Hyundai to enter China's luxury market with Genesis brand
Hyundai Motor Co. will launch its stand-alone Genesis luxury brand in China within two to three years, as the Korean automaker tries to compensate for thin profits in China's mass-market segments.
Genesis brand chief Manfred Fitzgerald told Reuters that the company plans to build Genesis models in China "for sure. But there are also other examples of [automakers] who live pretty well off of importing cars," he said, citing Toyota's Lexus brand.
The plans come as Hyundai tries to reverse 10 straight quarters of falling global profits, hit in part by weak results in China.
Rolling out Genesis in key markets such as China marks a shift for a company, which lacks the brand cachet and tradition of Germany's BMW, Mercedes-Benz and Audi. Those brands dominate the luxury market globally and in China.
"The luxury customer in China is very brand-conscious," said Fitzgerald, 53, a former Lamborghini executive and a U.S. national.
Fitzgerald was speaking at the first -- and so far only -- stand-alone Genesis store, in a glitzy mall in Hanam on the outskirts of Seoul. The store featured models such as the G80 sedan, which can fetch up to $67,100 (447,500 yuan).
"If you don't get your brand right, you can have the best product in the world, it won't work," said Fitzgerald. "In two, three years' time we will be entering China," he said, declining to give sales targets for a global rollout that will follow launches in Korea late last year and in the United States last month.
In China, imported cars carry a duty of more than 20 percent, putting pressure on automakers to produce locally.
Distribution debate
Genesis will open more stand-alone outlets, said Fitzgerald, and is exploring unspecified locations for its first U.S. store. The Genesis lineup features two models, a range that the company plans to expand to six by 2020, including two SUVs.
Consultants such as Eric Noble, president of California-based consultancy CarLab, say getting the sales channel right for premium cars is as important as the product itself.
For now, more than 300 of Hyundai's 800 U.S. dealerships also will sell the Genesis brand, posing an added challenge for differentiating it from Hyundai. By comparison, Toyota's Lexus is sold through separate dealerships.
"From a product standpoint, the prospects of the [Genesis] brand are encouraging," said Noble. "But from a distribution standpoint, at least here in North America, it is much more problematic."
'Tipping point'
Hyundai Motor Group Chairman Chung Mong-koo, now 78, took the helm in 2000 and turned Hyundai and its Kia Motors affiliate into the world's fifth-largest automotive group by making inexpensive, reliable small cars.
Now Chung's 45-year-old son and vice chairman, Chung Eui-sun, seeks to move Hyundai up the value chain. Last November, he spearheaded the move to transform the Genesis sedan into a stand-alone brand, tapping a segment more profitable and faster growing than the mass market.
Fitzgerald said his meeting with the younger Chung was a "tipping point" in his decision to join a company long known for promoting from within.
Said Fitzgerald: "He definitely gave me the feeling that no matter how long and how troublesome and how tedious this might be, they are in for it and they want to succeed."
The plans come as Hyundai tries to reverse 10 straight quarters of falling global profits, hit in part by weak results in China.
Rolling out Genesis in key markets such as China marks a shift for a company, which lacks the brand cachet and tradition of Germany's BMW, Mercedes-Benz and Audi. Those brands dominate the luxury market globally and in China.
"The luxury customer in China is very brand-conscious," said Fitzgerald, 53, a former Lamborghini executive and a U.S. national.
Fitzgerald was speaking at the first -- and so far only -- stand-alone Genesis store, in a glitzy mall in Hanam on the outskirts of Seoul. The store featured models such as the G80 sedan, which can fetch up to $67,100 (447,500 yuan).
"If you don't get your brand right, you can have the best product in the world, it won't work," said Fitzgerald. "In two, three years' time we will be entering China," he said, declining to give sales targets for a global rollout that will follow launches in Korea late last year and in the United States last month.
In China, imported cars carry a duty of more than 20 percent, putting pressure on automakers to produce locally.
Distribution debate
Genesis will open more stand-alone outlets, said Fitzgerald, and is exploring unspecified locations for its first U.S. store. The Genesis lineup features two models, a range that the company plans to expand to six by 2020, including two SUVs.
Consultants such as Eric Noble, president of California-based consultancy CarLab, say getting the sales channel right for premium cars is as important as the product itself.
For now, more than 300 of Hyundai's 800 U.S. dealerships also will sell the Genesis brand, posing an added challenge for differentiating it from Hyundai. By comparison, Toyota's Lexus is sold through separate dealerships.
"From a product standpoint, the prospects of the [Genesis] brand are encouraging," said Noble. "But from a distribution standpoint, at least here in North America, it is much more problematic."
'Tipping point'
Hyundai Motor Group Chairman Chung Mong-koo, now 78, took the helm in 2000 and turned Hyundai and its Kia Motors affiliate into the world's fifth-largest automotive group by making inexpensive, reliable small cars.
Now Chung's 45-year-old son and vice chairman, Chung Eui-sun, seeks to move Hyundai up the value chain. Last November, he spearheaded the move to transform the Genesis sedan into a stand-alone brand, tapping a segment more profitable and faster growing than the mass market.
Fitzgerald said his meeting with the younger Chung was a "tipping point" in his decision to join a company long known for promoting from within.
Said Fitzgerald: "He definitely gave me the feeling that no matter how long and how troublesome and how tedious this might be, they are in for it and they want to succeed."
