Acura’s NSX -- The “Next Big Thing”

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Acura, the luxury vehicle division of Japanese automaker Honda Motor (NYSE: HMC), has just tweeted the first teaser picture of an NSX second generation prototype. This new NSX is a hybrid-electric supercar and a revival of the first generation Acura NSX. Acura is planning on putting out the NSX to the market in 2015.

Will this sleek new electric car turbocharge Honda and Acura moving forward, or will competitors like Porsche (NASDAQOTH: POAHY.PK) (NASDAQOTH: POAHF), Nissan Motor (NASDAQOTH: NSANY.PK), and Audi make the new Acura NSX slam the brakes? Honda’s revamping of the Acura brand and the NSX’s appeal to consumers will be a catalyst for Honda’s stock moving forward. Even if the NSX doesn’t sell as well as other competitors, the car itself will probably drive customers to buy other Acura or Honda cars.

The NSX can help Honda compete better

The original first generation NSX was a lot different than the planned second generation redesigned NSX supercar. However, Clement D'Souza, associate chief engineer at Honda of America, underscored the importance of the first generation NSX:

The first NSX redefined the sports car world and this car will hopefully do the same, with new technologies that will cascade down to other models in the Acura line.

Honda has a good foundation to build upon from the success of the first generation NSX, and is currently overhauling the luxury Acura brand. Acura sales in the United States were up an encouraging 14% in the first four months of 2013.  But Acura is “only” ranked fifth in the United States among luxury brands, behind BMW, Toyota's Lexus brand, Mercedes-Benz, and General Motors' Cadillac. And although the Acura team is most likely not planning on directly competing with Porsche and Ferrari, the more affordable NSX supercar will appeal to more consumers and give Honda a new front to compete with the likes of Nissan, Audi, and Porsche.

Honda shares have done fairly well in the past few months due to a weaker Japanese yen and a robustly strong automotive market:

<img alt="" src="http://media.ycharts.com/charts/4329c824e5a8bf7d9c397fbffe5b7f4c.png" />

HMC data by YCharts

Sure, an NSX supercar will probably not be the first model a budget-conscious family or consumer. Analysts estimate the NSX will cost somewhere in the $120,000-$200,000 range to compete with Audi’s R8. The Nissan GT-R, a comparable model to the NSX, runs at about $110,000. Porsches are priced expensively since they are very high-end, high quality sports cars. So, the NSX might have some difficulty competing with Nissan if its price is much above $120,000. And, people with a lot of discretionary income to spend on a high priced car aren’t offered much of a reason to not buy a snazzy Porsche and get an NSX instead.

But, as we will see in in the next point, the NSX itself might not be the biggest piece to Honda’s puzzle. Acura's NSX will possibly not only take some market share away from Nissan, Audi, and Porsche, but will also give Honda leverage in selling its other brands. The NSX would probably ride the coattails of the electric car revolution and have a larger impact than its numbers might originally suggest.

The NSX might give Honda leverage

The danger the NSX poses to Nissan and Porsche might not initially lie in how well the NSX sells. As Ronald D. White of the Los Angeles Times explains:

Experts said the previous iterations of the NSX created a so-called halo car that brought attention to the entire Acura line. The automaker is hoping that will happen again with the new version.

The NSX has been the kind of car that "adds luster and excitement to the Acura brand," Jack Nerad, executive market analyst for Kelley Blue Book, said in an interview.

"It will bring people into the showrooms, not so much to buy, but maybe to look," Nerad added. "And if they look and then buy an ILX or an MDX, the Acura people will be very happy."

The new generation NSX has one key factor in common with the first generation NSX -- the allurement factor. The first generation NSX sold very well, but also helped consumers take a second look at other Honda and Acura cars that they otherwise might not have taken a look at, thus driving revenue up for Honda.

How Nissan, Porsche, and others respond to this development remains to be seen. Nissan probably has more to lose than Porsche since Porsche most likely won’t be in direct competition with the NSX for the most part. Both Nissan and Porsche posted pretty strong results in the first quarter of 2013, with Nissan benefiting from a weaker Japanese yen like Honda has.

The outlook for both Nissan and Porsche at this moment looks fairly good, but Honda’s NSX will probably be a factor weighing down on Nissan’s sales in the long run.  At this point, if all goes well with the rest of the NSX's development then it is safe to say that Acura's NSX will be "the next big thing" in the automotive industry.

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