Why Genesis is cheaper than its competitors?

[Cobra]

Hi all.. Really curious to know why genesis is cheaper than its competitors for example a 5 series, well the genesis offers high quality interior, high quality ride may be better ride and quieter than a 5 series for most people including me, strong solid design, lots of power from base engine, economy and 5 star safety and lots of technologys, so why its cheaper?? What makes it cheaper, or let me say like that, why a 5 series or an E class is more expensive while genesis lacks nothing, just because its hyundai its cheap? Or a 5 series is a BMW its expensive ??!!

 

[PMCErnie]

Why is my Casio watch cheaper than a Breitling?

 

[stevebxl]

Hi all.. Really curious to know why genesis is cheaper than its competitors

Unions maybe?
Not quite the same as a BMW or a Mercedes either.

Name brand is another reason. I can buy Levis for $80 or I can get a pair of Wranglers for $30. People pay for the name...

As my sister said, " A Hyundai?? Why didn't you buy a Mercedes?" Cause I just need to get from point A to point B in a comfortable fashion. I'm WAY too old to worry about what people think of me when it comes to the badge on the hood.

 

[Mark_888]

Its always going to be cheaper than many of its competitors, but part of the reason is that Hyundai is trying to buy its way into the US luxury car market. They can afford to do that because the sell 3 million vehicles a year worldwide, and only a few thousand Genesis in the US per month (and that includes Genesis Coupe). Lexus did the same thing when they started out. In Korea, Middle East, Russia, and even Canada, the Genesis is much more expensive.

 

[GenesisCaptain]

Lots of reasons:

1) More R&D time-- BMW probably invests way more time than Hyundai in track time refining the suspension and other performance stuff
2) Pure profit-- BMW is one of the world's most profitable car companies, and that is because it prices more margin into its vehicles and services
3) More drivetrain configurations-- BMW has multiple engines (gas, diesel & hybrid of numerous sizes), multiple transmissions, and RWD/AWD; all of the permutations drive up design and manufacturing costs
4) More premium options-- BMW offers stuff that is not available on the Hyundai, like LED headlights, blind spot detection, power assisted doors and trunk, heated steering wheel, advanced seating, night vision, top vision cameras, rear seat entertainment, ultra-premium audio, active steering, etc. Each of these further drives R&D and manufacturing for the car, even if you do not buy them in yours.
5) Premium materials-- BMW offers multiple grades of leather and wood trim on the interior and special grades of exterior paint
6) More color combinations-- BMW offers many more exterior and interior color permutations that massively drive manufacturing complexity and cost

The nut is that BMW is a highly-refined, mass-customized car. Each of the permutations above drive a percent here and there into cost. Add to that the additional engineering for performance and the premium price that the brand can command, and you get a price $20K higher for an equivalent car.

The BMW 5 series configured most closely to my 3.8 Tech package lists for $63K (535i moderately loaded). If I configured a 535i in a dream setup of features that I really wanted, it would be $78K. My 3.8 MSRP was $44K, IIRC. I would gladly save $20K to give up on a few dream options.

For giggles, the 5 Series most closely comparable to the R-Spec would be about $72K. However you can run that one up to $81K when you throw in the extra fun goodies like HUD, B&O sound, and soft close doors and trunk.

(My comments above apply to the subset of options that BMW chooses to selectively offer to the North American market. They have massively more options available in the European market that add to the cost. None of that would be financially viable if their brand positioning could not support the willingness to pay model they built.)

 

[scotttisha]

Does any other car company also own their own steel company. Hyundai makes their own steel. As far as I know, all the other car companies have to buy from a supplier.

http://en.wikipedia.org/wiki/Hyundai_Steel

This is what I was told by someone at Hyundai, years ago.

Scott

 

[EXBMWGUY]

^ Very accurate, detailed explanation. May I add that that the additional complexity of the BMW 5-Series also makes vendor quality exponentially more challenging, resulting in dependability issues that, out of warranty, are brutally expensive. Much the same can be said for MB and Audi high-line models.

 

[GenesisCaptain]

May I add that that the additional complexity of the BMW 5-Series also makes vendor quality exponentially more challenging, resulting in dependability issues that, out of warranty, are brutally expensive. Much the same can be said for MB and Audi high-line models.

Double +1. I lump MB and Audi into the same bucket of mass customization, refinement, and premium materials. And, the things that set them apart are the same things that make them massively expensive to maintain.

 

[Mark_888]

Does any other car company also own their own steel company. Hyundai makes their own steel. As far as I know, all the other car companies have to buy from a supplier.

http://en.wikipedia.org/wiki/Hyundai_Steel

This is what I was told by someone at Hyundai, years ago.

Scott

According to this site, Kia Motors (part of Hyundai-Kia Group) owns about 21% of Hyundai Steel, and the rest is owned by others.
https://www.hyundai-steel.com/info/eng/hki/hki3_3.jsp?lang=en&menu_code=23-03-03

Given that the Chinese make a significant amount of steel these days, and sell it at aggressive pricing (aided by government manipulated undervalued Chinese currency), not sure how much advantage that Hyundai has regarding their minority interest in Hyundai Steel.

Here is a statement from the CEO of Hyundai Steel earlier this year:

Given the economic and industrial environment at home and abroad, the steel market in 2013 is expected to see sluggish demand and over-supply, resulting in low profitability. In particular, over-supply in China and Japan will lead to a large inflow of low-priced imports, further worsening the already fierce completion.
https://www.hyundai-steel.com/info/eng/hki/hki1_1.jsp?lang=en&menu_code=23-01​

 

[sooththetruth]

Hi all.. Really curious!

Since I am having troubles with my 2010 Genesis having the motorized steering wheel repaired for the third time under warranty, and the adjustable lower seat cushion for the second time in less than 5K miles, I would argue that Hyundai's are very expensive compared to the relatively low maintenance Japanese cars, that I now consider a better value. Keyless entry has failed on the driver door, now, and voice activated nav button has to be pushed 20 times before it listens. They say the nav button is working, but that's just not true, so I will have them show me it's working before I accept the car back. They are waiting on parts for the rest.

I am discouraged, and admit that I feel I lost the bet buying a Genesis. The suspension on my 2010 was so bad I replaced it, and the relatively cheap suspension is better than the stock. It's in the shop way too often for an Asian car. I thought I was smart buying one, but now I am looking to unload it far sooner than I normally would a car, as the 60K warranty is coming to an end, and I cannot see paying to fix the car as often as it is broken. Why would I believe these repeatedly broken pieces now have a long term fix?

There are many people on this board with good experiences; I am glad for them. If my Genesis were lower maintenance, I would keep it 200K miles as I have kept many of my Japanese cars. I like the looks of my Genesis as much or more than any other car on the market. Don't like the newer ones as much. But low maintenance is a value of mine, and so this car isn't for me. I never imagined I should have bought the extended warranty for this car, but clearly I should have. Even so, taking a car in for repairs gets old fast.

It's cheaper because the design quality was less. Similarly, I think luxury German cars are wildly overpriced, if you value long term low maintenance over cutting edge tech and panache.

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[shagnat]

Since I am having troubles with my 2010 Genesis having the motorized steering wheel repaired for the third time under warranty, and the adjustable lower seat cushion for the second time in less than 5K miles, I would argue that Hyundai's are very expensive compared to the relatively low maintenance Japanese cars, that I now consider a better value. Keyless entry has failed on the driver door, now, and voice activated nav button has to be pushed 20 times before it listens. They say the nav button is working, but that's just not true, so I will have them show me it's working before I accept the car back. They are waiting on parts for the rest.

I am discouraged, and admit that I feel I lost the bet buying a Genesis. The suspension on my 2010 was so bad I replaced it, and the relatively cheap suspension is better than the stock. It's in the shop way too often for an Asian car. I thought I was smart buying one, but now I am looking to unload it far sooner than I normally would a car, as the 60K warranty is coming to an end, and I cannot see paying to fix the car as often as it is broken. Why would I believe these repeatedly broken pieces now have a long term fix?

There are many people on this board with good experiences; I am glad for them. If my Genesis were lower maintenance, I would keep it 200K miles as I have kept many of my Japanese cars. I like the looks of my Genesis as much or more than any other car on the market. Don't like the newer ones as much. But low maintenance is a value of mine, and so this car isn't for me. I never imagined I should have bought the extended warranty for this car, but clearly I should have. Even so, taking a car in for repairs gets old fast.

It's cheaper because the design quality was less. Similarly, I think luxury German cars are wildly overpriced, if you value long term low maintenance over cutting edge tech and panache.

+1...... IMO, Lexus is THE buy in luxury automobiles. Higher initial price, but, waaay more reliable than Hyundai, Mercedes, and BMW.

 

[my2wins]

It's cheaper because its not a fully functional product. The car looks and drives great. The tech package is poorly engineered. If I could do over I would not have bought this car. Way too many unacceptable features in the tech and no way to fix. Just poor technology design.

I'd have been much smarter to buy it used and get a non tech. Then I wouldn't be as pissed about all that's wrong with it.

 

[YEH]

^ The complaints about the original iDrive were far, far worse (probably worse than for Cadillac's CUE system or Ford's SYNC).

There are numerous reasons why the Genesis is cheaper than its competitors.

1. By forgoing the separate luxury brand and dealer network route (like what the Japanese had done), Hyundai doesn't have to factor in the cost to the price which would be another $7-8k to the list price.

2. Hyundai doesn't offer comparable service on the Genesis that the luxury brands offer or what Hyundai offers on the Equus.

No complimentary loaner cars, no free scheduled maintenance, no valet pick-up/drop-off for service calls (as in the case of the Equus), etc.

That's why the Equus is priced more closely to the LS460 than the Genesis is to the GS.

Hyundai will probably offer loaner cars and maybe scheduled maintenance (Kia offers that on the Cadenza which is premium and not a luxury sedan) for the next Genesis and the price will reflect that.

3. Hyundai doesn't offer the customization that the Gemans do and instead offers a bundle of options in set packages.

4. The current Genesis simply does not an interior with materials that are up to par with the segment (the Cadenza, despite being in a lower segment, has nicer leather); it seems like Hyundai will mostly rectify this w/ the next gen model and the pricing, again, will reflect that. The exception to this would be the Prada Genesis but that isn't offered here.

5. The Genesis doesn't offer all the technologies that the Germans offer, much less what Hyundai offers on the Genesis for other markets (such as not having a cooled front passenger seat).

6. As stated, Hyundai saves in areas such as having an ownership interest in a state of the art steel plant.

7. Hyundai, like the Japanese before them, is willing to take a lower profit margin in order to establish itself in the luxury market.

Remember, the original LS400 had an MSRP so low ($35k) that the Germans thought that Toyota was losing $$ on every sale.

While Toyota probably didn't lose $$, they probably didn't make any either since they were basically keeping the Lexus dealerships afloat at the time.

8. Exchange rate.

The Korean Won had a favorable exchange rate against the US Dollar while the Euro did not - but over the past year and half or so, things have evened out a bit.


-- As I have stated before, the 2G Genesis will likely see a fairly significant price hike w/ the starting price rising to around $39-40k.

This increase will be due to higher quality interior materials, higher-end service, more tech and amenities (can't see the front passenger seat not being cooled), etc.

But despite the price hike, the 2G Genesis will still be about $7-8k less than the Lexus GS and the Infiniti M - pretty much the cost of a separate luxury brand and dealer network per vehicle.

 

[Cobra]

It's cheaper because its not a fully functional product. The car looks and drives great. The tech package is poorly engineered. If I could do over I would not have bought this car. Way too many unacceptable features in the tech and no way to fix. Just poor technology design.

I'd have been much smarter to buy it used and get a non tech. Then I wouldn't be as pissed about all that's wrong with it.

So can we know whats the poor technology u mean in Genesis??

 

[Cobra]

^ The complaints about the original iDrive were far, far worse (probably worse than for Cadillac's CUE system or Ford's SYNC).

There are numerous reasons why the Genesis is cheaper than its competitors.

1. By forgoing the separate luxury brand and dealer network route (like what the Japanese had done), Hyundai doesn't have to factor in the cost to the price which would be another $7-8k to the list price.

2. Hyundai doesn't offer comparable service on the Genesis that the luxury brands offer or what Hyundai offers on the Equus.

No complimentary loaner cars, no free scheduled maintenance, no valet pick-up/drop-off for service calls (as in the case of the Equus), etc.

That's why the Equus is priced more closely to the LS460 than the Genesis is to the GS.

Hyundai will probably offer loaner cars and maybe scheduled maintenance (Kia offers that on the Cadenza which is premium and not a luxury sedan) for the next Genesis and the price will reflect that.

3. Hyundai doesn't offer the customization that the Gemans do and instead offers a bundle of options in set packages.

4. The current Genesis simply does not an interior with materials that are up to par with the segment (the Cadenza, despite being in a lower segment, has nicer leather); it seems like Hyundai will mostly rectify this w/ the next gen model and the pricing, again, will reflect that. The exception to this would be the Prada Genesis but that isn't offered here.

5. The Genesis doesn't offer all the technologies that the Germans offer, much less what Hyundai offers on the Genesis for other markets (such as not having a cooled front passenger seat).

6. As stated, Hyundai saves in areas such as having an ownership interest in a state of the art steel plant.

7. Hyundai, like the Japanese before them, is willing to take a lower profit margin in order to establish itself in the luxury market.

Remember, the original LS400 had an MSRP so low ($35k) that the Germans thought that Toyota was losing $$ on every sale.

While Toyota probably didn't lose $$, they probably didn't make any either since they were basically keeping the Lexus dealerships afloat at the time.

8. Exchange rate.

The Korean Won had a favorable exchange rate against the US Dollar while the Euro did not - but over the past year and half or so, things have evened out a bit.


-- As I have stated before, the 2G Genesis will likely see a fairly significant price hike w/ the starting price rising to around $39-40k.

This increase will be due to higher quality interior materials, higher-end service, more tech and amenities (can't see the front passenger seat not being cooled), etc.

But despite the price hike, the 2G Genesis will still be about $7-8k less than the Lexus GS and the Infiniti M - pretty much the cost of a separate luxury brand and dealer network per vehicle.

Your reply is so helpful to understand thanks, i saw G prada its really so different that our Genesis it has tons of features like adjustable suspension, driving modes more and more.. And about 2G genesis im agree with you, because the First genesis in 2008 offered alot and still offering alot.. So whats next, most probably greater and better..

 

[GenesisCaptain]

Here is a subtle sign that BMW is responding to the Hyundai Genesis & Equis competition...

Navigation is standard in the 5 Series and 7 Series. This used to be one of their premium options in these cars that they charged tons for. They quietly made nav standard to lower the price of the car slightly and force an apples-to-apples Genesis to have the Premium package at a minimum to compare against the 5 Series.

 

[Potty_Pants]

So can we know whats the poor technology u mean in Genesis??

I remember reading an article that identified Hyundai missed the follow thru with the tech part.

Unfortunately I cant recall much if any.

Things such as lane monitoring makes a noise but no vibration or steer back.
Navigation works but has issues

please note bmw isn't exempt from problems either such as flakey CA and jittering adaptive headlights.

ppp

 

[ImInPA]

Hyundai is able to price their vehicles for the US market lower than the competition for a variety of reasons. Among the primary reasons are:

1) Their labor costs and costs per vehicle is much lower. Even in the US plants due to the fact that their plants are modern state-of-the-art plants.

2) They make their own steel. They are able to create their own alloys and adjust JIT delivery extremely precisely.

3) they are highly integrated with other Korean companies such as LG and Samsung which gives them access to many desireable technologies that are more costly in European and American automobiles.

 

[my2wins]

So can we know whats the poor technology u mean in Genesis??

A few examples (specific to my 4 month old 2013):

Blue link navigation function does not deliver requested POI at least half the requests (probably more like 80% fail rate); hours with customer service bring passed around between blue link and hyundai -- multiple instances of no follow up from both and dead ends

Built in Driver Info System (including Navigator) is not intuitive and the documentation is limited (pictures of the equipment and basic descriptions of the functions); both manuals and online educational materials are elementary. If you can't figure it out yourself you basically are out of luck

Blue link voice commands differ from DIS voice commands. You have to remember two different menu structures.

Voice quality of speaker phone is intermittently so bad people can hear me. I have to bring headsets for any time I have an important call

There are about 50 other things that I could say but won't.

The car drives like a dream and is gorgeous. But most aspects of the technology package and advanced electronics have been a huge disappointment to the point where I'd sell the car if I could wave a magic wand, but alas I don't have the time. Someone else willing to go through the extensive discovery process may love this vehicle once they learn it, but I was not prepared to have so many things be dysfunctional and I don't want to be a part time Genesis trouble shooter. All this may not be as troublesome for others who enjoy the thrill and challenge.

I hate to use this analogy since it's imperfect, but the best way I can describe my Genesis tech package is the difference between an iPhone in 2013 versus a smart phone circa 2009. Yes, on paper all the features are there. They can both make calls, send texts, browse the Internet, install apps, etc. But the usability and functionality is drastically limited in the latter. Simple things were missing like, oops you can't cut and paste text. Or you can't talk and browse at the same time. Things you don't know would be buzz kills till you buy it and start using. That's how I feel about the Genesis tech package. A lot of features that on paper look very comprehensive and impressive. But in reality there is very limited actual functionality. The product is still in beta.

 

[PMCErnie]

My2wins, weren't you awaiting some equipment/parts fixes? Perhaps a defective microphone in the cockpit? I don't recall you updating us on the outcome.

Regarding the phone problems, are you running the AC/Heater fan too high during calls? The manual cautions against that.

Granted, I don't have Bluelink, but I have none of your problems with my '12 Premium Package-only car. You might have over-teched yourself in buying the Tech. Also, you may be relying too much on voice activation. Your car is relatively new and it does take time to get accommodated.