Hyundai Motor launches premium global brand Genesis

South Korea's Hyundai Motor has announced the launch of a new global luxury car brand called Genesis. With this, the automaker is seeking to kill two birds with one stone -- lifting the profit margins and reversing the slide in earnings.

While Korea’s strengthening currency, won, has been hindering its overseas sales, foreign rivals had been nipping at its heels in terms of heightened competition in the home market, Reuters reports.

Market need

Hyundai reported its seventh consecutive drop in quarterly profit in its recent third quarter results. With the new announcement, Hyundai is also trying to address its shortcoming as a major automaker without a standalone luxury brand.

South Korea's largest automaker said the Genesis brand will start off with two sedans. They will include the namesake car launched two years ago and the upcoming flagship sedan that will be released in December. Four more new models will be added by 2020, and they include a sports coupe and sports utility vehicles, AP reports.

The company had kicked off preparations for the premium brand in 2004. Hyundai tested the waters with the release of its Genesis sedan in 2008 but deferred the plans for the "big launch" because global financial crisis was denting the sales of luxury cars.

Launching premium cars is also in sync with Chairman Chung Mong-koo's vision to elevate the brand from its reputation as a maker of cheaper vehicles for upmarket customers. The current calibrated strategy of rebranding the existing Hyundai Genesis sedan as the launch-pad is also unique.

In the luxury segment, Hyundai will compete with brands such as Mercedes, BMW and Lexus. Hyundai got a good market response for its existing semi-luxury models, including the Genesis sedans and Equus large luxury 4-door.

The South Korean automaker has been mulling a luxury marque since 2008. That time, the cost of such a venture was as prohibitive as US$2.5 billion (AU$3.5 billion), Wards auto reports.

As of late, the idea has started recurring. Hyundai Motor America CEO Dave Zuchowski, in January 2014, said more luxurious second-generation Genesis sedan “doesn’t change our conversation about a premium brand, but we continue to have the conversation.”

Cost control

Reports also say that Hyundai will pursue the strategy of cost-effective retailing for the new models under the existing Hyundai dealers. It has already sectioned off the Genesis and Equus within Hyundai U.S. showrooms as part of a showroom-within-a-showroom setup. This is to keep the costs under control.

In the new scheme of things, Equus will be renamed as part of the new brand and a new cross over utility vehicle (CUV) on the Genesis platform is on the cards.

“I would say stay tuned for future details on a potential premium crossover,” former HMA CEO John Krafcik quipped.

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