New luxury brand aims to replicate success of Japanese rivals while redefining the customer experience. PHOTO: REUTERS
The Korean automaker unveiled its flagship sedan, the G90, at the Detroit auto show Monday that was designed to compete with the top offerings of storied brands like Mercedes and BMW by offering best-in-class performance and features.
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"We are applying ourselves to entirely new objectives to set the benchmark for luxury," Hyundai vice chair Eui Sun Chung said at the brand's US launch.
"With Genesis we will strive to meet the desire of a new generation of luxury customer... (who) value unique experiences over mere status."
The bold move comes after years of studious planning and work to improve Hyundai's reputation following a disastrous initial entree into the US market in 1986 with the poorly-built Excel.
Hyundai addressed its reputation for poor quality by vigorously improving its production standards and introducing a 10-year warranty program in 1999.
It launched its first luxury sedan -- the Genesis -- shortly before US car sales collapsed to the lows not seen in decades in the wake of the 2008 financial crisis.
Hyundai managed to expand market share during the downturn through clever marketing that included a promise to buy back a customer's car if they lost their job within the first year of purchase.
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It also won accolades for the Genesis, including the much-coveted car of the year award at the 2009 Detroit auto show.
But despite all that hard work, Hyundai has still not shed its reputation as a cheaper alternative, said Jack Nerad, an analyst at Kelley Blue Book.
"What they're limited by is 'that's just a Hyundai' -- the perception of that's what the brand is," he said in a telephone interview.
"The current Genesis sedan... it's a very good value, but has not resonated well sales-wise because people buying luxury want to have the prestige of the brand."
Separating its premium offerings into a separate brand could help boost their prestige.
It worked when Honda, Nissan and Toyota introduced their Lexus, Acura and Infiniti brands in the late 1980s.
"Figuring out if this is successful isn't going to be determined by the first two cars they bring over," said Stephanie Brinley, an analyst with IHS Automotive.
"It's a long-term play, it's having to do it over and over again and how they build that up."
Hyundai announced the Genesis brand in November and plans to introduce it initially in the United States, Asia and the Middle East. It will eventually expand into Europe as the brand expands to six offerings by 2020.
"Our ability to start fresh in this new era instead of having the legacy or burden of what was in the past means we can start with something new and invest more appropriately," said Mike O'Brien, vice president of corporate and product planning for Hyundai Motor America.
One way to start fresh is to upend the traditional dealership experience by offering customers valet service so they don't have to sit around waiting for an oil change.
Instead, someone will pick their car up from them and drop it back off when it's ready.
It doesn't make sense to invest tens of millions of dollars into elaborate showrooms, O'Brien said, when what today's customers really value is their time.
Hyundai understands the challenge of capturing a loyal Mercedes or BMW customer, O'Brien told AFP.
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"Our strategy is for those customers that are just getting ready to buy a luxury car to give us a shot," he said in an interview on the sidelines of the show.
"That is going to be our challenge: How do we make a more appealing shopping environment so people give us a try?"
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