Ward's obtains Hyundai doc detailing plan to split off luxury cars in dealerships

[bjjones]

Looks like Hyundai is getting the hint in regards to separating the higher end luxury models from the lower end models.

http://wardsauto.com/home/hyundai_details_plan_091230/

 

[Disaster]

This will save Hyundai money in the short term but I wonder if they upscale models will ever get the same status without their own brand. It seems at least Hyundai should brand them differently...even if they are sold in the same dealerships. As far as the dealers reservations are concerned. I can understand their concerns, in this tough financial time....but the alternative is losing the cars completely...to specialized dealers. They wouldn't want that. Hyundai is one of the few cars to actually increase sales during the recession and their upper end cars could be a real cash cow.

 

[bjjones]

This will save Hyundai money in the short term but I wonder if they upscale models will ever get the same status without their own brand. It seems at least Hyundai should brand them differently...even if they are sold in the same dealerships. As far as the dealers reservations are concerned. I can understand their concerns, in this tough financial time....but the alternative is losing the cars completely...to specialized dealers. They wouldn't want that. Hyundai is one of the few cars to actually increase sales during the recession and their upper end cars could be a real cash cow.

Agreed. Hyundai's marketing and strategic planning is simply backwards when it comes to the higher end models. Branding is everything in regards to upscale products and services. They should have already had a different name brand established before they brought the Genesis to the US. This could have given the brand some exclusivity separate from Hyundai. There are many people that say that it is too expensive for Hyundai to go all out and set up individual dealerships for the luxury car segment and while that may be true somewhat, it wouldn't have cost Hyundai but a drop in the bucket if they had forged a new name for the luxury automobiles and then scaled up the marketing and development costs from there. Also remember that while the Genesis is a great car, the economy is bad now and many people are looking for affordable luxury. But if/when the economy turns back around many people will be back to the same buying habits so if Hyundai has not put the name brand and dealerships in place and established some type of status, name recognition or cache among potential buyers most people won't be willing to purchase expensive luxury models from Hyundai (at least in the sales numbers that will make the luxury end of Hyundai successful).

 

[dataguy]

Hyundai has said that a new brand would have cost billions to establish the brand and separate dealer network. That's a big gamble to do first when the top of the line at the time was the Azera.

Contrast the new brand cost to $1B for the Alabama plant, or perhaps the development costs of one or two new vehicle platforms.

And frankly, I don't know anyone would would have really trusted a new nameplate without a vehicle to go with it, let alone with the Hyundai stigma behind it.

 

[bjjones]

Hyundai has said that a new brand would have cost billions to establish the brand and separate dealer network. That's a big gamble to do first when the top of the line at the time was the Azera.

Contrast the new brand cost to $1B for the Alabama plant, or perhaps the development costs of one or two new vehicle platforms.

And frankly, I don't know anyone would would have really trusted a new nameplate without a vehicle to go with it, let alone with the Hyundai stigma behind it.

Well actually the current model Genesis and second generation Equus were already in the pipeline for the Korean market before bringing these 2 models to the USA. Therefore Hyundai of America already had/have two models ready to promote a luxury brand with unlike some of the other luxury makes who spent large amounts of money in development to produce cars exclusively for the American market.

So in terms of actual costs, Hyundai has fared well here and some of the money saved could have been used in other areas to promote the luxury brand. And as I stated in my previous post, even if Hyundai felt it was not the right time to go all out in adding new dealerships for the luxury models, it would have cost Hyundai very little once they decided they would export the Genesis and Equus models to at least come up with a separate name to better identify the more expensive series of cars.

 

[dataguy]

Well actually the current model Genesis and second generation Equus were already in the pipeline for the Korean market before bringing these 2 models to the USA. Therefore Hyundai of America already had/have two models ready to promote a luxury brand with unlike some of the other luxury makes who spent large amounts of money in development to produce cars exclusively for the American market.

I understand what you're saying; I just don't buy that it would have made any difference to sales or brand acceptance to launch a new brand without having an established North American track record with a premium car. If anything, I think it would have been badly received (i.e. that Hyundai wasn't able to deliver an upscale experience and thus a failure or too presumptuous). I think that some of the surprise and leniency has been due to the Genesis being under the Hyundai brand, and therefore, a future "Genesis" brand (or whatever it will be called) wouldn't be an immediate laughing stock.

 

[CanukV6]

Personally I think this is a good way to go for Hyundai. If they seperated the brands/models completely then you can be sure the prices will increase, not just for the cars themselves but for service and parts. I like paying Hyundai prices for oil changes and labor costs for a car that competes with BMW's and Audi's etc.. In Canada (not sure about the USA) they seperated VW and Audi brands a few years ago and dealers carrying both had to build seperate showrooms and service facilities. The cost of servicing went up dramatically for Audi owners (ask how I know!!).

Provided that all dealers carrying the Genesis & Equus models are required to have specially trained mechanics for those cars, due to their sophistication, I can do without the fancy customer lounges and expresso bars. Many of us who got their cars early on probably experienced a lack of knowledge about the Genesis both at the customer service and technical levels, but this has improved as more cars are sold and dealers invest in their new customer base.

 

[sandy]

Let's not forget an important role of the Genesis is to provide a "halo" for the entire Hyundai line-up. From what I've read, one of Hyundai's biggest marketing challenges is the low % of consumers even willing to consider the brand. Part of the strategy to address this problem was the intoduction of the Genesis as a Hyundai, so there was no dilution of the rub-off effect.

 

[YEH]

Agreed. Hyundai's marketing and strategic planning is simply backwards when it comes to the higher end models. Branding is everything in regards to upscale products and services. They should have already had a different name brand established before they brought the Genesis to the US. This could have given the brand some exclusivity separate from Hyundai. There are many people that say that it is too expensive for Hyundai to go all out and set up individual dealerships for the luxury car segment and while that may be true somewhat, it wouldn't have cost Hyundai but a drop in the bucket if they had forged a new name for the luxury automobiles and then scaled up the marketing and development costs from there. Also remember that while the Genesis is a great car, the economy is bad now and many people are looking for affordable luxury. But if/when the economy turns back around many people will be back to the same buying habits so if Hyundai has not put the name brand and dealerships in place and established some type of status, name recognition or cache among potential buyers most people won't be willing to purchase expensive luxury models from Hyundai (at least in the sales numbers that will make the luxury end of Hyundai successful).

Uggh!

Not this again.

Hyundai is doing the right thing by taking incremental steps w/ the luxury lineup and focusing the bulk of its resources to (1) increasing market share and (2) building up the reputation of its mainstream lineup.

The best thing for a successful launch of an eventual premium brand from Hyundai is for the Hyundai brand to be seen on par w/ Toyota, and the next cycle of mainstream products from Hyundai (starting w/ the Sonata and Tuscon) should do the trick.

The decision-makers over at Hyundai have pretty much made all the right moves and auto industry analysts agree (from an article in Fortune).

Hyundai smokes the competition

A wave of new models should keep both Hyundai and Kia hustling over the next few years. The two companies are due to turn over their entire U.S. product line in the course of the next four years, the highest replacement rate in the industry, according to a forecast by Merrill Lynch/Bank of America's John Lynch. He sees Hyundai and Kia gaining 3 1/2 points of market share over the span. That would be enough to vault the Koreans past Chrysler and Nissan into fifth place in the U.S., with a share of 10.8% by 2013.

It's totally sensible for Hyundai to be focusing on its core mainstream products - they will be pivotal in raising the profile of Hyundai from a cheap alternative to being just as good, if not bettter than Toyota.

Right now, Hyundai has 1/3 the market share of Toyota in the US and had less than that when the Genesis sedan was launched in 2008 - not exactly prime conditions for spending billions on launching a new brand.

To take advantage of its momentum, Hyundai is pushing new models out of its factories faster and faster. American customers got to see the slick new 2011 Sonata in December, two months ahead of schedule, because, in an unusual move, Hyundai sped up the start of production.

Automakers hate to interfere with factory schedules because it is expensive, disrupts the flow of parts, and invites assembly problems. But Hyundai decided to move ahead. It was receiving good reads on early quality checks, suppliers showed ample stocks of parts, and engineers had prepped its Alabama plant. Speed became a competitive advantage.

Moving quickly and boldly has made Hyundai Motor Co. the fastest-growing major automaker in the world. Amid the global sales slump, it made a record $832 million in the third quarter ended Sept. 30. Analysts expect its net profits to rise almost 40% this year.

Despite its relative youth -- it is only 43 years old -- Hyundai already ranks fifth in volume among the world's auto producers, according to IHS Global Insight, and passed 107-year-old Ford Motor (F, Fortune 500) in 2009 to move into fourth place. Years ago Toyota used to say that Hyundai was the company it feared most. Today those fears have grown into a nightmare.

As I stated before, a strong/vibrant Hyundai brand which is a segment leader for mainstream brands is key for the successful launch of a premium brand, and Hyundai should get there by the end of the next cycle of products - which is about the time Hyundai has tentatively planned the launch of its premium brand.

"Hyundai is a brand that is on the verge of being aspirational," says New York--based consultant and investor John Casesa. "People are saying they are proud to own it, not just to settle for it."

The evidence can be seen in the strengthening demographics of Hyundai owners. Last year some 49% were college graduates, compared with just 36% in 1999. By comparison, Toyota has a higher percentage of college grads -- 57% -- but the number hasn't grown much, up only two percentage points in 10 years.

Fortune also has some nice things to say about the Equus.

Test-driving the Equus

Judged on its merits, not its image, the Equus is a winner. Fortune had an opportunity to test one in Korea and found it surprisingly competitive with German luxury sedans under normal driving conditions.

The exterior could go on a chrome diet, but otherwise the Equus adheres to the conservative design standards required for luxury cars. The interior is best in class, intelligently crafted from fine materials and smartly laid out. The spacious rear seat, where many Asian buyers will spend their time, is equipped with a variety of diversionary devices, including one that provides a back massage.

Powered by a smooth, quiet, 4.6-liter V-8, the Equus should appeal to customers for whom value is a higher priority than association with a three-pointed star or dual-kidney grille.

http://money.cnn.com/2010/01/04/autos/hyundai_competition.fortune/index.htm

 

[ajls09873]

Genesis 'Coupe' is not a luxury vehicle.

I think hyundai should remain Genesis 'Coupe' under Hyundai brand.

The new lux brand need a 'real' luxury coupe. (Like Lexus SC, BMW Z3 or something)

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[wallymn]

I am not going to second guess the only company that posted sales gains in 2009........

 

[YEH]

I am not going to second guess the only company that posted sales gains in 2009........

Exactly.

Amid the global sales slump, it made a record $832 million in the third quarter ended Sept. 30. Analysts expect its net profits to rise almost 40% this year.

Genesis 'Coupe' is not a luxury vehicle.

I think hyundai should remain Genesis 'Coupe' under Hyundai brand.

The new lux brand need a 'real' luxury coupe. (Like Lexus SC, BMW Z3 or something)

It's a moot point since the next gen Genesis Coupe is going upmarket and reportedly will be offered w/ the Tau V8.

Also, the current Genesis Coupe is more "luxurious" than what the Acura Integra was (putting aside the argument that Acura is not a "real" lux brand) and not that far off from the original G35, which had a pretty chinzy interior considering its pricepoint.

 

[DeMAN]

Hyundai is doing the right thing in keeping everything under one name. I have had no issues with going to dealer to get things done. The Acura TL or RL can not compare in interior space. The current Accord is same size as the TL and maybe a little larger than the RL in interior space.

I think the main interest going forward should be for hyundai to build a quality car. The rest will fall into line. The rest of the world can continue to blow 10k+ in cost for a similar car.

Hyundai is currently either meeting or exceeding those goal of making competitive cars. The other car companies can keep those dolled up dealership. I just want my car repaired period, and it get done

 

[CanukV6]

Genesis 'Coupe' is not a luxury vehicle.

I think hyundai should remain Genesis 'Coupe' under Hyundai brand.

The new lux brand need a 'real' luxury coupe. (Like Lexus SC, BMW Z3 or something)

I have to agree.
The Genesis Coupe is certainly a big step forward from the Tiburon (RWD for one) but I have to say that its fit and finish bear no relationship to the Genesis Sedan. It is still a decent car but I rather wish they had called it something other than a Genesis.