Hyundai Genesis offers luxury for less, may help image, sales

LOS ANGELES -- Ron Olsen could have bought a Mercedes-Benz, BMW, Lexus or another Cadillac.

Instead, the Boeing retiree decided to part with $40,000 for the new kid in the luxury sedan market — a Hyundai Genesis.

A what?

A luxury car from the brand known a couple decades ago as cheap, not-always-reliable wheels for college students and pizza deliverers?

Hyundai believes Genesis will show just how far it's come from those days — and will be the ideal luxury car for post-financial-meltdown America. Maximum features. Minimum snobbery. A value proposition vs. more expensive brand-name luxury.

The Genesis is the culmination for Hyundai of a painstaking effort to become a big-league U.S. brand. It's also fraught with risk. Genesis is betting that notoriously snooty luxury buyers can live without a Mercedes three-pointed star or other status emblem on their hood.

Hyundai also is taking a calculated risk by not creating a costly separate division for its luxury product, such as Toyota did with Lexus. It is banking that shoppers will buy a luxury car from dealers not devoted solely to pampering luxury customers. Genesis may sit door-to-door in the showroom with (horrors!) an $11,745 entry-level Accent sedan.

"It's like buying an Armani suit from Wal-Mart," observes David Champion, auto editor for Consumer Reports magazine.

Early results are lukewarm, with 3,976 sold since the six-cylinder Genesis went on sale over the summer. Buyers may have been waiting, however, for the top-of-the-line, 375-horsepower V-8 version, which didn't arrive until October.

Hyundai isn't the first to hawk luxury in a non-luxury store.

Volkswagen gloriously flopped with an upscale sedan brought to the U.S. in 2003. Phaeton, priced from about $70,000 to about $100,000 for a 12-cylinder version, lasted a couple of years before VW yanked it from this market.

Hyundai leaders say Genesis will do better than Phaeton because its price isn't floating so far above the rest of the lineup. Genesis, they add, is a lot of car for the money — fitting the Hyundai brand's value image.

"Price-wise, Genesis is $10,000 or $20,000 less than all the (luxury brand) competitors," says Kim Dong-Jin, until recently CEO of Hyundai Motor in South Korea and now head of its parts operation. "Therefore, we see the Genesis as a good product for the U.S. customers, particularly in the recessionary period."