Hyundai to keep Genesis brand in-house

The Hyundai Genesis sedan and coupe, which have both been confirmed for an Australian release (starting with the recently unveiled second-generation sedan in the third quarter of this year), will be sold in regular Hyundai dealerships without an separate section or special sub-brand dealership creations.

The Australian business case closely resembles Hyundai’s experience in North America, which shows that the Genesis has served as both a halo car and helped improve the overall Hyundai experience across the range.

The company’s North American boss, Dave Zuchowski, told CarAdvice at the Detroit motor show yesterday that the company’s strategy to keep the brand in-house had been the right call.

“We took an important step when we came out with both Genesis and Equus (not available in Australia) that we didn’t want to create a secondary distribution channel.” Zuchowski said.

“We think that every Genesis sedan and coupe that we sell makes the Hyundai brand better.”

The move to keep Genesis as part of the Hyundai brand is in contrast to brands such as Toyota, Nissan and Honda whom have launched their own separate luxury divisions with Lexus, Infiniti and Acura respectively. Of the three, Lexus has been the most successful but both Honda and Nissan have struggled to keep pace with their compatriots and German rivals.

Zuchowski admitted that Genesis couldn’t compete with the likes of BMW, Mercedes and Audi as it doesn’t have the brand equity of its long-established German rivals.

“Is the Genesis brand on par with other premium makes? No. They've spent decades and decades to develop that equity and ours isn’t there yet. What people recognise is value, even people shopping for premium cars recognise value. When they look and see they have no compromises in the craftsmanship, performance, ride dynamics, technology or power - no comprises at all - and you get a significantly reduced price and great value, there are people that are willing to make that switch. That’s a smart move.”

In North America, Hyundai has an overall marketshare of 4.6 percent (in Australia it’s around 8.5 percent), yet it commands more of the premium segment market share with its Genesis and Equus models, which suggests the brand has largely succeeded in entering the top part of the market over the last six years.

As Hyundai Australia recently confirmed to CarAdvice, bringing the Hyundai Genesis to our market is mostly about brand building and not volume. Yet it’s still possible that given a healthy price point (we suspect the Genesis sedan will be in the mid $50,000s), it may surprise the market. Particularly given the demise of locally made large cars.

Zuchowski was also quick to rule out any future possibility of splitting the Genesis brand away from its parent company. Pointing out the growing pains and vast monetary expenses that brands such as Acura and Infiniti have felt to date.

“No. We’ve talked about it in the past and we like what we’ve done now and that’s not part our discussions anymore. We actually believe that many of our competitors that have elected to go a different way and created a separate distribution channel for their premium products might rethink that strategy if they made that decision today.”

Hyundai is likely to use its Genesis products as a way to attract a new audience and lift its profile among buyers who may have never considered the brand in the past. As far as the Koreans are concerned, it’s wiser to spend the marketing and brand building costs associated with launching a separate premium brand on the parent brand itself.

“The investment from a company perspective is tremendous, the investment from a dealer perspective is tremendous, the splintering of a brand building effort is really impactful. We have growing consideration where we still need to get to where Toyota and Honda are right now and by spending hundreds of millions of dollars to build a sub-brand, you’re taking that away from building your primary brand. So [the decision to keep Genesis as part of Hyundai] is not something that did loosely without a lot of thought, we thought it was a good strategy and we are going to continue that strategy.” Zuchowski said.

The Australia-bound second generation Hyundai Genesis sedan will be powered by a 3.8-litre V6 engine and coupled to an eight-speed automatic transmission, although yet to be confirmed, it’s likely to be available in only one high-grade variant and be sold through most Hyundai Australia dealers.

The Hyundai Genesis coupe will be here when the next-generation model launches in around 2016.

Do you think the Genesis brand could work separately on its own merit? Perhaps in time?