The Genesis: A New Way to Define Value?

January 13th, 2009


Now, you must admit there’s a lot to laugh at here: the announcer’s punctilious English, the cars skidding around, the people looking mystified, etc. Let’s see what Hyundai comes up with for its Super Bowl ads, which will announce the new Genesis coupe. They’ve got to do better than this.

But the company has created real buzz. Named North American Car of the Year at the Detroit Auto Show—almost a year to the day after the campaign launched in January 2008—the Genesis sedan went on sale in July and has met its sales objectives (5,000+ cars by year’s end). So we’ve heard a lot of talk about the marketing effort and who it was trying to target.

While Hyundai seems to lump them together, the Lexus/Infiiniti buyer who values luxury over performance is a very different animal from the BMW/Mercedes buyer. And each segment within these groups is different. Mercedes buyers value luxury engineering over performance engineering, BMW buyers the latter. Of course there are exceptions; we’re generalizing here.

Hyundai, I think, is using the German brands as a stalking horse to get to Lexus/Infiniti/Avalon buyers, their real competition. The Infiniti buyer, for instance, is seeking value above all in a luxury performance car, and that is Hyundai’s selling point. Despite what the company says, they aren’t going to attract many Porsche owners.

There are several problems with this strategy.

  1. Hyundai is coming off a history of producing pretty lousy cars. By selling the car under its own name, instead of creating a “Lexus,” as Toyota did, they are hoping their prior reputation won’t rub off on the new product.
  2. We’re in a severe recession, and the car market (including luxury cars) stinks.
  3. The Hyundai dealer network is much smaller than the competition’s; the brand is one of two or three in a typical showroom. High-end brands have dedicated, glitzy showrooms.

And yet the Genesis is making a big splash with the automotive media and, maybe, the public. Hyundai might in fact have created a very smart strategy. It did a similar thing with the Azera as it moved the company upmarket.

  1. The company saved a lot of money by NOT creating a dedicated, Lexus-type brand.
  2. It drew attention to the brand’s value proposition by playing up the Genesis’ performance capabilities against the competition’s, by winning awards and getting generally great reviews (including our own).
  3. It has indeed won buyers from its targeted competition.

Here’s what Hyundai Motor America’s VP/Marketing Joel Ewanick had to say on that score: “We know that 40% of those buying Genesis have traded in vehicles like Lexus, BMW, Mercedes, and Porsche. Right now, 90% of all buyers of Genesis are coming from outside.”

The company has clearly done some smart marketing, and the risks seem to be paying off. We can make fun of their ads, but as one car blogger said last year, “I’d say compared to an idiotic ad campaign where a pontiac grand prix lookalike called an is350 is dropped from a helicopter, or a camry lookalike is ‘self parking’ between crystal glasses, Hyundai’s ads are brilliant.”

Will the Genesis really catch on? What is its real competition?

—jgoods

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  1. gandolph
    October 2nd, 2009 at 14:20 | #1

    For a look at different car resale values, check out:

    http://www.peterdolph.com/2009/09/should-you-buy-american-car.html

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