Hyundai eyes Chinese Genesis production to cut costs
Hyundai is considering local Genesis manufacturing in China to avoid tariffs and compete with established luxury brands on price.
Hyundai is preparing to build its Genesis luxury models in China, aiming to sidestep import tariffs and offer more competitive prices against established premium brands. The company confirmed the plan as it seeks to expand Genesis sales beyond South Korea and the US, targeting China's lucrative but challenging luxury segment.
Cho Won Hong, Hyundai’s chief marketing officer, said the company is considering local production to overcome the high tariffs that make imported Genesis models more expensive than rivals from Audi and BMW. Hyundai must first reach an agreement with a local partner before manufacturing can begin. Chinese law requires foreign automakers to work with domestic firms to produce cars locally.
Hyundai’s move comes as the company works to reposition Genesis as a credible luxury brand. The firm recently hired Manfred Fitzgerald, formerly of Lamborghini, to lead the division. The aim is to shift Genesis away from Hyundai’s value-focused image and attract buyers who might otherwise choose established German marques.
China’s luxury market and Hyundai’s position
China is Hyundai’s largest market by volume, with more than one million vehicles sold there in 2015. Despite this, Hyundai’s Chinese sales fell by 5.1% that year, the first decline since 2007, reflecting both a slowing economy and increased competition. Local production of Genesis models is seen as essential for Hyundai to win market share from luxury rivals and restore growth.
Hyundai is not alone in targeting Chinese luxury buyers with local production. Other global brands, including PSA with its DS line and Peugeot with the 3008, have already established joint ventures to produce premium models for the Chinese market. This approach allows them to avoid tariffs and tailor products to local tastes.
Challenges ahead for Genesis in China
Launching Genesis production in China will require Hyundai to navigate regulatory hurdles and secure a suitable partner. The company has not announced a timeline for when local manufacturing might begin. Until then, Genesis cars will continue to face a price disadvantage against localised competitors.
The premium segment in China remains a key battleground for global carmakers, with growth driven by rising incomes and changing consumer preferences. For Hyundai, building Genesis models in China is a necessary step to compete on equal terms with the likes of Audi, BMW and Mercedes-Benz.
