• by Karl Greenberg , April 1, 2010

Hyundai is launching its first luxury vehicle in the U.S., a car the automaker unveiled for the first time on these shores this week at the New York International Auto Show. With Equus, a full-sized car that Hyundai is pricing at between $50 and $60 grand, the automaker is clearly hoping the vehicle does more than generate extra volume upmarket. 

Taking the long view, Equus is part of Hyundai's 11-year-old strategy of -- to borrow from a certain Norman Lear "All in the Family" spin-off -- move on up to the east side, to that deluxe apartment in the sky. Yes, like George Jefferson, Hyundai is working its way uptown, which gives sibling Kia a little more room to expand its own downtown real estate. Kia is rolling out several vehicles this year, including a redesigned Optima sedan and Sportage crossover.

Speaking at the car's press introduction, Dave Zuchowski, Hyundai Motor America's vice present of national sales, said the company set an all-time sales record for the first quarter, with over 111,000 vehicles. "That's a 16% increase over the first quarter of 2009," he said. "And that turned out to be a pretty good year for us. This is our 15th consecutive month of year-over-year retail market share growth."

Zuchowkski said sales of the Sonata and Tucson were up 184% and 129%, respectively, in March, and that Sonata is the No. 3-selling car in the mid-size segment behind Camry and Accord. He said Tucson and Sonata were Nos. 1 and 4, respectively, among vehicles shopped on Edmunds.com last month.

Jon Krafcik, president and CEO of Hyundai Motor America, says Hyundai dealerships selling Equus will have to create a store-within-a-store environment for Hyundai's higher-end, rear-wheel-drive cars: Equus, Genesis and Genesis Coupe, and that Hyundai will create a premium marketing channel for the vehicle.

"For Equus customers, we will adopt an individualized selling process," he says. "A specialized, trained sales representative will present the vehicle in the dealership or at the customer's home or office for a personalized demonstration drive."

There won't be a traditional owner's manual for Equus, but a digital tablet. "Leafing through a traditional owner's manual doesn't strike us as an intelligent luxury experience," he says. Instead, owners will get a WiFi-enabled, 9.7-inch multimedia color tablet with touch screen.

Krafcik says the tablet lets customers schedule service and maintenance wirelessly and schedule free at-home service pickup and delivery. Customers get a Genesis loaner car. "Equus will become a test bed for a new retail experience that will cascade throughout Hyundai dealerships over time."

Dealers have to meet "certain performance standards" and invest in "moderate facility upgrades" to be an Equus dealer, per Krafcik. "But we purposely kept fixed costs down," he adds. "Now more than ever, affluent customers can see that they are paying for all that marble. They know those costs end up being buried in the price of the car."

Dan Gorrell, president of Tustin, Calif.-based automotive marketing consultancy Auto Stratagem, says a Hyundai between $50,000 and $60,000 will be a tough sell for people unwilling to shell out luxury money for a non-luxury nameplate. Indeed, one need only remember VW's efforts to go upmarket with Phaeton, a vehicle that was well reviewed, but poorly accepted as a luxury car.

But he says Hyundai's investment in Equus is about more than sales of Equus. "The car is about return on image," he says. "Hyundai's investment in Equus is an investment in PR and marketing as much or more than return on sales. It's as much about the rub-off on the rest of the models."