What truly accounts for Genesis' lower price point.

[miamig35sedan]

After having test drove a 2010 3.8 I'm seriously considering one with the Premium and Tech packages. I would purchase and keep 8 to 10 years, driving about 12,000 to 14,000 miles annually (I'm meticulous about maintenance and will DIY things like oil, air filter, and cabin filter changes).

Before the Genesis, everything I looked at was $50,000 to $58,000 new, and even though I can afford this price point I just can't wrap my head around spending this kind of money for a depreciating daily driver. This means I either have to buy CPO or look for a differently branded lower price point vehicle without compromising the luxury size and amenities I want . . . enter the Genesis.

My experience with Hyundai as a brand is limited and mixed. I rented a late model Sonata (4 cylinder) on a family trip and was underwhelmed. It was reliable and fuel efficient, but did not seem as well designed or as "fully baked" as say a Camry or Accord. On the other hand, I know 4 Hyundai drivers (Sonata V6, Azeera, Tiburon, and Tucson?) and a Kia Sorento driver who swear by their cars and haven't had any issues at all.

I'm trying to figure out why the Genesis is $15,000 less than the competition (with a better warranty to boot) and have broken down to 3 possible elements. I would like to know your thoughts on whether I'm accurate and to what degree each plays in this price differential.

1) Less R&D vs. the competition. Part of what you pay with Lexus, Infiniti, BMW, etc. is the cost of development and R&D in areas such as suspension tuning, engine design, manufacturing technologies, electronics, etc. I see this already in things like the need to remove a manifold just to change spark plugs, or the plastic oil filter cap, etc.

2) Vehicle Branding. Part of what you pay with Lexus, Infiniti, BMW, etc. is just the name or status symbol.

3) Dealership Branding. Part of what you pay with Lexus, Infiniti, BMW, etc. is to cover the cost of a separate low volume, high operting cost dealership network and "luxury" service department.

What am I missing?

 

[VivienM]

Let's see here:
1) Lower costs of production/R&D/etc. Korean labour is cheaper than Japanese or German.

2) The only way the car will be noticed is if its price is low. And they're already raising the price. In Canada, the 2010s are $1500 more than the 2009s, though that includes the adaptive cruise and the like.

3) I don't think Hyundai is out to make a profit in the short-term. Their goal is to make a point:
i) that they can build a 'world-class' luxury car,
ii) that they can build a real luxury car (RWD/V8), unlike, say, their arch-rival Honda
iii) that the rest of the Hyundai lineup is good, too.

4) There are a few cut corners here and there. No xenon high-beams. Less adjustments on the passenger seats. No passenger-side cooled seat (then again, no car in that price range except maybe the Lincoln MKZ has any ventilated seats). No TPMS on Canadian-spec cars. No DRLs on US-spec cars.

5) Many people buy luxury cars less for the features, comfort, etc. and more so they can show off. You can show off with a BMW or Lexus badge, not so much with a Hyundai. The price needs to reflect that.

6) At the end of the day, no one would buy this thing if it was the same price as a comparable car from an established brand. Why gamble on the new unknown?

Look at how Lexus launched the LS back in 1990. The car was the same price as the MB C class' predecessor, yet was S class sized. To this day, the LS is cheaper than the S class, but not by the anywhere near the same amount.

 

[wallymn]

1. No "premium" dealer network.
This would add a couple of grand to the car...

2. Me too design....
I really like the look but this wasn't ground breaking.
(except the TAU engine)..

3. Content..
ZF transmission is "last" gen,
No a la carte options...
(you can't have it "your way")
A BMW 5 series has to many options to list, A v8 Genesis has 2.

 

[Disaster]

The current price of the Genesis can be explained by several things.

1. Hyundai has to "buy" their way into the luxury market. The Genesis is actually considerably more expensive in Korea. They discounted it in the U.S. to build momentum.

2. Hyundai has piggy-backed the Genesis on their normal dealer network, instead of creating a unique brand. This has saved them some expense.

3. Hyundai doesn't carry the marketing and support costs of Mercedes and the like. For example they don't have free roadside assistance or exclusive showrooms with Expresso machines.

As for the design itself. It is competitive with the best in the world and I expect will only get better in future generations. As far as reliability goes, Hyundai already tops Mercedes and BMW. They aren't quite up to the level of Lexus.

http://www.usatoday.com/money/autos/2008-10-23-cr-reliability-ranking_N.htm

BEST AND WORST IN RELIABILITY

Rank Make

1 Scion
2 Acura
3 Honda
4 Toyota
5 Lexus
6 Infiniti
7 Subaru
8 Hyundai
9 Mitsubishi
10 Kia
11 Lincoln
12 Mazda
13 Mini
14 Nissan
15 Mercury
16 Volvo
17 Ford
18 Buick
19 Porsche
20 BMW
21 Suzuki
22 Audi
23 Saab
24 Chevrolet
25 Volkswagen
26 GMC
27 Mercedes-Benz
28 Jeep
29 Pontiac
30 Dodge
31 Cadillac
32 Chrysler
33 Saturn
34 Land Rover

 

[dataguy]

They do have free roadside assistance, even if it isn't close to AAA quality.

Definitely true about cost savings versus building a premium dealer network, although the latest indications is they will insist on dealers to kit out their showrooms to have a separate premium brand area. I expect that will a.) weed out some dealers who shouldn't be selling the Genesis and Equus, and b.) will tend to uplift the cost over time. When they do a proper brand launch, that will further push up the price.

I've said many times that ever since the scandals and jokes forced the company to focus more on building a quality, competitive product, Hyundai has closed the gap with the industry leaders more and more each year. I'm torn as to whether that will eventually mean that Hyundai will get as complacent and expensive as the other makes or whether Hyundai will force the others to lower their prices and innovate.

EDIT: In terms of reliability, this is the 4th Hyundai vehicle we've owned (3 since 2000). While there have been several problems over the years, there's only been one repair that wasn't covered under warranty (and that was a sensor at 80K miles). And none of those past experiences negatively influenced my decision to buy the Genesis.

 

[LLT]

1) Less R&D vs. the competition. Part of what you pay with Lexus, Infiniti, BMW, etc. is the cost of development and R&D in areas such as suspension tuning, engine design, manufacturing technologies, electronics, etc. I see this already in things like the need to remove a manifold just to change spark plugs, or the plastic oil filter cap, etc.

Honestly, I believe they have less R&D because Hyundai is not known for innovation. They are followers, not leaders... which is fine, as I've not seen them claim otherwise. They're a budget-conscious alternative to the brands that do put forth the R&D dollars ---- and charge accordingly.

2) Vehicle Branding. Part of what you pay with Lexus, Infiniti, BMW, etc. is just the name or status symbol.

Obviously branding plays a role, just as with anything else in life. Some buy based only on brand name. The little "L" actually had little to do with my decision to buy a Lexus.

3) Dealership Branding. Part of what you pay with Lexus, Infiniti, BMW, etc. is to cover the cost of a separate low volume, high operting cost dealership network and "luxury" service department.

Hyundai is not known for a stellar dealership experience. You're definitely paying for a better quality of service with other brands and I'm not referring simply to the gourmet coffee.

What am I missing?

Every brand carries their own advantages and disadvantages. Hyundai, just like every other automaker in the free world, will never be everything to everyone. Their focus, as mentioned, is being a budget-conscious automaker. Quality vehicles at an affordable price. Are you giving up some things? Sure... if you weren't, the price would be more. To most Hyundai owners, it's worth the sacrifice.

 

[Disaster]

Originally Posted by miamig35sedan
1) Less R&D vs. the competition. Part of what you pay with Lexus, Infiniti, BMW, etc. is the cost of development and R&D in areas such as suspension tuning, engine design, manufacturing technologies, electronics, etc. I see this already in things like the need to remove a manifold just to change spark plugs, or the plastic oil filter cap, etc.

Honestly, I believe they have less R&D because Hyundai is not known for innovation. They are followers, not leaders... which is fine, as I've not seen them claim otherwise. They're a budget-conscious alternative to the brands that do put forth the R&D dollars ---- and charge accordingly.

2) Vehicle Branding. Part of what you pay with Lexus, Infiniti, BMW, etc. is just the name or status symbol.

Obviously branding plays a role, just as with anything else in life. Some buy based only on brand name. The little "L" actually had little to do with my decision to buy a Lexus.

3) Dealership Branding. Part of what you pay with Lexus, Infiniti, BMW, etc. is to cover the cost of a separate low volume, high operting cost dealership network and "luxury" service department.

Hyundai is not known for a stellar dealership experience. You're definitely paying for a better quality of service with other brands and I'm not referring simply to the gourmet coffee.

What am I missing?


Every brand carries their own advantages and disadvantages. Hyundai, just like every other automaker in the free world, will never be everything to everyone. Their focus, as mentioned, is being a budget-conscious automaker. Quality vehicles at an affordable price. Are you giving up some things? Sure... if you weren't, the price would be more. To most Hyundai owners, it's worth the sacrifice.

1. Good overall answer...however, as an auto engineer I know just because you aren't an "innovator" doesn't mean you save a ton of cash. If you make much of your own product, and you do it WITH quality, it can actually cost a lot more money than some of these other companies "innovations" because many of these other companies innovations are actually designed by outside suppliers. For example, much of the fuel injection work including direct injection and some of the new diesel innovations was done by Bosch for the big name manufacturers. An outside supplier designed Chyslers unique fold down seats. Microsoft did much of the design work on Ford's Synch system...and so on and so on.

Also, I think you will see Hyundai move more into the ranks of innovator as they grow. Cars like the Genesis, with it Nav system, are starting to show that.

3. I owned a Mercedes and I can tell you, the best thing you can do is find an independent shop to do the service. Mercedes dealerships charge insane prices for regular scheduled maintenance.

They do have free roadside assistance, even if it isn't close to AAA quality.

The dealer we bought the car from never mentioned that. But, I was pushing him to get out of there. I hate any "dealership experience" as much as going to the dentist. My best dealership experience was at a Suburban Volvo in Detroit. They had the car parked and waiting for me inside the showroom. I showed up, spent 5 minutes signing papers and drove away. The entire thing took maybe 15 minutes from the time I pulled up to the time I was driving my new car. Wonderful. It took almost 2 hours to get out the Hyundai dealership even though we had an car pickup appointment and preapproved credit. In their defense, they were short a finance manager and had to borrow one from another dealership.

 

[Sayantsi]

This is an interesting thread, and shows how people continue to post the Genesis next to uplevel cars instead of similarly priced cars when doing quality comparisons. If you looked at similar $30-40k cars, think what the discussion would be like...

Part of why the Hyundai is less expensive yet compares so directly with more expensive cars is how it was put together. Some new tech, some old, good quality parts, but lux not slathered all over the car, simple engineering vs overengineering, etc... Hyundai put a lot of thought into maximizing bang for the buck. The ZF and Aisin transmissions are not cutting edge new, but they are still quality, name-brand parts with proven track records. No, there is no mood lighting in the car, but then again, do you really miss it?

You can see little things that are simply less pricey ways of doing things, like the goose-neck trunk arms instead of more expensive struts you see on Audi, M-B, and Lexus. The fuel door is plastic, cheaper than metal. Plastic albeit high quality around the shifter instead of billet aluminum, the way the door air vents are integrated (or not), laminated glass on the front, but not rear side windows, "only" eight-way adjustable driver's seat, four way passenger, etc...

Look where the Hyundai has less cost and see if it matters to you. The Genesis does not have a ride height/firmness adjustment like a M-B with an air suspension. It doesn't have a 5 way or 7 way transmission setting, like a BMW. It doesn't use solid aluminum and wood all around like an Audi. There is a lot of cost that is simply overengineering and most of the public can do without.

Hyundai has spent a lot of time and money on R&D - it worked directly with ZF on the suspension for example, it just has less experience at fine tuning its look & feel than say BMW does. The OP is coming to a Genesis and Hyundai from higher-end Luxury cars, not Camrys, Avalons, Chargers, G8s and Accords. If you look at similar cars for the money, nothing comes close imo to matching the quality of materials, plus the engine power, mpg, and size, all in a rwd layout.

The Genesis isn't perfect, but you can say that about more expensive cars as well. If you're going to be "mostly happy" with a car, does an extra $20k make any real difference?

I'm not sure if you know, OP, but Hyundai has modeled itself after the Toyota method for production and quality that put Toyota on top (before its recent degradations I hope). Hyundai is the fourth largest automaker worldwide, so it has the resources to commit to going upmarket, it just never had the drive before recently. I think Hyundai sells more cars in North America than Mazda, Nissan, and VW combined - its a huge company, maybe just not huge in the USA or as well-known for quality and luxury, but its serious about changing its reputation.

 

[Par Avion]

I think Hyundai sells more cars in North America than Mazda, Nissan, and VW combined - its a huge company, maybe just not huge in the USA or as well-known for quality and luxury, but its serious about changing its reputation.

They sell more than Mazda and VW yes, but not Nissan (yet). They are closing in on Honda in Canada from what I understand. Worldwide, they are the 4th largest automake (bigger than Honda).

Most importantly, they are dead serious about changing their reputation in North America and becoming the quality leader. That's the kind of company I want to be around.

 

[Sayantsi]

Its better to hitch onto a rising star than a falling one.

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[LLT]

Most of these points are relatively moot. Think of the Genesis price as a promo price. Do you honestly believe Hyundai will maintain this price point long-term? Right now, they're passing along the savings to attract people into buying a Hyundai. If/when the good word spreads, don't expect the price point to remain the same. Right now, they just can't get away with it.

 

[OBCT]

Most of these points are relatively moot. Think of the Genesis price as a promo price. Do you honestly believe Hyundai will maintain this price point long-term? Right now, they're passing along the savings to attract people into buying a Hyundai. If/when the good word spreads, don't expect the price point to remain the same. Right now, they just can't get away with it.

Agreed, but I don't think the other big point here can be overstated: cost of production, most significantly labor, is far lower in Korea than in competing car manufacturing regions including Japan, Europe and North America.

The Genesis won't be a bargain bin deal compared to it's direct competitors forever (as it is now), but I do believe Hyundai will strive to undercut other brands with comparatively low prices for some time to come. It's still their schtick; they are now attempting to add "quality" to their reputation for building "value" vehicles.

 

[VivienM]

You can see little things that are simply less pricey ways of doing things, like the goose-neck trunk arms instead of more expensive struts you see on Audi, M-B, and Lexus.

Uhhh, the Genesis has the same style trunk arms as most established luxury cars. Those kinds of arms, placed in their own compartment to the side of the cargo area. Go to ebaymotors.com and stare at some trunks.

If you're thinking about the struts outside the trunk (e.g. on W body GMs), they're not typically used in luxury cars. I think the reason is that it's impossible to pop the trunk open with those: when you unlatch the trunk, it just goes up a few mm and you have to manually lift it up.

Then again, now that I think of it, does the Genesis trunk pop open?

 

[dataguy]

Then again, now that I think of it, does the Genesis trunk pop open?

There was a running design change midway through the 2009 model year to pop the trunk open a bit (versus just unlatching it).

 

[MattG]

When considering why the Genesis is cheaper, I think that it is actually quite informative to consider the Sonata. Hyundai makes plenty of Sonatas right here in the US, and they are, frankly, an incredible deal when compared to their direct Toyota and Honda competition.

IMHO, the main reasons for Hyundai's price advantage are:

• Simplified options - reducing the number of configurations must make manufacturing and supply chain issues a bit less cumbersome
• More recent modernization - automotive manufacturers invest staggering amounts of money in their manufacturing processes, and then they have to recoup that investment. The thing is, though, that the underlying technology is steadily progressing. Hyundai is in the enviable position of being big (number 4) and the "new kid on the block" (in terms of upgrading to true, world class design), so they are doubtless enjoying some real benefits of having the latest and greatest thinking incorporated into their design and manufacturing process
• Replication vs. innovation - once someone is on top, they are under pressure to truly innovate. Hyundai gets to learn from their competitors' mistakes instead of making their own (well, not that they don't make any of their own, but they get to let the competition make more of them).
• Mature parts sourcing - making a car is as much about good OEM/parts/materials supplier relationships as it is about anything else. Hyundai/Kia have built an impressive ecosystem of suppliers.
• Value orientation - making cars that are value oriented isn't a simple design choice. Honda and Toyota used to make value oriented cars, but they really drifted away from that space a long time ago. Several other car companies make value models, but they are basically rolling tin cans, because those companies don't have the mature supplier ecosystem that is geared to those kind of cars (see above), so those cars clearly suck compared to the main lines.

These things tend to move in patterns, I fully expect Hyundai to be where Toyota and Honda are now (in terms of being very nice, but overpriced and a little lost) in the next 15 years or so, but for now, Hyundai is very much like the Japanese car companies were in the very early 90's - a fantastic value proposition compared to the competition.

 

[SunnySD]

I think Hyundai is priced where it needs to be priced. 5 years from now, if the Genesis is $3K less than a MB E would you have a hard time deciding? 10 years from now if the Genesis is the same price as BMW 5, again would you have a hard time deciding?

I think Hyundai put out a great car in this price range for us. It didn't have to be this good for the price people are paying but this car is definitely making people think twice about the car vs the marque brands. I hope with Hyundai taking sales away from the others, it'll force them to drop price. Didn't MB drop the E price by ~$5K from last year to this year? Hope the Genesis contribute to doing the same with BMW and Lexus.

I don't think Hyundai is going to grab long time MB and BMW owners. Maybe Lexus to an extent? What they need is for today's 30 year old Sonata/Accord/Camry owner to get a Genesis when he/she turns 40.

Most of these points are relatively moot. Think of the Genesis price as a promo price. Do you honestly believe Hyundai will maintain this price point long-term? Right now, they're passing along the savings to attract people into buying a Hyundai. If/when the good word spreads, don't expect the price point to remain the same. Right now, they just can't get away with it.

 

[Sayantsi]

Uhhh, the Genesis has the same style trunk arms as most established luxury cars. Those kinds of arms, placed in their own compartment to the side of the cargo area. Go to ebaymotors.com and stare at some trunks.

If you're thinking about the struts outside the trunk (e.g. on W body GMs), they're not typically used in luxury cars. I think the reason is that it's impossible to pop the trunk open with those: when you unlatch the trunk, it just goes up a few mm and you have to manually lift it up.

Then again, now that I think of it, does the Genesis trunk pop open?

If you look at a Mercedes trunk, and how it operates, you'll see it has struts up top and they are all contained outside the actual trunk, so nothing pinches if you have it fully loaded. Here's a pick, but maybe some MB cars don't have this set up:

Audi A6:

If some MB (or other lux cars) have the goose neck trunk arms, great, we can mark that off the list! The overall point I was trying to make is that Hyundai uses simpler, less pricey options than the competition to do the same job just as well. German cars in particular have become overengineered in my opinion, and you overpay for a lot of fancy tech when basic tech will work just as well.

 

[VivienM]

If you look at a Mercedes trunk, and how it operates, you'll see it has struts up top and they are all contained outside the actual trunk, so nothing pinches if you have it fully loaded. Here's a pick, but maybe some MB cars don't have this set up:

If some MB (or other lux cars) have the goose neck trunk arms, great, we can mark that off the list! The overall point I was trying to make is that Hyundai uses simpler, less pricey options than the competition to do the same job just as well. German cars in particular have become overengineered in my opinion, and you overpay for a lot of fancy tech when basic tech will work just as well.

How weird. You must have picked all the MB models that don't do their 'usual' thing.

2010 S550:

2010 E350:

2009 C class:

Here's a 2006 E500:

And here is a 2007 Lexus LS460:

Don't the 2006 E500 and the Lexus have a VERY similar setup to the Genesis sedan?

 

[STREETS]

Hyundai will remain the value leader even as it ventures into hight price segments like Equus.
Case in point- 2011 Sonata. Priced at or less than 2009 with oodles of more class, refinement and identity. Like was mentioned previously, a rising star. Wouldn't have bitten on the Genesis if I didn't trust my research and believe in the hype.

 

[TJPark01]

Sayantsi's point is a good one, the lux car makers from Europe have gotten away from their core disciplines. MB is the worst offender of this, but BMW with the IDrive isn't far behind. Audi is probably the best in terms of interior layouts and simplicity, but I can't get on board with their platform sharing and rebadging just yet. Anyway 2010 E550 sedan trunk. They set this up for 2 reasons.
1. The trunk swings open, which some people love, and other hate.
2. Since the struts on the other set up were outside of the weatherstripping, they tended to get nasty, or malfunctioned and needed to get replaced.
Either way it looks bad, and not lining the roof of the trunk on a 72k car is just lazy.