Aquineas
4th Genesis
- Joined
- Mar 9, 2010
- Messages
- 4,326
- Reaction score
- 1,117
- Points
- 113
- Location
- Georgetown, TX
- Genesis Model Year
- 2020
- Genesis Model Type
- Genesis G70
Many (perhaps most?) of us enjoy our 2nd generation Genesis sedans. Some of us who owned the 1st generation can attest to the improvements made between the 1st and 2nd generations. Right now, Hyundai engineers and executives are planning the third generation, and they have some big decisions to make.
The biggest decisions involve mass, branding, and cost. I'll offer my perspective on the challenges and I'd love to hear what others think.
I think the early success of the 2nd generation Genesis is very helpful at this point because at a time when Hyundai executives are having to think long and hard about writing some pretty big checks, the market, at this point anyway, is reaffirming that some of their previous decisions are correct. The Genesis seems to be increasing in market momentum.
The biggest decisions involve mass, branding, and cost. I'll offer my perspective on the challenges and I'd love to hear what others think.
- Mass. The Genesis is a solid car. Hyundai was liberal in their use of high strength steel; more than 50 percent of the steel used in the car is high strength or ultra high strength steel. Hyundai wanted a car that felt solid and substantial, so they loaded it up with lots of steel and lo and behold, they built one. The problem with this is, with such high steel content, it leads to increased mass, and in an increasingly competitive luxury market, there's no way that the 3rd generation will be able to continue to compete unless it goes on a serious diet.
The BMW 7 series uses a combination of carbon fiber, ultra-high-strength steel, and aluminum to save nearly 200 pounds. The next generation Mercedes E-Class is set to debut soon as well, and while they haven't publicly disclosed their chassis improvements, it's probably safe to assume that they've got something up their sleeve. By the time the 3rd generation Genesis sedan is released, Audi will have their next generation A6 on the market as well (probably in 2019). And let's not forget the Lexus LS which has been on it's current chassis since 2006 and is (over)due for a refresh. My point is, by the time the 3rd generation Genesis is due to hit the market, its competitors will all have lost a lot of weight, and the Genesis will need to exceed that standard.
The problem is that the current ways of vehicle weight reduction (increased use of aluminum in the chassis and body panels, use of carbon fiber and carbon re-inforced plastics) cost a lot. I can't see Hyundai doing too much with carbon fiber with the 3rd generation due to lack of manufacturing expertise, so that leaves aluminum. Lots of aluminum. The problem even with aluminum is, Hyundai doesn't own 4 aluminum mills like they do steel mills. And if they do want to provide their own aluminum supply (as they do steel), then the cost of entry is about 1-2 Billion a mill (which seems like a lot, but this is also a company that just spent $10 Billion to buy prime Seoul real-estate, so maybe it's really not). However they go about doing so, expect the next generation Genesis to be a lot lighter, and have a much higher aluminum content.
- Brand. I believe I read when the 1st generation Genesis was launched, that it would cost a half a billion to launch an upmarket luxury brand (which is nearly the total development cost for each generation Genesis). Hyundai decided back then not to invest that capital and instead take a "wait-and-see" approach. I believe Hyundai will launch an upmarket luxury brand for the 3rd generation. This will also benefit them when the coming 3-series competitor is launched. The thing is, the cost of rolling your own brand hasn't gone down, which means...
- Vehicle Cost is going up. Between losing some of the cost-benefits of rolling your own steel, the potential cost of building your own aluminum mill (not strictly necessary, but the Koreans like to own their own infrastructure, because well, they just love kicking everyone's ass), the cost of rolling out your new brand, in addition to an increase in development costs for the new vehicle for technology integration and power-train innovation, I think we will see the cost delta between the Genesis and its competitors narrow somewhat. Hyundai would like to see it narrow a lot, which they will need their own luxury brand to do.
I think the early success of the 2nd generation Genesis is very helpful at this point because at a time when Hyundai executives are having to think long and hard about writing some pretty big checks, the market, at this point anyway, is reaffirming that some of their previous decisions are correct. The Genesis seems to be increasing in market momentum.
