Beyond a huge and glittering launch, which made Chung Mong-koo, Hyundai Motor’s chairman, very proud, the vehicle’s reception in the global premium car market will provide a revealing test of Hyundai’s new strategy, as the South Korean group seeks to move up-market.
Asian carmakers such as Toyota and Nissan have struggled in the past to challenge the hegemony of German carmakers in the luxury market. For many, Hyundai is a brand that stands for value-for-money, not high-end products.
“The all-new Genesis is a concentration of Hyundai Motor’s most advanced technologies, reborn through relentless performance tests and thorough quality management,” Mr Chung said in his welcoming remarks. “[It] will compete head-on with top-tier premium models in the global market including Europe.”
And while Hyundai has been holding back from capacity expansion in order to focus on boosting margins by developing a premium brand, a shadow has been cast over these efforts over the past year after the discovery of defects prompted a large series of vehicle recalls.
Hyundai spent about Won 500 billion ($470 million) over four years to develop the new Genesis, its first all-wheel drive saloon boasting first-in-class technologies such as the new CO2 cabin sensor control and automatic emergency braking.
The new Genesis received a record 3,500 orders on the first day pre-orders began in South Korea last week. Hyundai aims to sell 62,000 units globally next year – when the new car will be introduced to the US and Europe – by targeting mid-luxury customers in their 40s and 50s.
Fulfilling that target will require a high-end marketing push to match the Genesis’s high-end features. Hyundai does not provide a breakdown of its marketing spending, but in the US it trails Honda, Nissan and Toyota, which all spent more than $1 billion there in 2012, and has nowhere near the clout of GM, which spent $3.1 billion on advertising, according to research by Advertising Age.
Park Joon-hong, one of the company’s research fellows, says the new Genesis reflects growing internal calls to come up with top-quality cars as Hyundai shifts its focus away from volume growth to higher margins. Hyundai has been trying to boost its brand value in recent years under the slogan “modern premium”, by offering top-end features in its mass-market vehicles that are usually seen in premium cars.
Via Financial Times