Acura 25 years of Innovation

03/29/2011
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TORRANCE, Calif.

ACURA HISTORY

As Acura celebrates its 25th anniversary, it stands as a leader in
the luxury performance market with vehicles like the RL, TL, TSX, RDX,
MDX and ZDX. By combining technological innovation with world-class
performance, contemporary design and luxurious appointments, Acura has
captured the public's imagination.

The story of how Acura was created, launched and then grew into a
major force in a competitive marketplace is a compelling testament not
just to the company's products, but to the people who had the foresight
to establish the first premium Japanese luxury car brand. History shows
that Acura not only redefined the luxury car, it permanently changed the
luxury marketplace from a slow evolution among a handful of brands to
fierce competition between many. While today Japanese luxury brands are
taken for granted, this was not the case in the early 1980s, when the
groundbreaking Legend sedan was still on the drawing board.

The Acura Plan

The early 1980s were a tumultuous time for the U.S. car market. Gas
shortages, economic malaise and new government regulations from the
1970s caused an upheaval in the public's buying habits and the products
available to the public changed dramatically. Small was big and Japanese
manufacturers such as Honda had forged reputations of reliability,
economical operation and low price that were the envy of many
competitors. Even the least expensive Honda offered a unique and fun
driving experience, and the company's reputation for reliability was
second to none. Honda had also established a record of technological
innovation (such as the CVCC engine) that consumers embraced— and that
sent competitors back to the drawing boards.

The success Honda had enjoyed was emblematic of these changes. With
the right product (the groundbreaking Civic) at the right time (the gas
crisis of the early 70s), Honda sales growth had been phenomenal.
Subsequent models such as the Accord and Prelude proved Honda had more
than just good timing going for it. Following its philosophy of
assembling cars where it sells them, Honda embarked on an ambitious plan
to begin assembling cars in the United States and broke ground on a new
plant in Ohio in 1980.

As work began on the Marysville, Ohio manufacturing plant, there were
signs of change in the car market. The economy was improving, and
luxury cars were starting to increase in sales volume. Manufacturers
such as BMW, Mercedes-Benz and Audi captured the public's eye with
aerodynamic designs that eschewed the chrome and excess of American
luxury cars of the 1960s and 1970s. With a blend of luxury and
performance, European manufacturers began to chip away at the high end
of the market as America's middle class expanded and found themselves
with more discretionary income than they could have dreamed of a few
years earlier.

Many of these young professionals drove Honda cars when they were
young, but as their income grew, Honda did not have a more premium
vehicle for them to move up to. Special Edition Accords featured leather
seats, but even these limited-edition models couldn't qualify as a
luxury car. Instead, Honda owners seeking bigger, more luxurious and
more powerful cars were leaving Honda for Mercedes-Benz, BMW, Audi and
other European luxury brands.

In 1981, Honda had a new, larger sedan in the early planning stages.
It would be bigger than the Accord by a wide margin, feature the first
Honda V-6 engine, and be loaded with luxury appointments. It would be
sold not on the merits of its economy, but on its ability to thrill its
driver. Honda executives viewed it as the perfect vehicle to keep
upmarket intenders in the Honda family.

But there was a problem. While the buying public had accepted
Japanese nameplates for their reliability and economy, luxury was
another matter. Conventional wisdom said that an economy car
manufacturer trying to take on the best from Europe was folly. However,
Honda, more than any other car company, had found success by defying
conventional wisdom.

"Channel II"

At the time that Honda was planning its move upmarket, there was little
in its product lineup that foreshadowed success. With just three cars –
the Civic, Accord and Prelude – it wasn't even a full line manufacturer.
While popular with both the public and media, all of its cars were
still clearly intended for the budget conscious. Prices were affordable,
and even the most expensive Accord sold for well below $20,000. Basic
luxury features, such as power windows and leather upholstery, were in
short supply in Honda products. While nobody disputed that Honda built
excellent vehicles, few thought it had the luxury credentials to compete
with the likes of Europe's luxury brands.

The new Honda sedan, later to be named Legend, was known internally
as the HX. Under the guidance of Tom Elliott, senior vice president of
automobile operations, the HX would become the cornerstone of a luxury
car division to compete with the likes of Volvo, BMW and others. The
HX's 24-valve fuel injected V-6 engine was powerful and sophisticated.
Its independent suspension and four-wheel disc brakes promised the
handling of a European sport sedan, but with the compliant ride expected
of luxury car buyers. And it would boast equipment such as a premium
stereo, air conditioning, anti-lock brakes and power accessories. It
would also cost nearly $20,000, almost twice as much as the base price
of an Accord in the early 80s.

The problem of selling such an expensive car through Honda
dealerships was obvious. Not only would it overextend the already busy
dealers (which sold on average 600 cars a year), customers would likely
balk at the idea of such an expensive car wearing a Honda badge.
Ultimately, Honda executives decided that the HX was simply too large
and expensive to be sold alongside Civics.

Instead, a new division would be created, one tailored to the needs
and wants of luxury buyers. It would be entirely separate from Honda,
with unique dealerships, first-class customer service and a sales
experience that would be second to none. The Honda division would meet
the needs of the mass market that shopped for value. The new division
would cater to luxury and performance. Internally, the new division
became known as Channel II.

The idea of launching the world's first Japanese luxury brand was a
gamble. Launching it with only one vehicle – and an expensive one at
that – was too risky, so another vehicle was needed to fit below the HX,
but without diluting the luxury and performance image that Channel II
would ultimately have. Luckily, a solution was found in the
Japanese-market Quint-Integra. With a fuel-injected, twin-cam 16-valve
four-cylinder engine, sophisticated chassis tuning and eye-catching
style, the Integra, was designed to put premium sporty coupes such as
the Volkswagen GTI on notice. Its style, technology and performance
complemented the HX and the new division.

Later, there were plans for a third car, one that would take on one
of the most prestigious and challenging markets in existence: exotic
sports cars.

In February 1984, American Honda confirmed its upmarket intentions.
Channel II had been the subject of much speculation by the media, and
not all of it charitable. Some pundits regarded the idea of a Japanese
luxury brand – especially one from a company known mostly for
fuel-efficient transportation – as overreaching at best.

Despite media speculation, work continued. It was important to keep
the new division as separate from Honda as possible. This meant new
dealerships, new service and parts divisions, new sales and marketing …
everything. Developing the sales network fell to Ed Taylor, assistant
vice president of the new division. Honda boasted an image that appealed
primarily to those looking to maximize their dollars. The new division
was aimed at European luxury intenders. This meant that dealerships
would have to extend a level of customer service expected by a luxury
car buyer, and go beyond even that to convince buyers that they were
buying more than just an expensive Honda. Paul Pugh, manager of auto
field service, handled the creation of the new service network.

The new division needed a name, and the task of naming Channel II
fell to Ira Bachrach's Namelab in San Francisco, Calif. The challenge
was to create a name that would convey the image and style for which the
upscale division would be known. And in September 1984, the new name
was officially announced: Acura. The name was derived from "acu," a form
from Latin, meaning mechanically precise or done with precision.

In November 1984, potential dealers were gathered for a secret
meeting at the Anatole hotel in Dallas. American Honda executives
Schmillen, Elliott, Taylor, Pugh and American Honda president Yoshihide
Munekuni explained the dealership plan for the first time. The new
dealerships had to be separate facilities from existing Honda
dealerships, and couldn't even be adjacent to them. They would also have
a distinct look and feel separate from that of Honda dealerships.

But there was more in store for the lucky few in attendance that day.
For the first time, people outside Honda headquarters would see the HX
and Integra. Reaction to the plan was mixed. While the cars themselves
were universally well regarded, Honda was a popular brand, and some
dealers thought that any car made by Honda should be available through
Honda dealerships. However, many more saw the wisdom of separating the
new cars into a new division with a new image.

When dealership selection began in February 1985, the criteria were
strict. Potential dealers had to have the capital to afford the
construction of a new dealership. Acura management insisted that they be
located in key markets, such as Los Angeles, New York, Seattle and
others around the country where luxury sales were strong.

Acura would introduce new technologies to existing Honda service
managers, and Pugh established new service training centers in Los
Angeles, Atlanta and New Jersey. Hired in September 1985, service
managers had only a few months to master new Acura technology before the
cars went on sale at the end of March 1986. And there was a lot of new
technology to cover. Not only did Acura feature two completely new
engines, including the company's first V-6, but electronic fuel
injection, four-wheel disc brakes, double overhead cams and other new
technologies would also be standard on all the cars.

As Taylor and Pugh established the dealer, sales and service
networks, the newly formed Honda public relations department invited a
select group of journalists to Japan for a first look at the cars in
November 1985. At the Honda test track in Tochigi, the media were able
to drive the Legend and Integra for the first time, and learn the
difference between the Honda and Acura products.

The proof was in the driving. While some popular media still
expressed skepticism about the viability of a Japanese luxury brand, Motor Trend disagreed,
saying, "We think the odds of Acura's success are heavily in Honda's
favor, for the Legend is a terrific debut automobile." Everyone who
drove the Legend noted that the new sedan was not a copy of a European
or American luxury car, nor was it a repeat of larger sedan models sold
by Toyota and Nissan at the time. "It is, in truth, a new approach to
the market," said Car and Driver. Praise was equally glowing
for the Integra. "The Integra falls right into the hotbed of intriguing
fun cars priced just a bit over $10,000, and we don't see how it can
lose," said Car and Driver.

On March 27, 1986, the public finally got to see for themselves what
the automotive media meant. When the first 60 Acura dealerships opened,
it marked a turning point in the luxury car market. From that point on,
luxury benchmarks would not automatically carry a European nameplate.

The Early Years

When the first Acuras went on sale, doubt still ran rampant among the
general media and Acura competitors. On the day Acura opened its doors,
Schmillen appeared in a now-famous joint interview on NBC's Today Show
with the then-president of Volvo North America, who summed up most
European manufacturer's attitudes to Acura: "With all due respect to the
tremendous quality of low-priced Japanese automobiles," he said, "I
don't think they will ever be able to penetrate the U.S. luxury market."
Schmillen remained unflappable. "We weren't even in this market 15
years ago, and we've come from nothing to half a million, and we think
we can continue to keep that trend going," he said.

History proved Schmillen right. By the end of its first year, Acura
had sold 52,869 cars and had grown to 150 dealers. In 1987, sales
continued to climb, and Acura posted sales of 109,470 vehicles for the
1987 calendar year. Not only was this double the previous year's total,
it surpassed every European luxury-performance nameplate in the United
States including Volvo, silencing even the harshest critics, and proving
unequivocally that Acura was a major player in the luxury car market.

Advertising for the Acura line was aggressive, with a look and feel
separate and distinctive from Honda advertising. Acura was unafraid to
compare itself with the best European brands. The emphasis was on
performance and luxury, and the company slogan of "Precision Crafted
Performance" was backed up with a strong link between Acura and the
Honda Formula One teams.

By the end of 1987 Acura had established its luxury car credentials
with an award-winning lineup of sedans and coupes. The Legend and
Integra had won comparison test after comparison test, proving the cars'
mettle to even the harshest critics. Accolades mounted; the Integra and
classic Legend Coupe – added to the lineup in 1987 – were voted onto Car and Driver's 10 Best list, the Legend Coupe was voted Motor Trend's 1987 Import Car of the Year, and Road and Track selected the Legend Coupe as one of the 10 best cars in the world.

Perhaps the most significant indication of the new division's success
came late in 1987, when both Toyota and Nissan announced plans to add
their own luxury divisions.

The Challenging 90s

As the 1980s gave way to the 1990s, Acura continued to make waves.
Acura continually topped JD Power's Customer Satisfaction Index Survey,
the Legend Coupe remained on Car and Driver's 10 Best list, and sales continued to climb.

At the Chicago Auto Show in 1989, Acura unveiled its crown jewel, the
third car in its tri-product approach to the luxury market. Having
proved it could compete with the world's best luxury cars, Acura took on
the rarified realm of exotics with the all-new NSX. The new exotic
showcased Acura technological leadership. It boasted the first
mass-produced aluminum monocoque body, the first engine with electronic
variable valve timing and lift (VTEC®), and the first production engine
with titanium connecting rods.

When the media was finally able to drive production versions of the
NSX, the car's technological specifications and world-class performance
would have garnered accolades by themselves. But what made the NSX
special was its undemanding personality. After crowning the NSX the
winner of a five-exotic comparison test, Car and Driver said,
"The winning NSX has it all: stunning looks, a comfortable and inviting
cockpit, a rev-forever engine that's perfectly happy motoring around
town, and confidence-inspiring handling." Motor Trend put it more simply, proclaiming that the NSX was "the best sports car ever built."

Acura hadn't sat still with its core products either. While the
Legend and Integra had helped redefine their segments and were still
strong sellers, both were redesigned in the early 1990s. The 1990
Integra was larger, boasted a more powerful engine, more luxurious
interior and more refined ride and handling. It was followed in 1991 by a
larger, more powerful and more luxurious Legend sedan and coupe. The
new Legend solidified the model's place in the luxury market and helped
it maintain its lead as the best-selling luxury import model in the
United States for six consecutive years. Both cars expanded Acura luxury
credentials without diminishing the company's slogan.

In 1990, when the NSX debuted, the Acura badge appeared on cars for
the first time. It was designed to represent a set of mechanical
calipers, signifying the precision and attention to detail with which
Acura products were made.

But by the early 1990s the luxury market had changed once again.
Toyota and Nissan introduced new challengers in 1990, and established
European players had realized that both their product and pricing had to
change to meet the new Japanese competition. The American economy was
facing yet another recession, and the yen had grown so strong against
the dollar that the price advantage Japanese cars had traditionally
enjoyed all but vanished. As a worldwide economic downturn took hold,
the luxury car market began to contract, leaving all manufacturers with
declining sales.

Acura was well prepared for these events, and remained a major force
in the luxury segment with its core products. Despite the new models and
subsequent critical acclaim, Acura wasn't immune to the economic
realities of the time.

Acura responded to the harsh reality of yen fluctuations in a unique
manner. It insulated itself from the currency market by assembling some
of its cars in the United States, becoming the first import luxury brand
to do so. The first car designed, engineered and assembled in the
United States was the 1997 2.2CL coupe, which was quickly followed by
the V-6-powered 3.0CL. As Acura sales began to climb in the latter half
of the decade, U.S. production increased, and by 1999 more than half of
all Acura vehicles sold domestically were assembled in the U.S.

Acura also began to expand its product lineup. The Vigor was
introduced in 1992, filling a gap in price and size between the Integra
and Legend. As Acura began to shift its models to alphanumeric naming,
the Vigor was succeeded by the TL series. In 1994, a new Integra was
introduced that became a perennial Car and Driver 10 Best
winner, and solidified Acura in the sporty coupe market. The Legend was
replaced by the RL, which moved Acura's flagship considerably upmarket
with innovative features such as the first touch-screen satellite-linked
navigation system. Acura was also on the leading edge of the burgeoning
luxury sport utility market, with the 1996 introduction of the SLX, the
first sport utility from a luxury manufacturer.

Acura continued its technological leadership. VTEC, which was
introduced on the NSX, quickly found its way to the rest of the lineup.
The 1992 Integra GS-R, 1997 CL and the 1999 TL all used VTEC®. Today,
all Acura engines feature the VTEC® technology. Acura also blazed the
trail with navigation systems. Introduced on the '96 RL and improved
over successive generations, Acura continues to lead the category with a
GPS system that is acknowledged as the class leader.

The New Millennium

In the latter half of the 90s, the stock market was booming, the
Internet was a growing economic reality, and technology was working its
way into everyday life like never before. Luxury car sales were
increasing, and by mid-decade Acura sales were climbing again.

With a solid reputation for technological innovation, Acura was
poised to redefine itself in the crowded luxury marketplace in a way
that would connect with a tech-savvy public. The first example of the
reinvigorated spirit at Acura was the 1999 TL. Like the CL before it,
the TL was completely designed, developed and assembled in the United
States. It boasted a long list of standard features. The only option was
a DVD-based navigation system. The new TL was an immediate hit with the
public and the press, and became the best selling car in its class for
three consecutive years. A year later a redesigned CL coupe followed the
TL to critical acclaim. It upped the ante as well, offering a Type-S
version that featured a 260 horsepower V-6 engine and sport-tuned
suspension.

In 2001, Acura again raised the bar with the MDX, its first SUV
designed and developed completely in-house. As yet another product
developed in the U.S., the MDX was an immediate success. Motor Trend named it Sport Utility of the Year, it was voted North American Truck of the Year, and Car and Driver named it the winner of the Luxury SUV category in its 5 Best Trucks competition.

The Acura reputation for innovation expanded with the MDX. The
navigation system was the industry benchmark. Its third row seat folded
flat into the floor, a feature that competitors simply didn't offer.
Variable Torque Management four-wheel drive gave the MDX off-road
prowess without sacrificing on-road capability. It was also the first
luxury SUV to meet ULEV (ultra low emissions vehicle) standards.

When the CL was introduced in 1997, it marked the beginning of a new
era in Acura's history. Designed, engineered and assembled in the United
States, the CL set a precedent for future Acura models. The 1999 TL was
the second Acura product assembled in the United States, and was
quickly followed by the MDX sport utility in 2001, which is assembled in
Alliston, Ontario by Honda of Canada Manufacturing. Today, the TL and
MDX continue to be assembled in North America, along with RDX luxury
crossover SUV and the ZDX four-door sports coupe. In 2010, nearly three
quarters of the vehicles sold by Acura were assembled in North America.

Driver involvement was an important part of the Acura formula. By the
2002 model year, the TL and CL were both available in Type-S editions
that boasted a more powerful engine, sport-tuned suspensions and, in the
case of the CL Type-S, an available 6-speed manual transmission and
helical limited slip differential that Car and Driver said "closes the front-drive versus rear-drive gap by a bunch."

The public responded strongly to the Acura combination of high-tech
and driving pleasure. In 2001, Acura posted year-end sales of 170,469,
shattering the previous record set in 1991. And despite a short-lived
economic downturn in the beginning of the new century, Acura sales
remained strong, proving the value of its strategy of assembling cars in
the United States.

Second-Generation Acuras

An all-new second-generation TL debuted as 2004 model. Even more
packed with luxury features than the original, the new TL introduced Bluetooth®
HandsFreeLink®, DVD-Audio (DVD-A) and a remarkable 10-speaker Acura/ELS
Surround® Premium Audio System to the luxury ranks. Also for 2004,
Acura launched the sleek TSX sports sedan that was designed and targeted
for Gen X, but proved to have a broad appeal in the luxury market.

Following up the launch of the advanced new TL, Acura followed with
an all-new second-generation 2005 RL. Strong and sophisticated, the
Acura flagship sedan turned heads with the most powerful Acura engine
ever. It also included groundbreaking Super Handling All-Wheel Drive™
(SH-AWD®), a Zagat Survey® feature for the navigation system, Bose®
Surround Sound audio system and a full AcuraLink® suite, plus a host of
other amenities.

For 2007, the all-new 5-passenger RDX hit the streets with futuristic
technology, performance and utility all wrapped into a "right-sized"
package. Features included a turbocharged engine (a first for a
production Acura) and standard 18-inch alloy wheels and tires.

In 2007, Acura debuted in the American Le Mans racing series and
fielded three teams to compete. At the famed 12 Hours of Sebring
endurance race, Acura engines powered to first, second and fourth places
in the competitive LMP2 class.

Styled from start to finish in the United States, the innovative,
game-changing ZDX four-door sports coupe instantly commanded attention
when it debuted at the 2009 New York International Auto Show. With its
primary emphasis on the driver and front passenger (rather than ultimate
cargo and people hauling ability), the ZDX took Acura in a whole new
direction of personal luxury.

In 2009, Acura became the first car company ever to receive Top
Safety Pick honors from the Insurance Institute for Highway Safety
(IIHS) across an entire model-year lineup. Simultaneously, Acura was
also the only luxury brand in 2009 to receive Five-Star crash safety
ratings from the National Highway Traffic Safety Administration (NHTSA)
across the board for all its models. Additionally, the same year Acura
won ALG's Residual Value Award for Best Luxury Brand.

More safety honors arrived for 2010, when all Acura vehicles (both
passenger cars and SUVs) again earned the highest score possible on
frontal offset, side impact and rear crash protection tests. And Acura
was once again the only luxury brand to receive five-star crash safety
ratings from the National Highway Traffic Safety Administration (NHTSA)
across all models. Also in 2010, Acura again won ALG's Residual Value
Award for Best Luxury Brand. The Acura ZDX crowned a stellar year by
being named as a finalist for Esquire's "Car of the Year"
award. The magazine called Acura's all-new four-door sport coupe "the
most gorgeous, thrilling, undeniably American Japanese ride of 2010."

25 Years and Growing

In 2011, Acura began its 25th Anniversary year by winning the 2011 ALG
Residual Value Award for Best Near Luxury Car. True to history, the
division then continued its advancements by unveiling the all-new 2011
TSX Sport Wagon, a perfect blend of performance and utility. Making its
debut at the 2011 Chicago Auto show, Acura's newly refined 2012 TL
delivers fresh looks, improved performance and upgraded technology.

Today, Acura boasts the strongest, most extensive product line in the
division's history. The Acura brand appeals to customers whose sense of
prestige comes not from traditional status symbols, but from the true
sense of being ahead. This is because Acura is committed to creating
exhilarating, world-class luxury automobiles that use technology not
just to enhance the driving experience, but to make their owners' lives
better. Examples of driver-relevant technology include Super Handling
All-Wheel Drive™ that improve agility and control, Adaptive Cruise
Control (ACC), blind spot information and a Collision Mitigation Braking
System™ (CMBS™) that enhance safety. Advanced Acura technology also
includes Bluetooth® HandsFreeLink® mobile telephone
integration, plus a satellite-linked navigation system that includes
AcuraLink Real-Time Traffic with Traffic Rerouting™ along with AcuraLink
Real-Time Weather™ with radar image maps

that gives the Acura driver more control over their life.

The automotive marketplace has changed significantly in the past 25
years, and it will continue to evolve and grow in the future. With
sport-utility vehicles (the MDX, turbocharged RDX, the expressive ZDX),
continued refinement of its luxury sedans (the RL, TL, and TSX), and the
introduction of exciting new products like the new TSX Sport Wagon,
Acura will remain on the forefront of the luxury performance market for
decades to come.