Cynics may say Genesis, hyundai of Korea’s premium subsidiary, is dreaming the impossible dream of venturing into the German stronghold that is Europe’s luxury car sector. But amidst the wreckage of many other costly failed attempts, the Genesis’s ability to handle the electric revolution could be its ace in the hole.
After all, the well-established and traditional plans of Nissan’s Infiniti and General Motors’ Cadillac have crashed and burned trying to compete with Volkswagen’s BMW, Mercedes and Audi and Porsche on their own turf. Honda’s Acura and Ford’s Lincoln have never dared to try. Toyota’s hugely successful Lexus in the US has barely established a bridgehead after some 20 years of trying. Tata Motors’ Jaguar and Stellantis’ Alfa Romeo barely survive, despite possessing that crucial ingredient for success in the luxury market: a unique story and a degree of public awareness, even charisma.
Tesla’s success in Europe has shown how enthusiasm for electric cars can produce surprising results.
In an interview, the managing director of Genesis Motor Europe, Dominique Boesch, is clearly aware of the uphill fight ahead and avoids ambitious predictions.
“We want to establish our brand and learn now how to retail luxury at very high levels. Europe is a laboratory for us,” said Boesch, who joined Genesis from Audi.
Initially, Genesis bypasses dealerships by selling online and offering long-term service deals that include pickup of cars that require work with a guaranteed replacement. In the US, where Genesis has operated since 2015 under a similar formula, it is currently moving to independent dealerships for the brand.
Bosch said that Genesis wants to become a global luxury brand and that requires success in Europe.
“This is probably the most sophisticated market in premium terms and customers want that experience. We are not here initially just to put more metal on the street, but to be recognized as a brand that has a tremendous product. Initially, we are not sales-driven, but if we can be successful in Europe, we will be recognized as a truly global premium brand,” said Boesch.
And there’s not much doubt that Genesis has some very impressive products. The range starts with 5 new models; the large G80 sedan, the GV80 SUV, the smaller G70 sedan, the SUV, and the Shooting Brake. Later this year there will be 3 electric models, the G80, GV60 and an all new GV70.
“Success for us will not be measured in quantity, but in a perception of how the brand is valued. We are not here to compete with established brands, but we are dedicated to improving and creating a different customer experience,” said Boesch.
That’s okay because analysts don’t see much of an impact on the luxury market for some time.
Ian Fletcher, auto analyst at IHS Markitsaid sales expectations are weak, with Genesis market share in Western and Central Europe accounting for less than 0.1% of the overall market by 2025 and not much better by 2030. IHS Markit expects Lexus to sell around 10 times the number of vehicles and will take a 0.4% market share in 2025, while Audi will have a market share of around 4%, BMW 5% and Mercedes nearly 6%.
Analysts in French automotive consultancy Inovev they calculate that Genesis will have a 1% share of the European premium market in 2025 and 1.5% in 2030.
Inovev said the difficulty is the lack of a brand history. Sedans and SUVs are very impressive, but disruptive products are required.
Genesis began selling in the US with 7,000 sales peaking at 21,200 in 2019 and then dropping to 16,400 in 2020. In 2021, sales increased to almost 50,000.
According to Ed Kim, an analyst at the Long Beach, California-based consultancy AutoPacificelectric cars can provide the great opportunity.
Hyundai and its sister company, Kia, have made great progress in the children’s electric car market in Europe and this under-the-skin tech capability could well form the basis of an internal pathway for Genesis.
“Genesis is about to launch several pure EV models on the (US) market, and in many ways the brand is very well positioned to do so. While most other luxury brands have been making internal combustion engines since time immemorial, thus having legions of customers predisposed to gasoline powertrains, Genesis is a new brand and doesn’t have that legacy. So it can make big waves in the emerging luxury electric vehicle market with great products and a lack of customer expectations for gasoline engines under their skin,” Kim said.
“While I am less familiar with Genesis’ plans and target for Europe and the UK, I think the brand should focus on its electric vehicle offerings as they will be in the US market. Once again, without the legacy of petrol and diesel in Europe and the UK, Genesis may launch with its powerful ICE products, but make the transition to electric much easier than the established German brands, which have a long, long history of splendid (ice) for many years. decades,” Kim said.
“Also, materials and build quality should be emphasized. I have been amazed at the build quality and level of fit and finish of recent Genesis products and recently compared some of their model interiors to competitor German interiors, and Genesis interiors are generally just as good. That’s the first time I can really say that about the interior execution of an Asian luxury brand, and that’s really an achievement that needs to be promoted,” Kim said.
The Genesis outlook analysis will look at how Hyundai and Kia made progress in mass market sales in Europe. They started with cheap and cheerful but very reliable vehicles and with market-leading guarantees, and little by little they progressed in quality and price. Kia and Hyundai have arguably now surpassed the likes of Renault, Peugeot, Citroen and Fiat in terms of quality and are perceived to be as well made as market leader Volkswagen. In 2021, combined Kia and Hyundai sales in Western Europe totaled 861,088 with a market share of 8.1%, according to the European Automobile Manufacturers Association. This required a lot of commitment and a large investment.
Boesch says that Genesis has a clear commitment to what the European luxury customer wants: premium brand perception and customer service.
“In this lab experience we are gathering information that will contribute to the overall position as a premium luxury brand. We talk about our different approach and it’s a very simple Korean culture called “sonnim”. We will treat you as if you were a guest in my private home, that is what we want our clients to feel,” said Boesch.
It will take more than a feel-good factor to create that global premium brand, but who knows, the next-generation electric car, the GV70, could take that big step towards the impossible dream later this year.
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