Hyundai sets out to sell 50,000 of Genesis

Even with luxury automotive sales declining, Hyundai believes it will be able to sell 50,000 of its new luxury vehicle, Genesis, annually.

Hyundai’s Genesis sports sedan, a vehicle that Hyundai has said could “shatter premium automobile paradigms,” first went on sale in late June. This month, Hyundai said, it is on pace to sell more than 1,200.

“We’re going to sell 8,000 this year,” said John Krafcik, vice president of product development for Hyundai Motor Co. in America.

Krafcik said the 50,000 target includes both the Genesis sedan and coupe versions. The coupe is to go on sale during the first quarter of next year.

Anything over 35,000 vehicles would be a tremendous success for Hyundai, said automotive consultant Erich Merkle of Crowe Chizek and Co., an accounting and consulting firm based in Oak Brook, Ill.

Hyundai’s Genesis represents a $500-million investment and is perhaps the company’s most ambitious vehicle introduction ever in the United States. With Genesis, Hyundai is aiming to change Americans’ perceptions of Hyundai and convince people to consider the brand when they buy a luxury vehicle.

Analysts say that’s a tall order.

Hyundai developed the Genesis to compete against the Mercedes-Benz E-Class, BMW 5-Series, Infiniti M and Lexus GS but is selling the vehicle at $8,000 or more less than the entry-level versions of those vehicles.

So even while luxury sales are down 14.5% through the first seven months of this year, according to Autodata Corp., Krafcik said Hyundai has a shot at attracting customers who want to pay less for a luxury car by aiming the Genesis at a wide audience.

“The goal is to generate strong consideration and honest appraisal,” Krafcik said. “Rather than just showing Genesis to the target customer, the idea is to show this car to a very, very broad audience.”

But while analysts praise Hyundai for advances in quality, styling and design and say the Genesis is a good vehicle, they say Hyundai faces steep challenges because of its reputation as a manufacturer of low-priced, entry-level cars.

“Here’s the problem, at the price point they have selected for the Genesis, regardless of how good it is, they have to sell against their own nameplate,” said Jim Hall, managing director of Birmingham forecasting firm 2953 Analytics.

But Genesis is following other recent successful attempts by Hyundai to push purchase prices higher. Hyundai introduced in the past two years the Azera sedan and Veracruz SUV, which start at $24,235 and $26,900, respectively.

But on the other end of the spectrum, Hyundai has also apparently explored the possibility of importing its tiny i10 from India to the United States. Several trade publications, quoting unnamed Hyundai officials, have reported the plans. The i10, currently assembled in India, is bigger than the Smart Fortwo, but is smaller than the Chevrolet Aveo and Toyota Yaris.

But Krafcik sought to quash those reports Wednesday.

“I think it’s very, very unlikely that we’d bring the i10 to the United States,” he said. “It’s just extremely unlikely at this point.”

Instead, Krafcik said Hyundai has successfully moved its average sale price across all vehicles up from $16,489 in 2004 to $18,878 last year.

And so far this year, Hyundai is holding its own in U.S. sales while much of the industry is struggling. For the first seven months of the year, Hyundai sold 271,769 vehicles, down 3% from last year — not bad considering industrywide light-vehicle sales are down 10.5% over the same period. Hyundai’s U.S. share has increased to 3.2% so far this year, up from 2.9% for the same months of 2007, according to Autodata Corp.

But even with its recent successes, Hall said he believes Hyundai will hit a consideration ceiling.

“I think they are about $3,000 too high,” Hall said.

Krafcik said Hyundai has researched the issue carefully, and said the company even considered launching the Genesis without the Hyundai nameplate on the vehicle.

Krafcik said Hyundai designers did want to put a Hyundai badge on the front of the vehicle, but they didn’t think it looked good with the Genesis’ grille.

“We thought it just made the car look flat and boring,” Krafcik said.

When Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. launched luxury vehicles, they created Lexus, Acura and Infiniti as separate brands, but Hall said Hyundai doesn’t yet have the size to launch a separate luxury division.

Krafcik said Hyundai explored that idea.

“In the end, it is really expensive to do that,” Krafcik said. “I mean, you need billions.”

But Krafcik said the average price of a vehicle purchase in the United States last year was $32,800, just under the $33,000 Hyundai is asking for its V6 Genesis.

And Hyundai is offering so much more of a value for the performance and features that the car will be a success, he said.

“I think this car is just an incredibly efficient full-size premium car, from every point of view,” Krafcik said. “It’s efficient from how much money we ask the customer to pay, it’s efficient from a fuel economy standpoint, it’s efficient from an interior packaging standpoint and it’s efficient from an ergonomic standpoint.”

source : Freep.com

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