How Hyundai plans to do luxury - Genesis G80 Forum
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post #1 of 12 (permalink) Old 01-29-2016, 11:38 PM Thread Starter
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How Hyundai plans to do luxury

Luc Donckerwolke, formerly of Bentley, will lead Genesis' Prestige Design Division and the Hyundai Motor Design Center.

Originally Posted by Automotive News
The Book of Genesis: How Hyundai plans to do luxury

SEOUL -- Much at Genesis, Hyundai Motor Co.'s new luxury brand, remains a work in progress, even though the first nameplate went on sale in South Korea on Dec. 18 and will make its U.S. debut in Detroit next week.

It's clear, though, that Hyundai wants Genesis to carve a different path from other premium brands. "We had to come up with our own way, our own unique business model," Cho Won-hong, Hyundai's executive vice president of global marketing, told Automotive News at the carmaker's headquarters here.

During a daylong immersion into Genesis last month, Automotive News had access to the brand's vehicles and spoke with top executives about its strategy.

Hyundai executives believe the automaker has built a reputation for quality that will carry over to Genesis, which will distinguish itself from the Hyundai brand with a focus on safety, while avoiding technology for technology's sake. Genesis' rear-wheel-drive cars initially will be sold in Hyundai dealerships -- that may change later -- but Genesis shoppers will be targeted with a separate customer-care approach.

Here are some of the insights gained into what Hyundai wants Genesis to be, how the carmaker plans to make that happen and what it means for the Hyundai brand. The brand goes on sale in the U.S. in late 2016.

> Brand separation. After 15 years of pondering whether to spin off a premium brand from the mass-market Hyundai marque, Hyundai Motor Co. Chairman Chung Mong-koo greenlighted Genesis in the first half of last year, with the understanding that Genesis vehicles will be sold in Hyundai stores -- for now.

That may not last. After the first six nameplates debut by 2020, executives will re-evaluate whether Genesis needs its own channel, Cho said.

The company knows that launching a separate sales channel is expensive, but cost isn't the only issue. The revolution in digital marketing and sales has clouded the outlook.

"Given the big trend in digital technologies, I'm not sure the physical showroom is still a requirement," Cho said. While that suggests some kind of online retailing, he said all decisions would be carefully aligned with the dealer body.

When the company began debating the pros and cons of a separate network, nobody could have foreseen all the aspects of digital retailing that dealerships grapple with today. The delay may allow Genesis to incorporate a digital strategy early on, if not from the start.

> People. Part of separating from the Hyundai brand means having dedicated personnel. Genesis is gradually building its team.

At the time of Automotive News' mid-December visit to Seoul, the brand lacked a dedicated top executive.

Starting this month, though, Manfred Fitzgerald, 52, former director of brand and design at Lamborghini, will set and execute strategies for Genesis as a senior vice president at Hyundai.

He reports to Cho. Fitzgerald joins Luc Donckerwolke, formerly of Bentley, who will lead the brand's Prestige Design Division as head of the Hyundai Motor Design Center.

> Implications for Hyundai brand. As the Genesis lineup expands, the Hyundai Equus, Genesis and Genesis Coupe will go away, and the Hyundai brand will top out with the Azera, executives said. But they insist the Hyundai brand will benefit from Genesis.

By 2020, the expanded Genesis line will have higher sales.

That means more high-margin vehicles into which the carmaker can deploy advanced technologies and spread costs.

That will speed the migration of those technologies to Hyundai vehicles such as the Sonata sedan. Genesis also will provide a halo for Hyundai, Cho said.

"We saw some discrepancy between what we want to be and the real perception consumers have in the market," Cho said. "We believe Genesis will push it forward."

"Having a separate brand improves the expectations," said Kim Sang-dae, director of domestic marketing at Hyundai Motor.

But the sibling relations can cut both ways.

"Disassociating from Hyundai will also be a huge challenge, as very few consumers see Hyundai as a luxurious brand," said Akshay Anand, an analyst for Kelley Blue Book. "Brand perceptions take a long time to shift, and a luxury brand has to compete against brands that are entrenched in the consumer mindset in terms of prestige, comfort, safety, value."

> Technology and cost. Hyundai executives are aware of the change in perception they are seeking.

"We know ourselves. Our brand cannot be recognized as premium by the customers. We cannot charge that kind of premium," said Yang Woong-chul, Hyundai Motor Group's vice chairman in charge of r&d. "It's about premium performance, not premium cost."

That means devoting limited resources to advanced technologies with utilitarian impact instead of flashy, if gimmicky, features.

"Competitors like to put in new stuff as a world's first, whether the customers really like it or not," Yang said. "It's very easy to add very expensive components, but it adds cost. We are focused on engineering innovation."

Genesis could have used a pricey air-spring suspension to deliver an adjustable ride, Cho said. Instead, engineers found a less costly way to provide the same feel electronically.

A brand is born
Hyundai's new luxury brand went on sale in South Korea on Dec. 18. Here's some of the brand's strategy.

Lineup, now: Starts with the G90, a redesigned Hyundai Equus sedan. It arrives in the U.S. in the second half of 2016.

Lineup, coming: The G80, another sedan, replaces the Hyundai Genesis. Then a G70 smaller sedan, a midsize crossover and a larger SUV or crossover.

Selling points: Luxury-level safety technologies and performance, at less-than-stratospheric prices

Dealerships: Sold at Hyundai stores for now. After the full lineup is rolled out, the company may reconsider creating Genesis stores.

> Product. Hyundai Motor has worked, at times with mixed success, to separate its vehicles from those sold by sibling Kia Motors Corp. Each builds vehicles for the other. Hyundai will have to double those efforts to set Genesis apart.

Generally speaking, Genesis will get the upper-crust rwd vehicles, while Hyundai will keep more mass-market, front-wheel-drive ones.

The Genesis G90, arriving in the U.S. in the second half, will be the new brand's range-topping model.

The lineup will get two more sedans. A G80 will replace the Hyundai Genesis this year. Along with a new nomenclature, the sedan will get a significant freshening.

A smaller G70 sedan is also in the works. Fleshing out the brand will be a coupe, a midsize crossover and a larger SUV or crossover.

With that lineup, "we can reach some customers who are out of reach so far," Cho said. "The first requirement is the product itself."

> Safety. With Genesis, Hyundai Motor enters a new phase of brand development. In recent years, improving quality has been the top priority. Now, the mantra is safety.

"We emphasized quality so much at first, it made Hyundai what it is today. Now, we are putting that kind of thinking into safety," Yang said. "Quality is achieved, and safety is something we'll be representing in our vehicles."

The G90 previews that push with a suite of advanced safety technologies dubbed Genesis Smart Sense. The package bundles smart cruise control, lane-keeping assist and technologies to reduce driver fatigue.

In addition, the vehicle packs an autonomous braking system with pedestrian detection, active blind-spot detection, a driver attention alert system and an around-view monitor.

> Markets and customers. Genesis will be sold initially in Korea, North America, China and the Middle East.

Cho said Genesis will seek "new luxury" customers: young, pragmatic millennials turned off by ostentatious bling.

Genesis has a good chance to scoop them up, some analysts say.

"Auto luxury is no longer reserved for the rich classes, and sometimes, in certain developed markets, younger and less affluent consumers are more likely to afford auto luxury models," said Andy Bae, IHS Automotive's senior analyst for Korea. "Product segmentation and management by age levels and income levels are an essential part to nail down."

Executives are crafting a "human centered" marketing message they hope clicks with them. The goal is to offer upscale functionality without the upscale sticker prices.

> Customer care. Hyundai executives are evaluating a new customer-experience innovation program for Genesis. Cho declined to give details, but he said it will be digital-based, debut in South Korea this year and could hit the U.S. by year end.

One challenge, Cho said, will be training dealers to handle Genesis' product and customers differently from Hyundai's.

Genesis will also get separate customer-care programs. And a top priority will be creating "hassle-free" buying, Cho said. That may involve selecting dedicated salespeople and service technicians within a dealership to be Genesis specialists.

Taking the road less traveled will be key, executives say.

"We looked at all the different luxury car brands for many decades, and there are many which were not that successful," Cho said. "We are thinking of a different approach."

> Why now. Hyundai decided now was the time for several reasons. First, the Genesis name has built equity through the positive reviews of the latest-generation Genesis sedan, launched in 2013. That car's styling cues carry over to the G90.

Meanwhile, the Equus was due for a redesign, and there was a now-or-never mentality about pegging the brand launch to it.

Finally, executives wanted to strike while the market was hot.

The global market for premium-luxury cars will surge 29 percent to 6.77 million vehicles by 2020, from 5.27 million vehicles in 2014, IHS Automotive forecasts.

"The luxury segment has been bullish for the last several years, and I believe this will continue in the near- to midterm," Cho said. "This is the right time to launch a new brand."

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post #2 of 12 (permalink) Old 02-08-2016, 10:04 AM
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He also has Lamborghini and Audi under his belt. Going to be interesting to see what he comes out with moving forwards.
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post #3 of 12 (permalink) Old 02-08-2016, 02:32 PM
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That is one of the most pretentious pictures I have ever seen.

Most of the article sounds about right. It will be interesting watching the brand evolve and seeing how it does. Will it fail, succeed, or even surpass expectations?

I'm just not sure it is going to be capable of reaching German levels. I think Jaguar class is maximum and Acura is more likely.

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post #4 of 12 (permalink) Old 02-10-2016, 06:07 PM
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Originally Posted by SEGA View Post
That is one of the most pretentious pictures I have ever seen.

Most of the article sounds about right. It will be interesting watching the brand evolve and seeing how it does. Will it fail, succeed, or even surpass expectations?

I'm just not sure it is going to be capable of reaching German levels. I think Jaguar class is maximum and Acura is more likely.
His experience is in line with where Hyundai wants to go, i'm guessing chances are good we'll see a positive outcome but of course there's no telling for sure till we see the end result of that.
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post #5 of 12 (permalink) Old 02-14-2016, 03:27 PM
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I assume they'll be gunning for Mercedes and BMW if they want to hit the luxury market. They are the big two so it's going to be interesting to see the G80 or G90 go up against them.
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post #6 of 12 (permalink) Old 02-26-2016, 03:07 PM
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Yeah that will be exciting, even more so when you have other brands like Lexus also gunning for the same position. Seems like Hyundai could be building up some fast and better mometum, and of course great product.
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post #7 of 12 (permalink) Old 03-12-2016, 02:15 PM
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If they get the launch right they could start out looking better than brands like Acura and Lincoln. That in itself would be a big accomplishment from the outset.

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post #8 of 12 (permalink) Old 03-16-2016, 11:51 AM
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At this rate it wouldn't be hard to do that since Acura and Lincoln haven't set the bar that high, they're at a level that a brand like Hyundai can easily overtake them from the way I see it, but fortunate for both those brand is they have developed a following for a much longer time than Hyundai, giving them a slight edge.
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post #9 of 12 (permalink) Old 04-03-2016, 07:19 PM
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Acura seems like it is making progress. Lincoln its a little more unclear. Possible but not easy to overtake them.

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post #10 of 12 (permalink) Old 04-10-2016, 08:08 PM
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Acura is making slow progress so far, it has been a couple big jumps (ILX & TLX) but after that the rest has been incremental. They really need to do something about the RLX, already the Genesis is outpacing it, from the start! That's not good at all. The RLX's predecessor started off well in the 90's and then just fell off once the 00's hit. They need to go back to the drawing board.
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