Hyundai's Genesis aims to win buyers from luxury rivals
Hyundai on Tuesday launched its first premium sedan, the Genesis, dipping a toe into the luxury car market and hoping to win customers from foreign rivals and improve its brand image abroad.
Analysts expect the Genesis to help South Korea's top auto maker sell more cars and boost the company's profile, though many doubt it can compete with global luxury models such as BMW.
"The Genesis will play an important role in changing Hyundai's image, which will result in higher sales of the Sonata and Santa Fe," said Cho Soo-hong, an auto analyst at Hyundai Securities, referring to the flagship sedan and sports utility vehicle. Hyundai Securities is not related to Hyundai Motor.
Shares in Hyundai rose 1.3 percent, outperforming a 0.2 percent fall on the broader market.
Earlier this month, the world's sixth-largest auto maker, with affiliate Kia motors Corp, set an ambitious target to raise sales by a fifth this year to 3.11 million vehicles.
Analysts predict Hyundai's top-end model will attract more drivers to showrooms in the high-margin domestic market, where the company has more than 50 percent market share, as more South Koreans seek bigger cars.
But global car makers face testing times as sales in the United States, the world's top auto market, are set to slow amid a credit crunch and record oil prices that could tip drivers towards smaller cars, analysts said. Sales of the Genesis in China could be hampered by cut-throat competition there.
At home, the Genesis will compete with fast-growing sales of imported cars, thanks to its lower prices.
Hyundai is offering its first rear-wheel drive sedan, with a V-6 engine for the domestic market, from 40.5 million won (21,800 pounds), against the BMW 5-series that sells for around 60 million won in South Korea.
Hyundai, which has invested 500 billion won in research and development over four years, aims to sell 55,000 of the Genesis model, with 20,000 abroad, this year. It sees exports rising to 45,000 in 2009.
"Genesis is the pride of Hyundai technology and symbolizes our determination to enter the highly competitive arena of luxury cars now dominated by the Europeans," Hyundai Motor Group Chairman Chung Mong-koo said in a statement.
NOT A LUXURY YET
However, it is premature to talk of the Genesis luring wealthy customers around the globe, as media reviews have said the model needs more work to compete with luxury brands such as those made by Mercedes-Benz of Daimler AG.
"The overall quality of the Genesis is much better than any other domestic car, but it's too early to compare it with the targeted luxury models such as BMW and Benz," said Kim Jae-woo, analyst at Mirae Asset Securities, who took part in a Genesis test drive last month.
Hyundai plans to launch the Genesis with both V-6 and V-8 engines in June in the United States at between $30,000 and $45,000, and in May in China, according to spokesman Jake Jang.
The company has not yet set prices in China, he added.
Some analysts said it was unclear whether the Genesis could fend off surging demand for imported cars in South Korea as foreign rivals cut prices to attract drivers.
SK Networks Co is selling foreign-made brands such as the Lexus cars made by Toyota Motor Corp on the grey market. Grey market imports involve bringing in cars bought from dealers instead of manufacturers and selling them below the official dealer prices.
"I have some hope for the Genesis. But it's difficult to expect too much," said Mirae's Kim.