automotive

Hyundai On Equus: 'We Seek Recognition'

Equus

The next big hurdle for Hyundai Motor America is finding out if luxury buyers will consider dropping by one of its dealerships during showroom visits to BMW, Mercedes and Lexus. Hyundai is counting on that happening when it introduces the Equus this fall, the company's first true luxury car. 

Writing an op-ed piece in Edmunds.com's Inside Line on Wednesday, U.S. president and CEO John Krafcik says the car's purpose is about more than generating retail revenue; it will be a major milepost in Hyundai's years-long march to legitimacy in the U.S.

If Hyundai's recent track record is any indication, chances are good that the $55,000 car, while not selling more than a few thousand units a year, will lift Hyundai's standing substantially. Its Genesis coupe and sedan have been hits, successfully competing in Mercedes, BMW and Lexus territory. The company has sold 7,842 of the cars year-to-date.

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Krafcik writes that Genesis has 6.3% of retail share in the mid-luxury segment this year, in fourth place behind the Lexus ES, Mercedes E-Class and BMW 5 Series. "It's ahead of the other 14 entrants in the segment, including the Infiniti M, Lexus GS, Lincoln MKS and Audi A6," he writes, adding that Genesis' share of its segment tops Hyundai overall, which has 4.9% share of the retail industry.

He also said Equus won't be Hyundai's Phaeton (which for non-autophiles might be thought of as the automotive version of "Ishtar," an expensive effort by VW to take the high end that didn't take, positive buff-book reviews not withstanding).

Krafcik argues that Hyundai won't have that problem because the success of Genesis proves there's a buyer base for Hyundai premium. And he says Genesis provides a missing step in price point between mass and luxury, a step that VW did not have in its lineup, as -- Krafcik points out -- Passat at $25,000 was the nearest thing to the $65,000 Phaeton. Hyundai's Genesis nameplate resides in the mid-$40,000 range.

He concedes that volume isn't the point. "We have just two key goals in mind for Equus: show the world we can build a flagship sedan that rivals Lexus LS, BMW 7 Series and Mercedes-Benz S-Class, and in so doing build further confidence in the Hyundai brand with a broad audience of car buyers; and pilot several breakthrough customer experiences for Equus owners that will differentiate us from the luxury pack and enable rich learning opportunities within our Hyundai retail network."

"I do think he's right," says Scott Oldham, editor in chief at Edmunds.com. "The Equus is an extremely impressive vehicle and a statement about Hyundai's capabilities. If they are able to pull off their customer-service ambitions and customer-relation ambitions with that buyer it has a shot at expanding the brand and being a market success. Having said that, are they derailing Lexus and Mercedes in a year and reinventing the segment? No, this is slow road, and [Krafcik] says as much. He realizes it will take some time, but I do think they are doing it right."

Nissan/Renault chief Carlos Ghosn was the first top auto exec to write in Inside Line, with a piece last fall about green cars and Nissan's Leaf program. Early this year, GM's Bob Lutz did a New Year's resolution list for GM. Oldham says readers are both car shoppers and enthusiasts. "But 35% of those enthusiasts are researching on Edmunds.com when they are in the market for a car," he says.

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