Genesis faces tough European tests, but electric cars could tip the scales; Interview
Cynics might argue that Genesis, Hyundai’s high-end subsidiary in Korea, is fulfilling an impossible dream by venturing into the German fortress that is Europe’s luxury auto business. But amid the wreckage of many other costly failed attempts, Genesis’s ability to handle the electric revolution could be its trump card in the hole.
After all, the well-established and traditional blueprints of Nissan’s Infiniti and General Motors’ Cadillac have crashed and burned trying to compete with BMW, Mercedes and Volkswagen’s Audi and Porsche on their home turf. Honda’s Acura and Ford’s Lincoln never even dared to try. Toyota’s hugely successful Lexus in the United States has barely established a beachhead after about 20 years of testing. Tata Motors’ Jaguar and Stellantis’ Alfa Romeo barely hang on, despite possessing that crucial ingredient for success in the luxury market – a unique history and a degree of public notoriety, even charisma.
Tesla’s success in Europe has shown how the electric car craze can produce amazing results.
In an interview, Genesis Motor Europe Managing Director Dominique Boesch is clearly aware of the tough fight ahead and avoids ambitious predictions.
“We want to establish our brand and now learn how to sell luxury at very high levels. Europe is a laboratory for us,” said Boesch, who joined Genesis from Audi.
Genesis initially eschews dealerships by selling online and offering long-term service offerings that include collecting cars in need of work with a guaranteed replacement. In the United States, where Genesis has operated since 2015 with a similar formula, it is currently moving to stand-alone dealerships for the brand.
Boesch said Genesis wants to become a global luxury brand and that requires success in Europe.
“It’s probably the most sophisticated market in terms of premium and customers want that experience. We’re not here initially just to put more metal on the street, but to be recognized as a brand that has a great product. We’re not initially focused on sales, but if we’re successful in Europe, we’ll be recognized as a truly global premium brand,” Boesch said.
And there is no doubt that Genesis has some very impressive products. The range starts with 5 new models; the G80 large sedan, the GV80 SUV, the G70 small sedan, the SUV and the Shooting Brake. Later this year there will be 3 electric models, the G80, GV60 and an all new GV70.
“For us, success 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,” Boesch said.
That’s good because analysts haven’t seen much of an impact on the luxury market for some time.
Ian Fletcher, automotive analyst for IHS Markit, said sales expectations are low, with Genesis’ market share in Western and Central Europe representing 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 take 0.4% market share in 2025, while Audi will take around 4% market share , BMW 5% share and Mercedes nearly 6%.
Analysts at French automotive consultancy Inovev estimate that Genesis will hold 1% of the European premium market in 2025 and 1.5% in 2030.
Inovev said the difficulty is the lack of brand history. Sedans and SUVs are very impressive, but disruptive products are needed.
Genesis began selling in the United States with 7,000 sales peaking at 21,200 in 2019, then slipping to 16,400 in 2020. In 2021, sales soared to nearly 50,000.
According to Ed Kim, an analyst at AutoPacific, a consulting firm based in Long Beach, Calif., electric cars could offer a game-changing opportunity.
Hyundai and its sister company Kia have made huge strides in the electric baby car market in Europe and this technological capability under the skin could well form the basis of an interior track for Genesis.
“Genesis is about to launch several pure electric vehicle models in the (US) market and in many ways the brand is very well positioned to do so. While most other luxury brands make combustion engines internal since time immemorial, thus having legions of customers predisposed to gasoline powertrains, Genesis is a new brand and does not have this heritage, so it can potentially 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’m less familiar with Genesis’ plans and goals for Europe and the UK, I think the brand should focus on its electric vehicle offerings, as they will be in the US market. Still once, without the petrol and diesel heritage in Europe and the UK, Genesis can launch with its powerful ICE products, but quickly make the transition to electric much easier than established German brands, who have a long, long history of splendid (ICE) over many decades,” Kim said.
“Also, the materials and build quality should be highlighted. I was amazed at the build quality and level of fit and finish of the latest Genesis products and recently compared the interior of some of its models to competing German interiors, and Genesis interiors are generally just as good. This is the first time I can really say this about the interior execution of an Asian luxury brand, and it is truly an achievement that should be promoted,” Kim said.
The analysis of the Genesis outlook will note how Hyundai and Kia have boosted sales in the European mass market. They started with cheap and cheerful but very reliable vehicles and with market leading warranties, and gradually progressed in quality and price. Arguably Kia and Hyundai have now overtaken brands like Renault, Peugeot, Citroen and Fiat in terms of quality and are perceived to be as well made as market leader Volkswagen. In 2021, Kia and Hyundai’s combined sales in Western Europe totaled 861,088 with a market share of 8.1%, according to the European Automobile Manufacturers Association. It took a lot of commitment and a huge investment.
Boesch says Genesis has a clear commitment to what the European premium customer wants – premium brand perception and customer service.
“In this lab experiment, we gather information that will contribute to the overall position as a high-end 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, which is how we want our guests to feel,” Boesch said.
It will take more than a feel-good factor to create this premium global brand, but who knows, the next-generation electric car, the GV70, could take that big leap towards the impossible dream later this year.