After Genesis: Hyundai Looking to Take on BMW 3-Series

But Korean carmaker won’t flood showrooms with luxury models.

by on Apr.08, 2014

The new Genesis sedan will attempt to take on German rivals, such as the Mercedes-Benz E-Class, more directly.

In the beginning, there was Genesis.  But even as its second-generation luxury sedan begins rolling into showrooms, Hyundai is looking at its options for expanding its presence in the luxury car market, the maker’s top U.S. executive told And one very strong possibility will be to take on the vaunted benchmark of the compact luxury segment, the BMW 3-Series.

But it has already ruled out several possibilities and Hyundai Motor America’s new CEO Dave Zuchowski cautions that there’s a limit to how many new upscale models it plans to put in its showrooms.  Despite the higher profit potential of cars like the Genesis and even bigger Equus, he stressed, Hyundai isn’t walking away from its traditional “value” segment focus.

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“Genesis is our halo vehicle,” said Zuchowski, during an interview in Phoenix following a media drive of the 2015 luxury sedan.  “It elevates our brand and says we can compete with the best in the world.  But Genesis is all about image and prestige and the Sonata is all about volume,” the new CEO stressed, referring to the next-generation midsize sedan due to follow later this year.

A critical challenge for Hyundai is finding the right balance for its showrooms, and that means a mix of traditional “value” vehicles, such as Sonata and the entry-level Accent, as well as luxury models.  The maker, he emphasized, is “committed to invest in all of our existing vehicles.”

(Click Here to check out the new 2015 Hyundai Sonata.)

And that means that while the new 2015 Genesis sedan is more directly targeted at German competitors like the Mercedes E-Class, Hyundai won’t be filling showrooms with products aimed at every conceivable luxury segment, unlike key European rivals.

That said, Zuchowski did reveal that the Korean carmaker does have a few more high-line products under consideration.

“The space that seems to hold the most potential for us is the BMW 3-Series space,” he said, adding that, “We’re looking at it closely.”

Zuchowski did not offer any specific details, such as timing for a Hyundai 3-Series fighter.  But he did hint that the maker is moving forward on the development of the next-generation Genesis Coupe. And, like the new sedan, it will feature a more distinctive design language, rather than maintaining the me-too, derivative look of the current model.

Don’t be surprised to see the next Genesis Coupe move a bit more up-market, as well, and offer better performance, in line with its luxury competition.

Hyundai is “spending a lot of time” considering its various luxury options, according to Zuchowski – who replaced long-time HMA CEO John Krafcik at the end of 2013.

(Former Hyundai CEO Krafcik joins board of TrueCar as it files for IPO. Click Here for details.)

But the Koreans have already ruled out several possibilities, notably including a “luxury people mover” that could enter the crossover space populated by the likes of a BMW X3 or X5, a Lexus RX or Mercedes GLK. The problem, explained Zuchowski, is that it would be difficult to position separately from the current Hyundai Santa Fe ute.

Might other luxury models, perhaps a more upscale version of the big Azera be in store? Hyundai is apparently weighing a variety of options.

But one thing it has firmly ruled out is the idea of launching an all-new luxury franchise, along the lines of Toyota’s Lexus and Nissan’s Infiniti.

“The cost of a separate luxury channel would be too much,” even for a company churning out the profits of Hyundai, cautioned Zuchowski. Besides, the Korean maker’s existing brand still doesn’t have the awareness levels of key competitors like Toyota and Honda, so for now, it certainly makes sense, the CEO concluded, to use up-market models like Genesis, to help build demand for the Hyundai brand overall.

(Hyundai again restates fuel economy ratings. Click Here for the story.)

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