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Motor Trend 1998 Car Of The Year is The Chevy Corvette[an error occurred while processing this directive]

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1999 ACURA MODEL LINEUP

The 1999 Acura model lineup features six luxury/performance models to choose from. Each has been designed and built to satisfy different needs and requirements, yet all meet our demanding standards for quality, luxury, and performance. From our redesigned flagship, the RL, to the SLX rugged off-road sport luxury vehicle, to the all-conquering NSX mid-engine exotic, Acura has something for every enthusiast driver.

Risk-Free Balm for Boomers

FEELS ROOMY, LOOKS SMALL: WILL THE YARIS
PLAY IN PARIS? (int'l edition)

TOYOTA'S MIDLIFE CRISIS (int'l edition)

LEXUS: ALL REVVED UP WITH SOMEWHERE TO GO (int'l
edition)

Japan Cars Manufacturer Sites

BEHIND THE WHEEL / Toyota Solara

Risk-Free Balm for Boomers

By MICHELLE KREBS

DETROIT -- It was last January at the Detroit auto show, and Toyota had just pulled the wraps off its Camry Solara. The gleaming coupe, yet unseen by the public, spun slowly on a turntable. But a glance over one's shoulder, across the convention center, found a strikingly similar car rotating on another turntable a couple of displays away. That coupe, a Honda Accord, was already for sale. Given the two cars' close resemblance, from the lines of their front ends to the flow of sheet metal along their sides, a casual observer could be forgiven for thinking these were two versions of the same car.

The top-of-the-line Camry Solary SLE has a V6 engine and elegant appointments.

And just as Honda executives had explained their game plan months before, Toyota officials were saying that coupes, which commanded a huge share of the American market in the 1960's but lost their lead to more practical sedans by the 80's, could yet make a comeback. Both companies are betting that affluent, aging baby boomers -- their children grown, their nostalgia acute -- are ready to climb out of four-door cars, mini-vans and even sport utilities, if only they were offered a dash of style; roomy, comfortable accommodations, and a reasonable price.

The formula worked for Honda with the Accord coupe and for Acura with its CL models. Now Toyota has borrowed that recipe for its 1999 Camry Solara.

Toyota says the Solara (pronounced so-LAHR-uh) will appeal to baby boomers entering their peak earnings years who are "nostalgic for the sports car of their youth but need more room and comfort than a sports car can provide." Indeed, Honda says buyers of the Accord coupe are equally divided between single people and married couples, between women and men. Buyers' median age is 46 and median household income is a relatively high $73,000.

Data on initial buyers of the Solara, which went on sale this fall, are not yet available, but its demographics are likely to be similar (although Toyota's marketing efforts suggest that the car is particularly aimed at women). At once sleek and conservative, the Solara is slightly sporty, but its styling does not break new ground. Designed at Toyota's California studio and built in Cambridge, Ontario, the Solara has tapered flanks defined by a distinctive crease that runs from the front fender along the length of the car to a swoopy rear end with narrow taillamps.

Inside, the Solara cabin is more elegant and comfortable than those of most sporty coupes, befitting the expanding physiques of aging boomers. The test car, a top-of-the-line SLE -- a less expensive SE is also available -- was outfitted in attractive beige and taupe leather. Clean and uncluttered, the interior was reminiscent of a Camry sedan, though definitely upgraded. Controls and instruments were simply and logically laid out, with one glaring exception: The control for the power outside mirrors is on the dash, hidden behind the steering wheel. Toyota is usually more careful about such things.

Technically, the Solara seats five adults, but four will feel much more comfortable. Rear headroom and legroom are relatively generous for a coupe. The rear seat splits and folds to expand the roomy 14.1-cubic-foot trunk. The lid is also lower, making it friendlier to aching backs than the Accord coupe, which has a very high liftover because of its uplifted rear end.

Like the Camry sedan, the Solara can be ordered with a four-cylinder engine (a 2.2-liter, dual-overhead-cam unit with 135 horsepower) or a V6 (3 liters, dual-overhead cams, 200 horsepower). The Accord's four-cylinder is more powerful than the Camry's, but Toyota's V6 has more torque -- pulling power -- than Honda's.

Both Solara engines can be paired with either a four-speed automatic transmission or a five-speed manual. I usually favor a manual, but after driving V6-powered Solaras with both, I decided I would opt for the automatic. The stick shift was notchy and imprecise, and the clutch was not smooth. No matter: Few buyers are likely to be bothered with a manual transmission.

Based on its styling, one might expect the Solara to perform in a somewhat sporty fashion. Yet the looks are deceiving: Despite a suspension tuned to be tighter than the Camry sedan's, and the availability of a sport package with larger tires and an even firmer suspension, the Solara's handling is unremarkable. In aggressive driving on curving mountain roads, the Solara felt nervous and confused. And although the steering has been tuned to provide more road feel than one gets from the sedan, the Solara seemed slow to respond to the driver's commands, with a lag between the turning of the steering wheel and the car's response.

To be sure, a lot of Solara buyers will not notice. Target customers are unlikely to be aggressive drivers; indeed, many will be moving out of Camry sedans that handle similarly. And like the Camrys they traded in, the Solara provides a comfortable, quiet ride. It is well-suited to crosstown travel and downright comforting in highway cruising. The excellent V6 has plenty of pep.

The high level of quality is predictable as well, and overall fit and finish are as close to perfection as any manufacturer achieves. You can bet that reliability will be superb, as it is with all Toyotas.

Prices start at $19,000, with standard features like cruise control and power windows, locks and mirrors. The premium SLE, at $25,408, has the V6, antilock brakes, leather trim, power driver's seat, automatic climate control, a Homelink transmitter for garage doors and security gates, keyless entry, a security system and a 200-watt stereo with cassette and CD players. Options include side air bags up front.

The price range, which tops out at $27,000, is close to the Accord's. And in nearly every other way the two cars' hardware is so similar that a shopper could make a choice on "software": brand loyalty, dealer preference, even the feel of the seats. Both are safe bets, offering a little style and a dab of sport without sacrificing comfort or room.

INSIDE TRACK: A middle-of-the-road coupe for the comfortable middle class.

FEELS ROOMY, LOOKS
SMALL: WILL THE YARIS
PLAY IN PARIS? (int'l edition)

No matter how tiny their cars, Europeans want them big on pizzazz. So when
Toyota Motor Corp. decided to lead its push into Europe with a small car, it
knew it had to liven up its dull reputation. The outcome is the Yaris, which will
start selling in April for $12,000. ''Toyota is known for quality but needs more
emotion,'' says Juan Jose Diaz Ruiz, executive vice-president of Toyota Motor
Europe Marketing & Engineering. ''The Yaris is a very emotional car.''

Designed in Brussels, the snub-nosed Yaris draws on research that shows
Europeans want a city car that feels spacious. Thus, the Yaris sports ample
headroom, a movable backseat, lots of interior pockets, and the biggest trunk in
the category. People also want a zippy drive. So the company borrowed Lexus'
intelligent variable-valve technology, which monitors the way the engine and
accelerator are used, to deliver a sporty ride with good fuel consumption. From
2001 on, the Yaris will be built in the French town of Valenciennes--a big plus in
this import-leery market. Says Jean-Louis Gaspar, a 50-year-old visitor at the
Paris showroom on the Avenue des Champs-Elysees: ''Now, Toyota can say,
'We are also a French car.'''

The Yaris has gotten plenty of interest at recent auto shows and has softened
some of the skepticism about Japanese cars. Andrew Golby, deputy road-test
editor at Autocar magazine in London, is impressed. ''Toyotas in the past have
been dull to look at,'' he says. ''This car looks pretty and stands out.'' Toyota
hopes eventually to sell 200,000 Yarises in Europe every year--a tall order,
considering such rivals as the Volkswagen Polo and the Renault Clio.

If the Yaris makes it, expect to see its funny silhouette show up in Asia and Latin
America, too. Toyota figures it can do better in these markets with a
European-styled subcompact. ''The Europeans have come into our neighboring
market of China. And in Latin America, GM and Ford have products from their
European divisions,'' explains Akira Yokoi, executive vice-president for overseas
operations at Toyota. ''We have to fight them on an equal level.'' With the Yaris,
the auto wars will get hotter.

By Heidi Dawley in London, with Inka Resch in Paris.

TOYOTA'S MIDLIFE CRISIS
(int'l edition)

Can it produce cars that appeal to
young Japanese buyers?

Toyota Motor Corp.'s commander in chief, Hiroshi Okuda, is beaming.
Hundreds of French citizens are gathered to celebrate his latest conquest: a
sprawling site for a $727 million factory near Valenciennes, in northeastern
France. Okuda seals the deal by laying two stones for the plant, making
$177,000 in donations to local causes, and planting several cherry trees--proof
that Toyota wants to take root in Europe. Then he dons a short kimono and takes
up a wooden mallet to open four barrels of hot sake as part of Japanese ritual.
The spectacle leaves little doubt that Okuda is serious about extending Toyota's
reach around the world.

But back at home, road warrior Toyota looks battered. Japan's No. 1 carmaker
managed record pretax operating profits of $3.4 billion, on sales of $52 billion,
for the first half of this year. Yet these figures obscure something important:
Toyota is barely breaking even in its most critical market, Japan.

Some analysts believe the company has started to lose money in its domestic car
business. Merrill Lynch & Co. reckons Toyota loses $423 on every car it sells at
home. Only the sale of spare parts and accessories pushes domestic operations
into the black. Toyota slices the data differently: It lumps export profits from
Japanese plants together with domestic sales. But even its executives admit
conditions in the home market are dreadful. Toyota's vehicle sales in Japan have
tumbled 31% since 1990. Its market share has been below 40% since 1995, and
the company must spend more than ever to lure customers into showrooms. Even
if Toyota recovers a 40% share by yearend, it will sell less than 2 million vehicles
in Japan for the first time in a decade. Japan's economy, it seems, has become
Toyota's Achilles' heel.

To Toyota's North American rivals, none of this matters for now. All they see is
the Toyota juggernaut in the U.S., which in November upped its share of the
world's biggest market by more than a full percentage point, to 9.1%. Detroit
executives are only dimly aware of Toyota's woes at home and probably figure
the giant will recover its momentum when the recession ends. ''Toyota is a tough,
tough competitor,'' says Ronald L. Zarrella, head of General Motors North
America.

SHORT ON ZIP. But the question still demands an answer: How long can any
carmaker afford to give up profits in its core market? Japan accounts for just
38% of Toyota's worldwide car sales--down from 52% in 1990. Those sales
generate little in the way of profit, while North America accounts for an estimated
80% of operating income, with Europe accounting for most of the rest.
''Americans have been feeding us,'' concedes Kanji Kurioka, executive
vice-president for domestic sales. Yet with the yen now strengthening against the
dollar, every one-yen increase knocks an estimated $68 million off Toyota's net
profit. Partly because of the currency situation, Toyota has just lowered its 1999
profit forecast. Says Fujio Cho, executive vice-president for corporate planning:
''I tell people, 'You can't rely forever on a weaker yen.'''

The recession has certainly taken a bite out of Toyota's Japanese results, but the
company must accept much of the blame for its troubles. It has failed to cater to
younger buyers' desires for zippy compact minivans and sport-utility vehicles.
Shrinking sales mean that Toyota must pay for factory and dealership workers it
doesn't need. Toyota also worries investors by spending billions on investments
such as housing and telecoms that could yield minimal returns.

Increasingly, Toyota's woes typify the problems plaguing Japan Inc. Until the
mid-1990s, Toyota could depend on strong results at home to drive rapid
expansion abroad: Some analysts believe Toyota earned as much as 90% of
operating income from its domestic operations at its peak in 1990. The Japanese
car market was predictable, with Toyota firmly on top. It faced weak rivals, was
supported by dealers who felt little need to discount, and sold to consumers who
meekly accepted high prices. Japanese officials helped by conducting such stiff
vehicle inspections that most consumers were forced to buy a new car every
three years. Toyota could keep its Toyota City plants operating at full tilt because
of the steady growth of export markets and a booming local economy.

Now, the pattern is reversed, and overseas profits are propping up Japan. Excess
capacity, picky consumers, surplus workers, price wars, and hemorrhaging
affiliates have become the rule of the Japanese market. Honda Motor Co., which
for years played a small role in Japan, is attacking Toyota's domestic market with
a vengeance. Already, Toyota must worry about keeping its No. 3 ranking
among the world's auto makers. DRI/McGraw-Hill automotive analyst Philip
Rosengarten estimates that Toyota and Volkswagen will each sell 4.5 million
vehicles this year. ''Toyota has not changed, but the world has changed,'' says
Shoichiro Toyoda, Toyota's chairman.

If these conditions persist, even Toyota's $25 billion cash hoard could start to
dwindle, as the giant wages a war of attrition against rivals at home. Eventually, a
low-profit domestic market could sap its ability to finance its global ambitions and
fend off rivals. ''In a sense, we are troubled,'' admits Okuda. ''We set a target of
selling 6 million vehicles [a year] by the early 21st century. However, because of
the recession, it's necessary to extend that target.''

Some Toyota executives even compare their problems in Japan with those GM
faced more than a decade ago. ''In a way, we have gotten too big, and it's tough
to manage Toyota,'' says Chairman Toyoda. ''Sometimes, we face difficulties
deciding which direction to go. I used to think that [GM Chairman] Roger Smith
had [that] trouble.'' Toyota is much healthier than GM--but Toyota executives
know how foreign profits dulled GM management's sense of crisis at home. In the
U.S. GM's market share has shrunk from 40.3% in 1985 to 29.4% this year.

SACRED GROUND. Recognizing that Toyota must fix its domestic sales to
remain a leader, Okuda has embarked on an aggressive restructuring. ''Toyota
has a sense of crisis, and it is making efforts, but it takes time,'' says Takaki
Nakanishi, an automotive analyst at Merrill Lynch. Yet watching competitors such
as Nissan Motor Co. and Mitsubishi Corp. approach the brink has convinced
Okuda that the longer he waits, the more painful the process will be.

So Toyota has started to tread on sacred territory. Some investors remain
frustrated that it keeps workers on the payroll even as its factories run at 85% of
capacity. But next year, Toyota will hire 9% fewer high school and university
graduates. More important, some of these new hires will be contract employees
with no expectation of lifetime employment. If all goes as scheduled, such hires
will make up one-third of the payroll by early in the next century. ''We will be
streamlining and gradually reducing our workforce,'' says Okuda.

Toyota also expects to shed $678 million in costs this year, largely by designing
cars with fewer, simpler parts and sharing more parts between models. To shave
an estimated 30% off development costs, Toyota is using the chassis from its
European-designed Yaris for a new subcompact in Japan and for at least two
other models.

Such efforts should lessen the blow of smaller sales volumes during Japan's
deepening recession. Toyota's engineers used to develop cars on the assumption
that the company would sell 10,000 units per month. Now, many must design
cars to make profits at lower prices and monthly volumes as low as 2,500. So
engineers on the $26,270 Progres luxury sedan shared parts with other vehicles
and overhauled everything from the development process to the stamping
equipment to squeeze enough costs out to compete with the low-end Mercedes
C class.

Beyond that, Okuda is shaking up the chain of command. After he became
president in 1995, the sales staff showed him a report that described how
Toyota's well-built blandness turned off the younger customers. More alarming,
Toyota was losing ground with its core customers--folks in their 40s and 50s. So
Okuda ordered a task force of thirtysomething managers to make up a youth
division and to think big--fast. ''He said that if we couldn't think of anything in
three months, then we probably wouldn't be able to come up with an idea,''
recalls Hideaki Homma, 35. The result was a new company to design and sell
cars for young people. Dubbed the Virtual Venture Co. (VVC), its managers
answer only to Okuda. The company is housed in the hip Tokyo district of
Sangenjaya, safe from contagion from Toyota's stodgy headquarters.

''NOT FOR US.'' Although VVC is keeping mum on details, it is scheduled to
develop at least one cool car by 2000. But the longer VVC takes, the more
opportunities Toyota misses to lure younger buyers. If Toyota wants to regain the
volumes it had in 1990, it will have to go at full throttle. ''Toyota is for old people,
not for us,'' says Ken Nomura, 29, who cruises around Tokyo with his girlfriend
in a Honda $19,200 CR-V sport-utility vehicle.

In the meantime, the VVC subsidiary is experimenting with unconventional sales
strategies to jazz up Toyota's image. For a small fee, it is allowing the public to
test-drive most of the cars in Toyota's lineup in a Kobe parking lot. It's building
an $83 million amusement park on the edge of Tokyo that will open in April,
complete with everything from displays of Toyota's visions for vehicles of the
future to an area where people can design their own cars. VVC estimates that
these efforts have boosted sales of some Toyota models by 10%, and recent
consumer surveys show an improvement in Toyota's brand image, even though it
still trails Honda.

A MODICUM OF FLOPS. Good stuff, but Toyota continues to struggle to
regain its 40% market share. Many of Toyota's attempts to create entirely new
markets aren't working. The Altezza and Progres luxury cars are hits. But the
$18,600 Vista next-generation sedan and the $16,000 Nadia ''monospace''
sedan, which looks like a cross between a station wagon and a minivan, continue
to fall far short of sales targets. Some dealers fear that just at the time Toyota is
discovering what Japan's youth really want, youngsters aren't able or willing to
afford it.

Even Toyota's revolutionary hybrid, the Prius--which runs both on gasoline and
an electric battery to cut the emissions dramatically--may be an example of a
superb technology with no real market. Okuda's launch of the Prius one year ago
is still remembered with awe and bewilderment by everyone from Toyota's
competitors to its suppliers to its stockholders. That's because the $16,500 Prius
is being sold at a price that analysts estimate is only about half what it costs to
build the car. Toyota makes 2,000 Prius cars a month. Yet starting in August this
year, consumers have bought only 1,561 of them on average. ''The Prius is being
sold near [other Toyotas] that are discounted. And only cheap cars are selling
now,'' says a disappointed Akihiro Wada, executive vice-president for research
and development. Toyota now wants its dealership chains to specialize in different
parts of its lineup.

Toyota has also started to pressure dealers. Its sprawling network of more than
300 dealerships--with 5,600 outlets--has long been regarded as the key to its
might. No rival can match Toyota's reach. Yet sometimes, Toyota outlets are
located one block from each other. They may even display some of the same
models.

Now, Toyota wants to overhaul this crazy-quilt system, an act previously
considered taboo. It has stopped supplying dealers with look-alike models, to
eliminate unnecessary price competition. It has pulled the plug on monetary
incentives for dealers. Instead, starting next year, if dealers cannot meet sales
targets, they run the risk of losing their franchise. Toyota has also asked some
dealers to rebuild and rename outlets to attract more young people. In the past
year, for example, 66 dealers have established 1,074 ''Netz'' dealerships intended
to attract women and youth with showrooms that are brighter and swankier than
most Toyota outlets. On its own, Toyota has begun constructing a massive ''auto
mall'' in the Japanese Alps that will sell every model in Toyota's lineup--in
addition to prefabricated houses--from November, 2000.

Dealers are getting the message. Toyota's second-largest dealer, Tokyo Corolla,
closed down a dozen of its outlets in the capital this year and has drawn up a
blueprint for paring down its payroll by 300 employees in two years. Tokyo
Corolla is also trying to build trust among customers, revamping one of its main
outlets so that passersby can see through a window how workmen fix cars. ''We
dealers are trying things that we have never tried before,'' says Akira Nishimura,
chairman of Tokyo Corolla.

Okuda figures that a lot more has to be done before Japan can once again be an
engine of growth, even while shrugging off the naysayers. ''Financial analysts are
saying all sorts of things about our company,'' he says. ''They don't know anything
about the future, and they don't know the details of our operations. I don't care
that much about what they're saying.''

Yet he admits Toyota must go ahead at full speed. Says Okuda: ''Recession is a
time to overwhelm the enemy.'' And, he hopes, the best time to fix what ails
Japan's preeminent company.

By Emily Thornton in Tokyo, with Kathleen Kerwin in Detroit and Inka
Resch in Valenciennes, France

LEXUS: ALL REVVED UP WITH
SOMEWHERE TO GO (int'l
edition)

In the U.S. market, Toyota Motor Corp.'s most dazzling performer these days is
its Lexus division. It wasn't always so. Just four years ago, Lexus was skidding.
After a spectacular debut that caught its European rivals asleep at the wheel, a
skyrocketing yen forced Lexus to raise prices--so the cars were no longer the
extraordinary value they had been at first. The flagship LS 400, introduced in
1989 at $35,000, was going for more than $50,000 by 1994. Meanwhile, BMW
and Mercedes-Benz redesigned their products and cut prices. Lexus sales went
into a stall.

Now, Lexus is back in gear. Its products, once criticized as bland, have new
spark, with stronger engines and more feel-of-the-road for the driver. The new
GS sedans, launched a year ago, are more aggressively styled. And its $32,000
RX 300 sport-utility vehicle, with the handling of a car rather than a truck, has
been the division's best seller since its April launch. With sales up 57% so far this
year and on track to surpass 150,000 vehicles, Lexus has zoomed past BMW
and is closing in on Mercedes in U.S. sales.

EXHILARATION. While Toyota may be struggling to bring young Japanese
buyers to its brand, Lexus' new GS and RX models are luring new--and
younger--American buyers to the fold. Take Peter N. Giles, 41, who switched
from a Jeep Grand Cherokee to the RX 300 in September. ''It seems like
everyone and his brother has a Jeep. I wanted to break away from the pack,'' he
says. Giles, who owns a publicity agency, also wanted the amenities of a luxury
brand--such as the Nakamichi stereo he bought for his RX. Like Giles, some
65% of RX 300 buyers haven't owned a Lexus before.

With its new lineup, Lexus is trying harder to reach buyers who want more than
just a smooth ride. ''We were seen as the safe, sensible choice--almost so perfect
that it wasn't exciting,'' says Bryan Bergsteinsson, group vice-president of the
Lexus Div. Now, Lexus is even fiddling with the longtime tag line of its TV ads,
''The Relentless Pursuit of Perfection.'' In current ads, ''perfection'' is replaced, for
a few seconds, by ''exhilaration.'' To boost the exhilaration, Lexus is also readying
a sporty car--a version of the Altezza--that's less expensive than its $40,000 to
$50,000 GS models and that can match BMW's 3 series and Audi's A4. That
should give the Germans even more reason to worry about Lexus.

By Larry Armstrong in Los Angeles

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