By on July 17, 2012

If it weren’t for auto bloggers, the question of a separate Hyundai luxury brand would have been dead and buried long ago. But auto bloggers, with a desperate need to generate news out of thin air, won’t let the story die. 224,000 Google results later, and we finally have a definitive answer.

An interview with Automobile Magazine quotes Hyundai CEO John Krafcik as stating

“We actually thought about launching the Genesis that way, and putting them in their own showrooms, but we’re not going to do standalone premium franchises because costs are so high. If you multiply 200 dealerships by a cost of $10-20 million per dealer to make a new space, it comes out to something like $5000 or $6000 that would have to be added to the price of the car.”

A look at the Google results shows a series of back-and-forth headlines to the effect of “Hyundai mulls establishing premium luxury brand” and then a refutation shortly after with a headline stating something like “Hyundai denies luxury brand, separate Genesis showrooms”.

The sad thing is, there’s no confusion. All along, the idea has been an unequivocal non-starter. But the gods of pageviews dictate that even the flimsiest rumor has the potential for a story, and thus the rumor, like the Protocols of the Elders of Zion, refuses to die. Hopefully now we can put it all to rest.

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100 Comments on “224,000 Google Results Later, Hyundai CEO Closes The Door On Luxury Brand...”


  • avatar
    gslippy

    Chevy sells Corvettes, Impalas, and Sonics – people wishing for Hyundai to open a luxury brand need to get over it.

    Hummer is a great example of what can go wrong with separate, expensive franchises.

    • 0 avatar
      28-Cars-Later

      Saturn even more so… ask yourself which did more damage?

      • 0 avatar
        idiotking

        I don’t know, I’d argue that for a while, Saturn was doing more good for GM than GM knew what to do with. Eventually, political squabbling and a lack of vision killed Saturn, when Saturn should have been a wake-up call. Such is Detroit.

      • 0 avatar
        28-Cars-Later

        While I agree in the 90s Saturn drew in customers who would have never previously shopped GM, by 2003 Saturn became the new Oldsmobile and really lost its feel good identity. This combined with a host of awful products (L200 engine fiasco, first gen Vue, Ion which didn’t go over well) probably hurt GM more than helped.

      • 0 avatar
        el scotto

        My 96 SL1 was bog slow and stone dependable. I bought it to do a 180 mile commute for one day a week (night school) and as a DD. Saturn did change when the UAW came in. GM could’ve learned but Saturn was lost due to GM infighting and ineptitude.

      • 0 avatar
        Felix Hoenikker

        I own a 2004 Saturn Ion with 202K miles. It is simply the most durable and reliable car I ever owened including two Mercedes. Enough said about that brand.

      • 0 avatar
        Zackman

        When Saturn began, a gal in our office bought one – dark green of course – weren’t they all – and was absolutely captivated by it. So much so, she left the company and went to work for Saturn selling Saturns!

        Kind of like the Apple of its day. How soon it all ended.

      • 0 avatar
        28-Cars-Later

        el scotto you’ve about summed up my 98 SL2

    • 0 avatar
      bd2

      A separate brand/dealer network adds thousands to the MSRP.

      Look at the Infiniti M and the Lexus GS – not exactly big sellers and the Equus is not far behind LS sales in the US despite the lack of AWD.

      In Canada, both the Genesis and Equus sedans outsell the new GS and the LS.

      Now, this doesn’t necessarily mean that Hyundai will not resort to a luxury brand sometime in the future, or at least, a luxury sub-brand.

      • 0 avatar
        CJinSD

        Look at the Bentley Continental GT compared with the VW Phaeton. The same car sold better for three times the price thanks to branding.

      • 0 avatar
        bd2

        @CJinSD

        The problem w/ the Phaeton in the US wasn’t branding so much as it was (1) brought nothing to the ‘value’ equation (starting at the mid-60k range and went over $100k – which is the equivalent of being over $70k today), (2) didn’t up the service quotient and (3) looked too much like a larger Passat.

        When Toyota launched the Lexus LS400, they, despite launching it under a separate luxury brand/dealer network, made sure to price the LS400 accordingly, starting at an MSRP of $35k which not only heavily undercut the S Class, but a well equipped E Class as well.

        Also, it wasn’t like the A8 was a big seller for Audi (the 3rd gen A8 is just starting to really see an increase in sales for Audi in the segment), so one could hardly expect the Phaeton to do better, esp. since it was priced so close to the A8.

        While the Infiniti M and Lexus GS are prices lower than the E Class and 5 Series, they are still close enough in price that most buyers in the segment look past them and just get the MB or BMW.

        The Lexus GS is a new model and its barely outselling the Genesis sedan which is due to replaced next year (the Genesis handily outsells the newer Infiniti M).

        In Canada, both the Genesis and Equus outsell the GS and LS and the Hyundais don’t even have AWD.

        Unless you’re MB or BMW, pricing is more important than branding.

      • 0 avatar
        CJinSD

        You’re not addressing the central point of my post. Why does a failed $60K VW work as a $200K Bentley? The market immediately corrected Lexus’ pricing when the LS400 was launched. Whatever the MSRP was, the cars almost never changed hands for less than $50K and both Mercedes and BMW had to increase their value to compete. Lexus also adjusted their pricing to reflect actual transaction prices so not just the dealers got rich in a very brief period of time.

      • 0 avatar
        bd2

        @CJinSD

        In did address the issue.

        The Phaeton in 2004 had a starting MSRP of $64,600 and a top of the line Phaeton went for over $100k.

        In today’s dollars, the base Phaeton would sell for $78,500 – which is $4k than the starting MSRP for a 2013 Audi A8 ($72,200).

        So as I had stated before, the Phaeton failed in part b/c it brought nothing to the value equation?

        Why buy a Phaeton when the Audi A8 could be had for around the same price and the A8 didn’t look like an oversized VW Passat?

        The Equus, otoh, starts at $60k – which is a hefty $18k less than what the base Phaeton would sell for in today’s dollars.

        In addition, the Equus comes with a level of service that wasn’t offered by VW – such as at home/office sales and service calls and a guaranteed loaner of an Equus or Genesis sedan.

        1,433 Phaetons were sold in 2004, and 820 were sold in 2005 with sales ended after 2006 as sales continued to drop (note – this was when auto sales were going up and up).

        Meanwhile the Equus is on track to sell nearly 4k units for the year and the Equus doesn’t have available AWD which can make up as much as 45-50% of sales (even w/o AWD, the Equus outsells the LS460 in Canada).

        Toyota increased the pricing for LS over the years (still, the LS460 is tens of thousands less than the S Class; the LS is closer in price to the Equus than it is to the S Class) and Hyundai is doing the same, but more so for the Genesis than the Equus (the Genesis started at $32k and for the 2013MY will be priced around $35k; the next gen Genesis which is set to launch next year will probably start at around $37-38k).

      • 0 avatar
        fredtal

        It does show that Hyundai knows their market is for low price cars, even in the upper ends.

    • 0 avatar

      HUMMER failed because it was an UGLY, LUMBERING, OVERLY-EXPENSIVE piece of junk.

      The hype got me excited about HUMMER right up until I actually tried to get into an H2. When I saw how cheap and impractical it was, I decided to stick with a short 2009 Cadillac EXT lease. This was coincidentally when I fell out of love with “big trucks”.

      The Hyundai is in a different position.

      It’s a good looking vehicle – albeit generic looking – and offers plenty of luxury technology at a low price when compared to the SRT8, the MKS Ecoboost and the Cadillac XTS. I also like that Hyundai offers a range of engine choices.

      Hyundai did a smart thing not trying to start a new luxury franchise , but the real news at Hyundai is in their low-end cars like the Accent, Elantra and Sonata. You might even include the Azera. All of those cars came ready to take advantage of high gas prices and the Toyota Unintended acceleration fiasco with great looks, low prices and value.

      • 0 avatar
        chicagoland

        Toyota was cleared of that, no solid proof of any ‘computer bug’ that forced cars to go out of control.

        Also, Hyundai/Kia resale is not great, and they are laying cash on hoods and dumping into fleets, sound familiar?

      • 0 avatar
        snakebit

        According to a news account reporting on the crash of the Toyota poster child for unintended acceleration(sp), the car was a DEALER OWNED rental/loan car ( I think something like a Lexus RX300)and someone in the dealership installed the wrong, and oversize, set of floor mats that fouled the gas pedal, and prevented the driver, a state trooper presumably trained as a good driver, from slowing down before crashing, killing him and most of the passengers.

        If that taught me anything when I was a parts guy, it’s that when someone asks you for a set of mats, and you don’t have the exact set that fits that model car, you don’t sell them just anything hanging up in your rack. You offer to get them the correct set, and nothing else, and install them for them, making sure to use the hold down pins provided.

      • 0 avatar
        bd2

        @chicagoland

        Don’t let the FACTS get in the way.

        Hyundai’s fleet % for 2011 was 10%; for YTD in 2012, it’s 9% (lower than any other major mainstream brand aside from Honda).

        Toyota’s fleet % YTD is 15% and they sell a lot more volume than Hyundai so that means a lot more vehicles into fleet.

        Hyundai also has the least amount of incentive spending of any brand.

        Hyundai/Kia’s average incentive spending for June was $1,253.

        Take out Kia and Hyundai’s average incentive spending is below the 1k mark.

        Honda/Acura’s average incentive spending for June was $2,314 and for Nissan/Infiniti – $2,645.

        http://blog.truecar.com/2012/07/03/honda-and-toyota-with-record-highest-average-transaction-prices-for-second-straight-month-industry-incentives-lower-in-june-according-to-truecar-com/

        As for resale –

        2012 ALG Mainstream Brand Residual Value Rankings:

        1.SUBARU
        2. HONDA
        3. HYUNDAI
        4. MAZDA
        5. TOYOTA
        6. NISSAN
        7. KIA
        8. VOLKSWAGEN

        Only brands above the industry average were ranked

        https://www.alg.com/residual-value-awards.html

        It’s pretty difficult for someone to get EVERYTHING in their post WRONG, but congrats!

  • avatar
    catt102

    Hyundai should’ve bought Jaguar. Hyundai + Jaguar made a bit more sense than Tata + Jaguar as what Jaguar needed most was $$$$ and a volume of units to spread development costs.

  • avatar
    FJ60LandCruiser

    When I buy a luxury car and need to take it in for service, I’m glad to know that my business means the same to them as some hick with a crapped out Sonata.

    • 0 avatar
      icemilkcoffee

      Huh? How so? They will charge you 4X as much for your fuel filter and brake rotor than the crapped out Sonata. Your business means a lot more to them because they make a lot more money off of you.

    • 0 avatar
      jetcal1

      BTW, why should the owner of a crapped Sonata get a lower level of service? My customers range from companies flying clapped out 70 year old fire bombers for the forestry service to 2 billion dollar fleets consisting of a handful of business jets. Why should I discriminate? Your statement reeks of hubris.

    • 0 avatar
      gslippy

      Those hicks with crapped out Sonatas make a lot more money for Hyundai than the handful of Genesis owners do.

    • 0 avatar
      bd2

      Except with the Equus, one wouldn’t have to take it in for service since the Hyundai dealership will pick up and drop off (something that only some luxury dealerships do).

      And at MB dealerships, one will see SMART cars and MB commercial vans being serviced together with S and E Clases at the service bays.

    • 0 avatar
      JREwing

      You also would’ve paid tens of thousands more for a badge, and someone kissing your ass.

    • 0 avatar
      vlangs

      actually, what I really like about the Equus service is they drive to your house, drop off another Equus loaner and then take your car to a dealer.

      You actually never once have to go to the dealer ever. If you allow them to run your credit score or whatever, they’ll arrange to meet you somewhere with a tester Equus and all the materials to sell you one.

      You never once have to mingle with the “plebeians” And if you switch the H badge with the KDM badges, it looks like a CLASS automobile.

    • 0 avatar
      mkirk

      FJ60, My wife drives an 07 Tucson. I have had nothing but positive experiences at any dealer I have gone to. Even the local screaming TV ad dealer in Watertown NY went above and beyond while I was deployed to Iraq and drove out to the house to jump my wife’s car off in the dead of winter so she could get it to the dealer (30 below temp zapped the battery).

      Now as a fellow Land Cruiser guy I’ll ask you when was the last time you went to a Toyota dealer with your 60? I had my FJ-80 in for a recall recently and decided I would have them align it as I had just done some front end work. Since you are familiar with these vehicles you know they have 2 solid axles and like 1 adjustment and can be aligned with a piece of string. Yet the service guy was offended when I told him that I didn’t need a 4 wheel alignment. “These things are full time 4WD so you need all 4 wheels aligned or you’ll ruin your tires”. Then I was ambushed by a salesman trying to convince me that my old truck had expensive problems on the horizon and a new FJ Cruiser was really in my best interest. It took my like 20 minutes just to get my keys and get out of there.

      Last time that truck saw a Toyota dealer…I mail order all my OEM parts now.

      And isn’t a 60 series about as far from a Luxury vehicle as one can get? Don’t get me wrong, I’d own one if mine didn’t have to tow on occasion and I saw onw sans rust, but the Tata and Mahindra trucks we drive in Kandahar are more luxurious than a 60 ;)

      • 0 avatar
        FJ60LandCruiser

        I sold the 60 and now have an 80. Same level of “luxury,” just with leather. My DD is a GM pickup. I have most of the work done by a Land Cruiser nut at a local garage.

        On the amusing note of Toyota dealers, I was getting a new taillight assembly from the local dealer and the svc manager asked me when was the last time I had the CV joints inspected.

        I told him the truck has no CV joints, he countered how does the power reach the front wheels in a 4WD/AWD truck? Then I offered him 100 dollars cash if he could point out the the CV joints to me.

        It was 5 minutes of fun watching him wrench the steering wheel and marvel at the lost technology of a live front axle.

      • 0 avatar
        mkirk

        LOL FJ60…that is awesome. It is amazing how much these trucks seem to bewilder the Toyota dealers. I wish I could bring back one of these poverty packed 80′s or 105 series trucks from Afghanistan. Diesel, 5 speed, and vinyl floors and seats. I searched long and hard for an 80 with the 4.5 AND cloth, mechanical seats.

  • avatar
    shearwater26

    Nice.

  • avatar
    Dave M.

    “When I buy a luxury car and need to take it in for service, I’m glad to know that my business means the same to them as some hick with a crapped out Sonata.”

    I don’t see you being Genesis/Equus material. You need a more powerful social statement in case one of your neighbors even sees you pulling into the Hyundai dealer for service! Try MB or BMW….

    • 0 avatar
      Rental Man

      The funny thing is that if you are in that pay you have a good chance to be traveling a lot. In rental cars. So you do knew exactly how it feels when you get in/out of one.

      The real rich never asked for more then a full size car. Even if they own a BMW 7. They have to go & get things done. Maybe bill someone. A BMW 3 customer sent over by the dealership? PITA

    • 0 avatar
      JCraig

      I’m glad that when I take my Elantra in for service I’m treated like I bought a luxury car…

    • 0 avatar
      FJ60LandCruiser

      I drive a GM pickup.

      The local Hyundai dealership operates out of the Ford service bays. Your 60k luxury car will be in the expert hands of their Super Duty diesel mechanic, who doesn’t bother to put any plastic down on the seats or floors because he’s used to dealing with fleet trucks.

      And if something breaks, instead of getting a courtesy car, you can catch the shuttle or maybe score the last generation Focus to buzz around in.

    • 0 avatar
      jpolicke

      FJ60 assumes the standard treatment by the service department is somehow inferior when applied to a Genesis/Equus owner. I don’t know how Hyundai treats service customers, never having owned a Hyundai. I suspect he doesn’t either.

      Maybe they think the guy with the Sonata – and the guy’s kid with the Accent – deserve the same quality treatment as the “big shot” with the Genesis because they desire to build a positive relationship with them and hopefully sell them another car further up the model line.

      But just to be on the safe side, FJ60 should buy BMW or MB. He can then feel confident that he’s getting “premium” treatment because they empty his wallet with a big respectful smile.

      • 0 avatar
        Sigivald

        Maybe they think the guy with the Sonata – and the guy’s kid with the Accent – deserve the same quality treatment as the “big shot” with the Genesis because they desire to build a positive relationship with them and hopefully sell them another car further up the model line.

        We have a winner.

        Any dealership worth taking your car to will treat you* like a Very Valued Customer, whether your car is an old POS or a brand new top-end Luxobomber.

        (* Assuming you hold up your end by being minimally civil and respectful; nobody has a duty to treat a dick like a king.)

      • 0 avatar
        iNeon

        Crown Mercedes-Benz, in Hoover, Alabama had a counter clerk which told me they could get my touch-up paint later– when I knew what I wanted. The car was in the parking lot, and I asked for a jar/vial of non-metallic 1979(727?) white.

        I paid $30 for my fuel return lines and left. Never returned. Sold the car.

        People do not get good service at Mercedes-Benz shops– we have no need to convince ourselves otherwise. The good news is that no one else is better.

        Jim Burke Chrysler couldn’t get me the correct lug nut for a 2008 PT last year. I gave them two tries. It makes me shake my head every time I wash the rear left wheel on that car.

    • 0 avatar
      raph

      Heh… that reminds me of a local stealership called Checkered Flag BMW, their tag line was ”Where winners buy” – I get it, but the radio spot and the voice doing it made for some real d-bag bait. It was something along the lines of ” You’ve made it, you’ve proved you better than the rest, now you deserve the best, that’s why winners buy at Checkered Flag BMW”

      • 0 avatar
        Ubermensch

        Can’t blame them for knowing their customer base.

      • 0 avatar
        drivelikejehu

        In fairness, I don’t think that’s a BMW-specific slogan. They own a ton of dealerships and it’s just their corporate tag-line. Stupid, no question, but not really a snob appeal. Been the same for a long time too, if I recall correctly, having grown up in Virginia Beach and heard their radio/TV ads a million times. Did get my first car from one of their dealerships.

  • avatar
    Pch101

    Avoiding the separate showrooms, at least over the short run, is probably a wise idea.

    Avoiding the separate branding is a bad idea. If they plan on competing against the Germans and Lexus on any basis other than price, then they will need the special branding.

    Of course, if the goal is to compete against the likes of Buick, then this approach may be good enough. But these days, Buick doesn’t represent much in the way of competition.

    • 0 avatar
      CJinSD

      At some point the customers matter and the ones who buy often-inferior luxury cars are buying them because they want to be associated with ‘exclusive’ brands. Put a Kia badge on a new BMW 750i and it suddenly becomes just an ugly, unreliable car with giant chrome medallions bridging the front doors and fenders to announce the tackiness of its occupants.

    • 0 avatar
      bd2

      A sub-brand is the way to go.

    • 0 avatar
      KalapanaBlack

      “Avoiding the separate branding is a bad idea. If they plan on competing against the Germans and Lexus on any basis other than price, then they will need the special branding.”

      This line of thought is completely baffling (illogical) to me.

      Is “Lexus” as a brand well-regarded because the LS has been a good product, or is the LS a good product simply because “Lexus” is a well-regarded brand? It’s similar to a chicken-egg scenario, except it has an obvious logical conclusion.

      Anybody who knows anything about cars, branding, or any mixture of the two should be able to realize that Hyundai’s strength is in their products, and that they have seen real dividends paid in how their brand is regarded over the last decade-plus.

      Why anyone would, for some unfathomable reason, think that the brand name intrinsically dictates the quality of the product and not vice-versa is beyond me.

      • 0 avatar
        Pch101

        “Is “Lexus” as a brand well-regarded because the LS has been a good product, or is the LS a good product simply because “Lexus” is a well-regarded brand?”

        It’s both.

        There is a reason why consumer products companies devote a lot of time, attention and money on branding and marketing — because it matters.

        Branding is critical in the auto industry. The brand has to tell a story, and the vehicles need to support that story. Americans have grown accustomed to seeing separate badges for luxury cars, and not many of them will pay the price premium without the appropriate badge.

        I suspect that the dealership argument is a bit disingenuous. In order to command BMW prices, Hyundai would have to spend more on parts and engineering, and they apparently don’t want to do that. I suspect that they would rather compete on price in a subcategory of their own creation (the bargain luxury car) than to compete head-on against the heavyweights.

      • 0 avatar
        bd2

        Lexus or Infiniti, much less Acura can’t compete against the Germans in pricing (esp. MB and BMW).

        Infiniti gave up the Q45 and the M is barely selling.

        Acura sells at a completely different pricepoint due to the lack of RWD and V8 (competing more against the likes of Lincoln, Buick Volvo); and their flagship, the RL, had been an even bigger failure than the Infiniti M.

        And even for Lexus, their big sellers are the cheaper FWD based models like the RX and ES; take away sales of the RX and ES and Lexus becomes… Infiniti.

        More astute luxury buyers will opt for a RWD Genesis over the FWD ES.

        I’d much rather see Hyundai spend their $$ on developing more RWD models than waste it on building out a separate dealer network and then trying to cheaply fill their lineup with FWD based models such as bringing the i40 over and rebadging it as a ‘luxury model’ (Euro Accord/TSX) and making a luxury version of the Azera (new Lexus ES).

        Seems very likely that Hyundai will do at least one luxury CUV, likely built on the RWD Genesis platform.

        So what’s more ‘luxury’? A CUV built on a dedicated RWD platform or a CUV (Lexus RX) built on the same platform that underpins millions of Camrys?

      • 0 avatar
        28-Cars-Later

        Bd2, you’ve got me really thinking here. Lexus at one time was doing really innovative things (LS400, SC400, 1st gen GS) but with the exception of LHA and LS series, everything else they make are wrong wheel drive Toyota clones, right? Acura has been this way for some time, just restyled Hondas, at least since the Legends went out years back. Infinity I’m not sure about there may be a wrinkle of exclusivity there I’m not accounting for, but surely most of their brand is similarly guilty. But if you take just Lexus/Acura and then add whatever Buick and Lincoln have become they all basically sell the same thing over and over, boring midsize FWD/AWD V6 powered blobs (fake SUVs included, they are mostly car based to my knowledge). So who the heck is buying all of these cookie cutter cars and how do all brands manage to survive selling the same darn thing?

      • 0 avatar
        bd2

        People who don’t really care about cars aside from the badge.

        The type who compare the FWD ES and the RWD GS at the Lexus dealership and decide that the ES has the same interior space for tens of thousands less and opt for the ES.

        Also holds for the Mercedes and BMW in a somewhat different degree – the type who purchase a bare-bones 3 Series b/c it has the BMW badge and don’t know or care that it is FWD or RWD.

      • 0 avatar
        CJinSD

        You guys have pretty in depth discussions without bothering to consider if any of your assumptions are correct or not. Lexus RWD biased vehicles include the IS series, GS series, SC series that is on hiatus, LS series, LX series, and GX series. With the exception of the Lambo-based R8, Audi makes a bunch of FWD architecture 4 cylinder and V6 powered products. So what? Many people that buy high quality Japanese cars today are buying them having owned German cars when they were special and realizing that today they’re for the kind of people that notice what kind of undershirts other men are wearing. German reunification destroyed German cars as far as I’m concerned, it just took a couple model cycles for German values to degenerate irretrievably.

      • 0 avatar
        mkirk

        LX and I believe the GX are full time 4WD. Your exclusive GX is just a Leather Lined Prado that the third world beats on.

      • 0 avatar
        Pch101

        Audi is FWD biased.

        Much of the Lexus and Infiniti lineups are RWD.

        I doubt that the average car buyer knows the difference. “Wrong wheel drive” comments completely miss the point.

        The issues are more basic than that. BMW and Mercedes took the Lexus threat seriously, and counterattacked with more technology, more service, more coherent product ladders and more leasing. Those were smart moves; since they already began with the branding advantage, they could use more customer coddling to defend against the Lexus reliability angle. If you’re trading in leased cars every two years and get treated well at the service bay, then reliability isn’t so important.

        One of the weaknesses of Lexus is the failure to follow the German three-model strategy (what some would deride as a “same sausage, different lengths” approach.) Lexus has cars to compete in these same segments, but the models lack coherence with each other. It’s easy to intuit the connection between a C, E and S class or a 3-, 5- and 7-series; the ES/IS/GS/LS relationship is muddier and less compelling.

      • 0 avatar
        bd2

        The IS and GS sell around a THIRD of the volume that the 3/5 Series and C/E Class do despite having the pricing advantage (this applies to the brand new GS; prior to that GS sales were floundering).

        The Infiniti M fares even worse (and we all know what happened to the Q); the G sells well but that largely due to some incredible lease deals that Infiniti offers on the G.

        Even the Audi A4 and A6 struggle against their German competition.

        While it’s true many buyers either don’t know or care about the difference btwn RWD and FWD (hence those buyers looking at the ES and GS and opting for the ES since it’s the same ‘space’ for much less $$), there are still plenty of buyers who prefer the traditional RWD drive, and those buyers overwhelmingly pick MB and BMW over the others (there’s a reason why having an AWD option is very important for the RWD models – these buyers want the RWD bias, but security of AWD if they live in the snowbelt).

  • avatar
    Cammy Corrigan

    The CEO of Hyundai Motors is Chung Mong-Koo.

    The CEO of Hyundai Motors AMERICA is John Krafcik.

    • 0 avatar

      Is this level of pedantry necessary? I think most people reading this article not only know who John Krafcik is but know the distinction between the two entities.

      • 0 avatar
        KalapanaBlack

        Let’s just cut corners, then. Since a proper level of finishing and quality is pedantic.

        I’m pretty sure Roger Smith said the same thing about GM customers in the ’80s. Why make interiors that wear past three years? I think most of our customers not only remember the 1950s, but think our engines won’t self-destruct in four.

        • 0 avatar

          It’s not a matter of cutting corners, the readers at TTAC are informed enough that if I don’t insert the word “America” when discussing John Krafcik and his duties, they are going to understand the context of the article.

          Luckily, the segment that must let everyone know just how smart they are with their endless attempts at comment-page one-upmanship are firmly in the minority. And I have little patience for this kind of conduct.

      • 0 avatar
        bumpy ii

        The distinction may be generally known to the readership, but it is nonetheless good practice to clarify the matter, particularly when quoting him in regards to matters that he may or may not be the ultimate arbiter of.

      • 0 avatar
        LALoser

        +1 for DK at 5:57 and +10 at 7:22.

  • avatar
    harshciygar

    This post is hipster-ironic in the worst sense of the words.

    Come on Derek, how are you going to take to task auto bloggers writing about a made up story (even though Hyundai admits to considering the idea) when you’re doing the exact.same.thing.

    You’re better than that.

    • 0 avatar
      don1967

      Granted, Derek is getting some mileage out of the same story which he derides. But in fairness he is not the one making up the story; he is the one trying to put it to bed with new factual information. Isn’t that why people come to TTAC?

  • avatar
    stryker1

    at my local Hyundai dealer, the Genesis does have its own show room.

    • 0 avatar
      Rental Man

      With the new Azera looking as impressive as it does (I see lot’s of Lexus LS) would it be on the Hyundai side because it is FWD or parked with the Genessis & Eques that are wearing the near Bentley badges?

      • 0 avatar
        bd2

        Hyundai side – since it competes with the likes of the Avalon, Taurus, Maxima (would then be the ‘flagship’ of the Hyundai lineup).

        Hyundai is purportedly working on a compact RWD sedan which would join the Genesis and Equus sedans (btw, only the Genesis has the winged badges; the Equus has its own separate badging).

  • avatar
    hifi

    “If you multiply 200 dealerships by a cost of $10-20 million per dealer to make a new space, it comes out to something like $5000 or $6000 that would have to be added to the price of the car”

    Wait, you mean that there is actually a value to buying an Audi, Mercedes, BMW or Porsche??? Who would have thought that getting a better car, a better dealer experience, avoiding the Elantra/Sonata/Accent crowd, would cost more than buying a tarted-up Hyundai?! Astonishing that there is actually a decent value to buying a real luxury car. Fascinating.

    • 0 avatar
      bd2

      How’s that doing for Infiniti M (much less the departed Q45) or Lexus IS and GS sales?

      Even the venerable Lexus LS has seen a significant decline in sales.

      (And the whole ‘age’ excuse doesn’t work since the S Class is just as old.)

    • 0 avatar
      gslippy

      What’s wrong with the Elantra/Sonata/Accent crowd? Not good enough for you? Hyundai isn’t ashamed of those cars, so they see no need to separate one crowd from another.

      Good thing Ford didn’t sell Crown Victorias alongside the Focus. Oh wait, they did.

      Read a review on any Corvette, and you’ll find that their interiors are often called ‘tarted-up’ Impalas, or whatever. Not such great execution. But try sitting in a Genesis or Equus someday; they’re anything but ‘tarted-up’.

    • 0 avatar
      don1967

      @hifi,

      If Warren Buffett could drive a rusty VW Beetle for years, then I feel sorry for any BMW pretender who feels the need to lease his self-esteem from an overpriced depreciating asset while, most pathetically, sneering at those who do not.

      The Genesis has merit as a “smart” luxury car that sticks its middle finger in the eye of pretentiousness. Nothing more, nothing less. John Krafcik gets this, and would be foolish to push it in another direction.

  • avatar
    jmo

    Is his math right?

    200 dealerships at $15 million each is $3 billion. The IRS depreciation for a commercial building is 25 years, 5-7 for the contents so let’s say 15 years. If he sells 150,000 cars a year that 3 billion / 150.000 / 15 gets us $1300 a car.

    • 0 avatar
      James2

      Math gives me a headache :) but Krafcik knows he’s not going to be able to sell 150,000 Genesises (Genesi?) a year.

      • 0 avatar
        jmo

        Sure – he’d do like Toyota – restyle and upgrade the Sonata as an entry level Genesis, restyle and upgrade the Santa Fe and sell it as the Genesis SUV, the mid level Genesis sedan and the top of the line Equus etc.

  • avatar
    el scotto

    Just finished piddling around on Hyundai’s website. A Genesis 5.0 came out to $46,500.00 on their build you own website. That’s a lot scratch for a Hyundai. Also, only three colors available: white, black. and silver; whoopee. WTF is the trend of having only non-color colors available?

  • avatar

    I really got pissed at all of the people who keep commenting about buying a near luxury car and having to shop along with “hicks” or any other colloquialism for common people. What makes you think because you are buying a car over 40k that you automatically don’t have to shop in the same showroom as the “average” car buyer. What we consider luxury brands in the automobile market here in the United States are just a construct. Minus the Bentley, Rolls, Ferrari and similar brands, of course, most of the cars we consider luxurious aren’t really that great at all, at least enough to get “special” treatment in the showroom. In fact, shouldn’t all manufacturers dealers offer great services and make their entire body of customers feel like they’re precious to them? Maybe I’m just dreaming.

  • avatar
    el scotto

    LOL at your last sentence. You are treated much more politely at a luxury dealer vice a large volume dealer. Would you like some nice coffee or a bottle of water/soda while we talk about your car vice what can I do to make you drive this car home today experience.
    Maybe Hyundai should have a service specialist for the Genesis and Chevy should have a service specialist for the Corvette. No, that wouldn’t be all they did; but be on hand to assist whoever bought a high end product. Oh, wait you can easily drop 45k on a truck/SUV.

    • 0 avatar
      Toad

      Do you really need “some nice coffee or a bottle of water/soda while we talk?” That is nice treatment from your mom, but does the rest of the world need to treat you that way too?

      Call me old school, but when I get my car serviced I don’t need to be treated like I am in a women’s hair salon. A clean waiting room with wi-fi is fine. Many, maybe most of us don’t require an “experience” when visiting a car dealership; we go in, take care of business, and leave. There are other people in life I can get an “experience” from, and they don’t cost $110+ per hour.

    • 0 avatar
      bd2

      Eh, many of the newer Hyundai dealerships offer complimentary coffee, bottled water, as well as muffins and the lot.

      Many of the nicer mainstream dealerships are doing that these days.

  • avatar
    waltercat

    Just a quick observation – last fall we purchased a new Santa Fe Limited from our local (high volume) Hyundai store. It was the best new-car purchase experience of my life. The car was prepped well, the delivery experience showed patience and class, the first service was prompt and free, the one warranty issue was resolved expeditiously, and the facility is new and immaculate. I’m contemplating an Azera as my next daily driver, in part because of a first-class retail experience.

  • avatar
    Felix Hoenikker

    One of the qualities of the “Hyundai” legacy customers is their very low FICO scores. The brand survived in the US because they found ways of financing these deadbeat customers who wanted to drive a new car but would never qualify at one of the big three or Asian dealers. I don’t know if the credit worthiness of their customer base has improved as much as the quality of their cars, but after being subjected to the mindless radio commercials of their local dealers, I can understand why come customers would not want to mingle with the great unwashed while shopping for their near luxury rides.

    • 0 avatar
      28-Cars-Later

      “I can understand why come customers would not want to mingle with the great unwashed while shopping for their near luxury rides.”

      Agreed. If I am about to lay out some *real money*, I’m not looking to been seen or deal with the $99/month crowd. Call it snobbery if you must, but its the same sort of thing if your waiting to be seated at somewhat exclusive/expensive restaurant (more Mortons than Olive Garden) and Ma and Pa come in with their four loud, bratty, children. I’m not going to be impressed.

    • 0 avatar
      bd2

      Well, considering that S Class owners have to ‘mingle’ with the Smart and Sprinter van crowd and that Corvette owners have to mingle with the Spark/Sonic crowd and the GT-R owners with the Versa crowd and the Land Cruiser owners with the Yaris and Scion crowd, it’s not that unusual.

      Besides, an Equus owner doesn’t even have to deal with going to the dealership at all (pick-up and drop-off service).

      As for FICO scores, according to JDPower, Sonata buyers in 2011 had a FICO score of 734 which was HIGHER than that for Camry (729), Accord, Altima and Fusion buyers.

      Also, according to Edmunds, the ATP for the Elantra is $1,500 higher than for the Corolla and $500 higher than the Civic.

      Anyway, dealerships that sell the Equus have to have a separate showroom (usually with the Equus and Genesis) and going forward as Hyundai’s luxury lineup expands, they probably will have separate waiting areas as well as separate showrooms if that stuff is important to you.

  • avatar
    jetcal1

    Mr. Hoenikker,
    A low FICO score does not automatically make one a “deadbeat”. Many of the young adults I had working for my in the Navy had low FICO scores because they came from the families that drove that beat up Sonata. Daddy wasn’t there to co-sign that loan. I counseled a fair number of them into Accents because they could payoff the car before the warranty was up and because maintenance was part of the deal. Plus the store would match the credit rates of the credit union.

    Not everyone can afford to drive an FJ60 from the start.

    • 0 avatar
      Felix Hoenikker

      jetcal1,
      I came from a blue collar family. The standing rule when I was growing up was that the parents would not buy, contribute to or cosign for a car. If you wanted a car, you better get the money first and shoulder the costs afterward. Hence I did not get a car until I was 21 and senior in college. It cost a whole $400 and lasted for three years until I could save up enough for a new one.
      I thought this was a good policy so I carried it forward to our kids. Last Winter, I accompanied my 24 year old car shopping as an observer. He found a car he liked and they asked him for his drivers license so they could run a credit report. The salesman said he had the second highest credit soore he had ever seen for someone that age.
      The only credit he had before was one credit card he used for gas and misc expenses which he paid monthly and did not carry a balance. He also paid off a $13K student loan in less than two years again with the money he makes at his job.
      To me the biggest factor for his FICO success is that he hates to spend money.
      But getting back to my original comment, I did not mean any disrespect for the young people you mentioned. I was aiming at the $99 down and $99 a month crowd that the local Hynundai dealer hollers to on the radio. If I were in the market for a luxo car and I’m not because I have a healthy respect for capital, I would avoid any dealer that advertises scammy deals like that. That’s all.

      • 0 avatar
        jetcal1

        Hello Felix,
        Thank you for taking the time to respond. You hit a hot button. After watching a few of my kids
        getting taken with 30% loans and other interesting business practices I really came to hate the used lots and their predatory practices. The FICO game is easy to play once you know the rules, not so simple for
        18/19 year olds out on their own for the first few years.

  • avatar
    don1967

    What many are missing from this interview is that Krafcik’s dismissal of separate branding is highly conditional, and based on current market conditions. His quote even closes with the words “probably” not.

    In other words, never say never. Right now it doesn’t make sense to make the investment, with a tough economy, insufficient brand image, etc. But in 3, 5 or 10 years, who knows? Smart business people might close the door, but they never lock it.

  • avatar
    mkirk

    I always figured the eventual goal was to get the “legacy” Hyundai buyer (99 down, 99 a month for the next decade) to head down to the Kia dealer and have Hyundai move more upmarket. I don’t think it is unrealistic…look at the brand’s image compared to 10 years ago. Did anyone see these cars comparing favorable to Toyota’s then?

    I wish they’d build a Kia-ized Genesis though…Could help fill the hole left by the Panther’s departure.

    Besides everyone knows the really wealthy don’t drive BMW’s or Lexuses…They are driven in stretched Town Cars and Caddys or if they have really made it, a LWB Bentley or Rolls.

    • 0 avatar
      bd2

      The whole Kia being ‘downmarket’ of Hyundai is a common misconception – a no. of Kia models start at a higher MSRP than the Hyundai model in the same segment (and there is no ‘lux’ trim for the Sonata as there is for the Optima – the Optima SXL).

      As for a Genesis-sized Kia, Kia does have one – the K9 (christened, the Kia Quoris for overseas markets; my, that’s a horrible moniker) which is slots btwn the Genesis and Equus in size.

      There is no word yet if the Quoris will make its way to the states, but it seems very likely.

      But in the meantime, Kia will launch the refreshed Cadenza (which competes in the same segment as the Azera, Maxima, Avalon, etc.) in the US sometime next year, and Kia supposedly has greenlit the GT for production which is about the size of the Infiniti G.

  • avatar

    Talk down to entry level car buyers all you want. Whether they are just looking for basic transportation, have poor credit scores, can’t afford a $40k ride or are simply buying their first car… To paraphrase Tyler Durden: “Look, the people you are bashing are the people you depend on. They cook your meals, haul your trash, connect your calls and drive your ambulances. They guard you while you sleep. Do not… mess with them.”


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