Hyundai did such a good job in executing its Genesis sports sedan and Equus luxury model and subsequent treatment of their owners that the brand had no choice but to spin off its own premium brand, which it calls Genesis. That’s the way Michael O’Brien, VP of corporate and product planning for Hyundai Motor America, sees it.
The company announced this week in Korea that it plans to split off the two vehicles into their own new luxury marque and rename them the G80 and G90 for the 2017 model year, respectively. It will then add a handful of new models over the next few years even as US Hyundai dealers make gradual new accommodations for the Genesis lineup and brand in their showrooms. Eventually, Genesis vehicles will be sold through their own separate sales channel, O’Brien told brandchannel.
“I think it’s basically a reaction to how the market has received our products lately,” O’Brien said. “If you go back even two to three years ago, to think: Could we legitimately be in a position to act like a luxury maker and bring in customers like we have for these cars and provide the extra requirements in terms of touchpoints that luxury makers provide? The answer would have been no, and the results wouldn’t have been the same.”
brandchannel asked O’Brien about how Genesis was born and Hyundai’s plans for it:
bc: How did the plan for Genesis evolve? [Former Hyundai Motor America CEO] John Krafcik used to insist that Hyundai could legitimately stretch its brand from under-$20,000 vehicles to over-$60,000 models.
Michael O’Brien: These ideas have been debated for a long time, but from the customer point of view, we saw things like customers buying our Genesis product and peeling off the Hyundai badge. It’s evolved to the point that people looking at and buying these cars see them as the real article. It’s more recognition that we’ve basically earned a place there and we can legitimately participate in the luxury market, rather than a plan that dictated that at some point in the future we’re going to participate.
bc: Will Genesis be a halo brand or a volume brand?
O’Brien: We already do very well with the Genesis sedan that will be renamed G80; it’s No. 3 in sales in the mid-size luxury sedan category, according to J.D. Power. So certainly our sales level says we’re a participant in that market. In the premium area of the market that includes Equus, we also do quite well on a share basis. At the end of the day, we’re running a car business, and volume will be a big part of that.
Genesis will be a further strengthening of the Hyundai brand even though they’ll eventually be separate. It’s part of our evolution to legitimize us as a full-range manufacturer and legitimizes our capabilities in terms of being able to truly understand the needs of customers. And in luxury, that’s what it’s all about.
bc: In an era when every brand and dealer, especially in the premium category, is attuned to the “customer experience,” how can Genesis differentiate itself?
O’Brien: The original covenant with Hyundai dealers to sell Genesis was all about being able to manage your time better than others is the ultimate luxury. So with things like free pickup and delivery of loaner cars, and taking your car away on a flatbed so it isn’t driven—we’re focusing on time as the ultimate luxury. In the traditional way of presenting luxury, it’s about very high-end materials at the dealership: mahogany walls and beautiful leather. But for us it’s about placing more money where we can save the customer time.
So we’re looking at how we can do that even better. We have to find the best ways to scale some of those things, and we’re working on that right now.
bc: As it carries the luxury banner for the company, can we expect Genesis models to become the main platforms for self-driving in the future?
O’Brien: Right now there’s no particular requirement to pick a model range for autonomous driving. But the key point with autonomous driving moves to the back of the vehicle. When you think about the vehicle types that allow you to prioritize passenger space and experience, there will be better candidates than those that prioritize the driving experience. And Genesis is more of a driver’s car. In fact, we’re working with Lotus Engineering in terms of the final tuning of the car to make sure it registers well with buyers, and we have human-machine interfaces for the steering, brakes and suspension. So it could be this car, but we’re not committed yet to the vehicle platform for self-driving.
The key determinant will be how people use autonomous vehicles and prioritizing passenger space. If you look at the car today, with the big front-center screen, the first thing you’d do is move that to the rear seat, along with control of audio and HVAC. So Genesis could be a good candidate, but I’d like to think we have other good candidates, such as some of our alternative-fuel vehicles.
bc: What are the implications of the Genesis move for the Hyundai brand per se?
O’Brien: Our customers will have no doubt that both Genesis and Hyundai are coming from the same manufacturer. When you look at Lexus, for example, there are very few Lexus customers who aren’t aware that it comes from Toyota. It’s part of our evolution as a full-range manufacturer, and it legitimizes our capabilities in terms of technology and truly being able to understand the needs of customers. And in luxury, that’s what it’s all about.