Hyundai Motor (HYMLF) is introducing its Genesis G90 sedan to the U.S. market, the first all-new model geared toward a strategy of creating a luxury brand to compete with Mercedes-Benz, Lexus, Cadillac and other automotive brands.
Starting next month, the sedan will be available for sale and service at Hyundai dealers that have been authorized by the South Korean automaker to carry the brand, roughly 300 of the roughly 850 total franchisees.
Hyundai shares have lost 5.9% over the past year, compared with a 9.3% gain for Kospi 100 Index of large South Korean equities.
Journalists and reviewers have been driving the G90 this month at a Genesis event in Vancouver, British Columbia. So far reviewers have rated the car auspiciously, comparing its size, driving performance and appointments to those of Mercedes-Benz S Class, BMW 7 Series and Cadillac CT6. Prices haven't been announced.
Unlike other automakers that have initiated luxury brands in the U.S., such as Honda's (HMC - Get Report) Acura division and Nissan's (NSANY) Infiniti brand, Hyundai isn't requiring separate dealerships. Instead, Genesis models will be displayed at a "showroom-within-a-showroom" at Hyundai stores. Genesis dealers will be required to invest in valet services and loaner cars that customers can use when their cars require maintenance.
"Genesis will be a symbol of respect, respect for our customers' most valuable resource, their time," said Erwin Raphael, general manager of the brand. "Why would anyone want to spend their Saturday morning bringing their car in for service?"
General Motors' (GM - Get Report) Cadillac luxury franchise, which has been in revitalization mode since the early 2000s, has been pushing separate showrooms for dealers who have been sharing stores with other GM models. Cadillac also has been creating incentives to invest in showrooms, facilities and services to enhance the brand -- bringing it in conflict with some dealers who say GM is favoring large dealers over small, in some cases in violation of state franchise laws.
G90 joins a smaller sedan, G80, that has been on sale at Hyundai dealerships. G90 replaces Hyundai's earlier Equus full-size premium sedan that was a precursor to developing a full luxury lineup and brand strategy. The automaker intends to introduce at least four more Genesis models through 2021, including two SUVs, a G70 sedan and a coupe.
Raphael noted that luxury vehicles now account for 12% of the U.S. vehicle market "and we think that there is growth potential."
G90 will be offered with few options. All advanced safety features such as adaptive cruise control and adaptive lane keeping will be included as standard equipment. Besides color, a customer can choose rear-wheel-drive or all-wheel-drive, a new 3.3-liter V6 with 365 horsepower or an existing 5-liter V8 with 420 horsepower.
For Hyundai, the creation of a luxury franchise is an important step toward competing globally with other top automakers. Genesis models are sold in South Korea, though the automaker has said nothing concrete about plans to compete in the Chinese or European luxury markets.