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| Hyundai Sends Luxury Model to Challenge Europe’s Auto Stalwarts | Hyundai Sends Luxury Model to Challenge Europe’s Auto Stalwarts |
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| TOKYO — How’s this for a marketing challenge? Selling a South Korean luxury sedan in Europe — the home turf of Audi, BMW, Mercedes and other gilded marques. | TOKYO — How’s this for a marketing challenge? Selling a South Korean luxury sedan in Europe — the home turf of Audi, BMW, Mercedes and other gilded marques. |
| European consumers already have plenty of locally produced choices, and those are in a funk. Sales of new cars in the region fell last year to the lowest level since 1995. What is more, politicians in France have begun taking cues from their Japan-bashing American counterparts of the 1980s, blaming South Korean imports for the troubles of European carmakers like PSA Peugeot Citroën and Renault. | European consumers already have plenty of locally produced choices, and those are in a funk. Sales of new cars in the region fell last year to the lowest level since 1995. What is more, politicians in France have begun taking cues from their Japan-bashing American counterparts of the 1980s, blaming South Korean imports for the troubles of European carmakers like PSA Peugeot Citroën and Renault. |
| That has not discouraged the leading South Korean automaker, Hyundai Motor. In the latest sign of the breadth of its ambitions, the company recently announced plans to sell a new version of its Genesis premium sedan in Europe for the first time, beginning this spring or summer. | That has not discouraged the leading South Korean automaker, Hyundai Motor. In the latest sign of the breadth of its ambitions, the company recently announced plans to sell a new version of its Genesis premium sedan in Europe for the first time, beginning this spring or summer. |
| Hyundai has been selling a version of the Genesis since 2008 in the United States, where it also offers a larger, more expensive sedan called the Equus. The new version of the Genesis, with swept back headlights and a sleeker shape, is expected to go on sale in the United States in April. Hyundai has yet to announce pricing for the new model, but the current Genesis starts at $35,200 in the United States. | |
| Selling Asian-made luxury sedans in the United States is one thing. Americans long ago embraced upmarket Japanese brands like Acura, Infiniti and Lexus, and all of those also compete with Cadillac, Lincoln and other Detroit brands, alongside German imports. | Selling Asian-made luxury sedans in the United States is one thing. Americans long ago embraced upmarket Japanese brands like Acura, Infiniti and Lexus, and all of those also compete with Cadillac, Lincoln and other Detroit brands, alongside German imports. |
| European luxury car buyers remain far more attached to German sedans like the Audi A6, the BMW 5 Series and the Mercedes E-Class. The three carmakers are the pride of the German export machine, and they dominate the high-end car business across Europe. | European luxury car buyers remain far more attached to German sedans like the Audi A6, the BMW 5 Series and the Mercedes E-Class. The three carmakers are the pride of the German export machine, and they dominate the high-end car business across Europe. |
| “For European consumers to move out of the small circle is extremely rare,” said Antonio Ferreira, founder and director of Carnorama, a research firm in London. “Most people would rather trade down to a less expensive BMW, Audi or Mercedes.” | “For European consumers to move out of the small circle is extremely rare,” said Antonio Ferreira, founder and director of Carnorama, a research firm in London. “Most people would rather trade down to a less expensive BMW, Audi or Mercedes.” |
| In a sign of how tough the European market is, even Toyota’s Lexus, perhaps the most widely available luxury import, had a mere 0.2 percent of car sales in the European Union last year. By contrast, Lexus has rivaled or surpassed the German luxury brands in American market share for more than a decade. | In a sign of how tough the European market is, even Toyota’s Lexus, perhaps the most widely available luxury import, had a mere 0.2 percent of car sales in the European Union last year. By contrast, Lexus has rivaled or surpassed the German luxury brands in American market share for more than a decade. |
| Though Hyundai struggled last year in Europe, as it and most other carmakers wrestled with a sluggish economy, it has steadily built market share for itself and its South Korean affiliate, Kia, a onetime rival in which Hyundai now owns a controlling stake. With a combined market share of 6.3 percent in the first three quarters of last year for the two brands, according to the European Automobile Manufacturers’ Association, Hyundai is now a significant player in Europe. | Though Hyundai struggled last year in Europe, as it and most other carmakers wrestled with a sluggish economy, it has steadily built market share for itself and its South Korean affiliate, Kia, a onetime rival in which Hyundai now owns a controlling stake. With a combined market share of 6.3 percent in the first three quarters of last year for the two brands, according to the European Automobile Manufacturers’ Association, Hyundai is now a significant player in Europe. |
| But Hyundai and Kia are known as budget brands in Europe. That reputation, analysts say, may have helped them gain market share during the financial crisis. | But Hyundai and Kia are known as budget brands in Europe. That reputation, analysts say, may have helped them gain market share during the financial crisis. |
| “When European consumers had budget constraints, they started looking at value-for-money options,” said Angela Hong, an analyst at Nomura. | “When European consumers had budget constraints, they started looking at value-for-money options,” said Angela Hong, an analyst at Nomura. |
| Even Hyundai executives acknowledge that high-end sedans are another matter. | Even Hyundai executives acknowledge that high-end sedans are another matter. |
| “Until now, we did not launch any luxury cars in Europe, which shows how tough the premium segment is,” said Lee In-cheol, vice president for Hyundai’s international sales division. “Now we think the market is ready.” | “Until now, we did not launch any luxury cars in Europe, which shows how tough the premium segment is,” said Lee In-cheol, vice president for Hyundai’s international sales division. “Now we think the market is ready.” |
| The new Genesis has been popular in South Korea, where it was introduced in November. Mr. Lee said the company had received 15,000 orders in the first month, half of its domestic goal for the first year. | The new Genesis has been popular in South Korea, where it was introduced in November. Mr. Lee said the company had received 15,000 orders in the first month, half of its domestic goal for the first year. |
| Ms. Hong said she expected Hyundai to sell 62,000 Genesis cars worldwide in the first year, about half of them in South Korea. But she estimated that in Europe, the number might be no more than a few hundred. | Ms. Hong said she expected Hyundai to sell 62,000 Genesis cars worldwide in the first year, about half of them in South Korea. But she estimated that in Europe, the number might be no more than a few hundred. |
| “This isn’t going to contribute a lot of earnings,” she said. “It is more about image. Europe represents the global consumer preference, so that can have a very positive impact on the brand.” | “This isn’t going to contribute a lot of earnings,” she said. “It is more about image. Europe represents the global consumer preference, so that can have a very positive impact on the brand.” |
| Mr. Lee declined to provide sales estimates for Europe, but he agreed that the numbers would be modest. The company plans to use the Genesis as a way to showcase its innovations in technology and design, he said. The hope is that the benefits will extend to its less expensive models, in the way that tire-kickers ogling a $115,000 Audi R8 sometimes settle for a $30,000 A3. | Mr. Lee declined to provide sales estimates for Europe, but he agreed that the numbers would be modest. The company plans to use the Genesis as a way to showcase its innovations in technology and design, he said. The hope is that the benefits will extend to its less expensive models, in the way that tire-kickers ogling a $115,000 Audi R8 sometimes settle for a $30,000 A3. |
| Accordingly, Hyundai plans a more visible marketing push in Europe than the expected modest sales figures might justify. In addition to advertising, Hyundai plans an extensive program of test drives so that prospective customers, or just curious ones, can get a better feel for the car. | Accordingly, Hyundai plans a more visible marketing push in Europe than the expected modest sales figures might justify. In addition to advertising, Hyundai plans an extensive program of test drives so that prospective customers, or just curious ones, can get a better feel for the car. |
| “The target customer is someone who values differentiation in their experiences and a new kind of luxury,” he said. “We will place an emphasis on social responsibility, design and innovation.” | “The target customer is someone who values differentiation in their experiences and a new kind of luxury,” he said. “We will place an emphasis on social responsibility, design and innovation.” |
| Not everyone in Europe sees Hyundai as socially responsible. Shortly after the election of a Socialist president, François Hollande, in France almost two years ago, members of his government began accusing the company of unfair competition, saying it was dumping — that is, selling its cars below cost in an effort to gain market share — in Europe. | Not everyone in Europe sees Hyundai as socially responsible. Shortly after the election of a Socialist president, François Hollande, in France almost two years ago, members of his government began accusing the company of unfair competition, saying it was dumping — that is, selling its cars below cost in an effort to gain market share — in Europe. |
| The French industry minister, Arnaud Montebourg, complained that Hyundai was taking advantage of low-cost South Korean labor to undercut European carmakers. Around the same time, Peugeot was announcing the closing of a plant near Paris, eliminating thousands of jobs. | The French industry minister, Arnaud Montebourg, complained that Hyundai was taking advantage of low-cost South Korean labor to undercut European carmakers. Around the same time, Peugeot was announcing the closing of a plant near Paris, eliminating thousands of jobs. |
| Hyundai said most of the cars it sold in Europe were made in the Czech Republic or Turkey, not South Korea. And it commissioned a study by London Economics, a research firm, that said the presence of Hyundai and Kia in Europe supported 317,000 jobs in the region. | Hyundai said most of the cars it sold in Europe were made in the Czech Republic or Turkey, not South Korea. And it commissioned a study by London Economics, a research firm, that said the presence of Hyundai and Kia in Europe supported 317,000 jobs in the region. |
| Though the Genesis is made in South Korea, Mr. Lee said he did not think political concerns would pose any problem in Europe. | Though the Genesis is made in South Korea, Mr. Lee said he did not think political concerns would pose any problem in Europe. |
| “We contribute heavily to the economy, and volume will be low,” he said. | “We contribute heavily to the economy, and volume will be low,” he said. |