, believe me. If an NSX shows up available in a showroom here in next six months, I'm sure they will ask a premium.

When I picked up my Z06 (early car, MSRP) from the delivering dealer, he had another on the floor and was asking $25K over.

So perhaps the difference is that people (but not me-- maybe I'm lucky) seem to be having problems custom ordering a NSX for MSRP. That part seems weird.

Agree that dealers can do what they want, which I have no problem with--- I've paid premiums in the past (but mostly regretted it).

Actually, you didn't. The cars you mentioned were subject to dealer markup. I never said that it was impossible to find SOME dealers that weren't marking up cars, just like there are some Acura dealers that are selling the NSX at MSRP, there will be some dealers that will sell hotly anticipated cars for MSRP. It's just that, at least in the US, the dealers are independent franchises and ultimately can ask for any price they want. Doesn't mean they will sell it at that price, but they are free to ask any price. Also, the demand will depend on the location. Certain areas contain wealthier clients and some of them are willing to pay a premium.

Ok. I didn't claim that ALL cars were offered at MSRP. I guess you're saying that you didn't claim that NO cars were available at MSRP. That's fine.

Let's agree on one thing: hopefully the new NSX will be *WORTH* its MSRP.

Dealers selling floor models for premiums rely primarily on uninformed and/or impulsive/impatient buyers. Unfortunately, there are many such buyers in my neck of the woods.

As others have observed, there is a significant regional component -- dealers in Southern California and Florida price their floor models much differently than dealers in Memphis and Salt Lake City. In fact, dealers in Southern California and Florida often buy cars from dealers in the mid-west, and re-sell them for premiums.

I just priced the new R8 . . . two local dealers with inbound cars (likely May delivery due a port hold) want $25k and $35k over MSRP. On the other hand, I was able to order a car for a June delivery at MSRP. I had a similar experience with the MB GT-S. A dealer with two floor models priced well over MSRP offered to order me a car at MSRP. Ditto the C7ZO6. I visited a BMW dealer a while back, and they had a floor model M6 priced over MSRP (even though the current model M6 has been available for a few years). I had to travel 500 miles to find a dealer willing to sell me a floor model GT-R at MSRP, and that was several years after the car had been released. When I purchased my 996TT -- approximately a year after the car was released -- there were no floor models and a nine month wait for an ordered car. Most dealers wanted premiums, but MSRP was available to those willing to make a few calls.

There will be few, if any, NSX floor models for well over a year. Therefore, a greater percentage of dealers are demanding premiums for ordered cars. Many mid-west dealers are being buoyed by nationwide shoppers. A somewhat local dealer recently offered me its first allocation for "only" $20k over MRSP, noting that all other nearby dealers are asking $40k+ over MSRP. The fact that dealers must invest a considerable amount of money to become NSX certified compounds the problem (particularly if they only have a couple of allocations for the first year).

As much as I hate premiums for new cars, and refuse to pay a premium, the practice is not unconscionable. Rather, the practice is dictated by supply and demand.

Of course, the pricing game does not end at MSRP. Those who are even more patient will likely be able to buy a NSX at a discount. Thus, for those who are wildly impatient, early cars can be purchased for a premium. Those with a little more patience and/or who are willing for work a bit harder can buy the car at MSRP, and those with the most patience will have the last laugh when they buy the same car at a discount. I fall somewhere in the middle.

I find it interesting to spectate the balance between patient and passionate/needy buyers. If one is patient enough, one can buy almost anything for a lower price. The rarity factor is the only factor that could truly upset this virtue.

This is a not a Corvette or 911 high volume sales car. It's exotic level supercar based upon looks and limited production volume. One will have to pay an extra premium(either by ~retail or upcharge) for the particular specs you want and not just get lucky when stepping on the lot to find one unsold already speced to one's personal taste.

I think that will be the ultimate deciding factor of commanding premiums or discounted unsold volumes in the upcoming years of NSX sales.

At this point, it seems like the only way to have inventory pile up is for a dealer to order a car, take delivery themselves and repeat (i.e. becoming their own repeat customer)

chrisn said:

The C7 Z06.

Several national dealers (with Kerbeck being the biggest) took orders at MSRP from the first day orders were accepted by factory. Hundreds of the first cars were sold at MSRP. You take physical delivery at a local dealer and pay a couple hundred bucks for courtesy/paperwork fee to avoid re-registering the car in your home state.

To be sure, cars on showroom floors in big cities were getting premiums, but not ordered cars.

I also took delivery of a BMW M5 (F10) on the first day available in US for ~10% under MSRP (but i had to pick up the car in Munich, so not sure if you would count that).

Anyway, the point is that virtually all *custom-ordered* cars are available at MSRP. Maybe Ferrari is the main exception to this rule. I can't think of any <$200K cars not available at MSRP. My local dealer is taking orders for the 570S at MSRP, for example.

Click to expand...

Ferraris are ordered and sold by North American dealers at MSRP....

lee168 said:

Ferraris are ordered and sold by North American dealers at MSRP....

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Ha ha. Fair enough-- as long as you find one willing to take your order for delivery in the reasonable future. I suppose not totally unlike the NSX situation in theory, and yet still a bit different in practice.

Maybe I'm just lucky, but I made five phone calls (several months ago) and found a local (SF bay Area) dealer willing to sell me their first NSX slot at MSRP. And no one laughed at me. Somehow I think if I made five calls to inquire about getting a 488 at MSRP for summer delivery I would get five chuckles along with five friendly offers to sell me a low mileage used 458 for very close (or above) MSRP.

Bricks and Bio said:

At this point, it seems like the only way to have inventory pile up is for a dealer to order a car, take delivery themselves and repeat (i.e. becoming their own repeat customer)

Click to expand...

My understanding is each NSX is being built for a named customer not a dealership.
If a dealership wants an NSX for the showroom I think that means an order must be bought by someone like a dealership owner or dealership employee.
Once delivered the NSX could be resold to the dealership itself and put on the showroom floor.

I believe dealerships buy cars from manufacturers without state and local taxes but not sure if this applies to cars bought in an owner's name.
If the taxes aren't avoidable the resale prices would need to cover those extra costs, which may not be a problem if supply is tight.

↑↑↑↑↑↑ mindset that creates flipper dealers & more ADM (if they can get it) .