New Luxury

New Brand, Big Plans: Genesis Charts A Course Into New Luxury Waters

Genesis is the first new luxury brand in the U.S. since Tesla in 2004, and its Korean parent Hyundai is determined to make it a success.

Hyundai spent a long time mulling and preparing before it green-lighted the creation of a stand-alone luxury brand, and it has a meticulous product, service, and marketing plan in place to grow Genesis to the point where it can take on top-tier German luxury carmakers.

The brand will have six vehicles by 2021. Here’s a glimpse at what the Genesis lineup will eventually look like.

Genesis G90 : The first all-new vehicle on a dedicated platform is the full-size 2017 G90 flagship sedan, which replaces the outgoing 2016 Hyundai Equus. The G90 arrives in Genesis showrooms (many located within Hyundai showrooms initially) this month. It competes in the same segment as the BMW 7 Series and Mercedes-Benz S-Class. Sales will be small, about 3,000 a year in the U.S. compared with 10 times that many in Korea, a chauffeur-driven society. The G90 starts at $69,050 with 3.3-liter, twin-turbo V-6 and $70,650 with the 5.0-liter V-8.

Genesis G80 : The 2017 Genesis G80 midsize luxury sedan replaces the outgoing Hyundai Genesis. It still rides on a Hyundai platform and will be sold by both Hyundai and Genesis dealers until the next-generation G80 becomes a dedicated Genesis vehicle in five years. The 2017 G80 is on sale now, and the automaker expects to sell about 25,000 a year. It competes against the BMW 5 Series and Mercedes-Benz E-Class. Initially Hyundai considered combining the G90 and G80, said Dave Zuchowski, president and CEO of Hyundai Motor America.

Genesis midsize SUV : A midsize SUV or crossover will come off the next G80 platform. Genesis is still working on how it will name its crossovers.

Genesis G70 : The Genesis G70 will be a near-luxury compact sedan competing against the BMW 3 Series. It is due in the first quarter of 2018 and is on a new dedicated platform.

Genesis compact SUV : The unnamed SUV or crossover will share the same platform as the G70.

Genesis compact near-luxury sports coupe : The Genesis coupe is history after the 2016 model year, but a new coupe will spring from the platform underpinning the G70 sedan and compact SUV, which are still a couple years out.

Most of the lineup will have the new 3.3-liter, twin-turbo V-6 developed exclusively for the Genesis brand. The automaker is also developing a four-cylinder diesel engine to launch the G90 in Europe in a few years when the engine is ready. And although there are no immediate plans for hybrids or electric Genesis vehicles, it is an area the brand is working on.

All Genesis sedan names begin with the letter G followed by a number denoting their relative size. A lot of work has gone into what to call the sports car and SUVs, but that information is still being kept close to the vest, Zuchowski said. The CEO would prefer to be launching the SUVs sooner, given growth in the segment. “I wish I could move the SUVs up, but I can’t,” he said.

Zuchowski won’t say how much launching a new brand will cost, but he notes Lexus said it would take 10 years and $1 billion when it launched in 1989, and R & D costs are much higher today.

The Genesis brand initially will be sold in the U.S., Canada, Korea, China, and the Middle East with 50-55 percent of global sales expected to come from the U.S., Zuchowski said. Europe will be added in a couple years.

“We really believe that our time has come,” Zuchowski said. “We have our act together and are ready to go,” he said, referring to the product plan, a leadership team with experience from companies such as Bentley and Lamborghini, dedicated vehicle platforms and powertrains, and the continued growth of the luxury market.

There is strong parent support and a budget to launch the new brand, but the automaker will not grow Genesis at the expense of the original Hyundai brand.

Zuchowski thinks Genesis will keep Hyundai buyers, lure others from some Japanese marques, and draw in some non-luxury buyers. It will take time before Genesis can compete head to head with the top-tier German luxury carmakers. Zuchowski is happy with the undisclosed marketing budget. “I feel good about the incremental amount spend,” he said.

Marketing manager Kate Fabian said Genesis has secured key sponsorship spots with the NFL and PGA.

Hyundai has been grappling with the idea of launching a luxury brand since before it introduced the Hyundai Genesis full-size sedan in the U.S. in 2008. The decision to proceed was made within the last 12 months and announced in November at the 2015 Los Angeles Auto Show.

“We’ve paid our dues,” Zuchowski said. “We’re not a new company.” The Hyundai brand is strong enough that it won’t be hurt by the creation of another brand. Hyundai sold about 400,000 vehicles in the U.S. in 2007, but sales are approaching 800,000 a year with an established owner base.

Over time, new Genesis products will only go to designated Genesis dealers, at which point the CEO thinks there will be enough volume to justify stand-alone dealerships. One unfortunate outcome: Genesis products will be cross-shopped against higher-end vehicles from Kia, including the Cadenza and K900. For the most part, the two brands that share a Korean parent have done a good job of sticking to their own lanes and developing distinct vehicles. Kia was unhappy when Hyundai added the sporty Veloster, and Hyundai wishes Kia had stayed out of the top-end luxury space.