Genesis Emulates Lexus, Wants Its Buyers

[YEH]

Christie Schweinsberg | WardsAuto

VANCOUVER, BC, Canada – It’s no surprise that Hyundai’s nascent Genesis brand is closely studying the Lexus playbook.

“It’s easier to say who has been successful at doing this than it is who has been unsuccessful. Lexus is the lone example of somebody who has been successful at doing this,” Dave Zuchowski, CEO-Hyundai Motor America, tells WardsAuto in a recent interview here. “Lexus is just a prototypical, Harvard-business-case study in how to launch a vehicle.”

A key to Lexus’ early success was its pricing strategy. The Toyota luxury brand launched the LS large sedan in 1989 at 60% of the price of its German competitors, Zuchowski says.

The first-generation LS 400, at $35,000, cost 70% of the competing Mercedes 300SEL, priced north of $50,000, Ward’s AutoWorld reported in February 1989.

Now, Genesis is coming to market priced below the competition, including the 27-year-old Lexus.

The ’17 G90 flagship sedan starts at $68,100 for a rear-wheel-drive model with a 3.3L twin-turbo V-6, compared with the $75,520 sticker for the ’16 LS 460 with RWD and a 4.6L V-8.

Even with its optional 5.0L V-8 and AWD, the ’17 G90 is priced below the base LS, at $72,200.

“Luxury buyers really do appreciate the value proposition,” Zuchowski says. “And you see value in a lot of different ways. We have a very difficult time giving people a reason to buy a new, somewhat-unproven product when it’s priced the same as the competitors that have been there for a long time.

“Pricing is nothing more than brand power,” he continues. “And we look at brand power as brand opinion, brand consideration, brand awareness, all those different things. And all of those metrics are lower than our competitors.”

http://wardsauto.com/industry/genesis-emulates-lexus-wants-its-buyers


Eh, way too much is made of wanting to emulate Lexus (as if Lexus was the one who originated the strategy of value pricing for a new entrant into the luxury game; even the Germans not MB started at lower price-points when they entered the US market).

Unlike what Toyota did w/ Lexus, Hyundai didn't launch a separate luxury brand at the start (and even w/ the launch of the Genesis brand are not going to have separate dealerships until 4-5 years from now) and the Genesis brand will be entirely a RWD-based lineup, unlike a hodgepodge of RWD and FWD for Lexus.

Basically just comes down to pricing (and Acura was doing that before Lexus) - which makes for lazy journalism.

Also, Schweinsberg doesn't take into account that the G90 is really akin to the LS460L and not the SWB LS460.

And w/ Genesis, Hyundai is looking to take buyers from all the Japanese lux brands.

In addition, w/ the Genesis crossovers slated to be RWD based, not exactly direct competitors to the the Lexus crossovers.

Figure that in this case, will be more pricing parity (due to RWD vs. FWD) - and like other RWD-based luxury crossovers, will have lower sales than the FWD-based crossovers.

 

[Sal Collaziano]

I imagine price causes FWD based crossovers to sell better than RWD based crossovers... I don't think emulating Lexus is such a bad idea - or even bad to be spoken about. But that's just me. I see it as no big deal.

I do feel people should be comparing the G90 to the LS460L rather than the 460. It does make a difference..