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Top-spec Hyundai Santa Fe boosts Genesis confidence

Premium pick: The Hyundai Genesis luxury sedan is set to arrive in Australia in about November this year.

Success of top-line Santa Fe bodes well for Hyundai’s Genesis premium flagship

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Hyundai logo26 Jun 2014

HYUNDAI believes Australians are ready for the first premium South Korean luxury car following unprecedented sales for the range-topping version of the Santa Fe SUV.

According to Hyundai Motor Corporation Australia chief operating officer John Elsworth, the success of the $51,990, plus on-road costs, Highlander CRDi has helped put everybody involved with the upcoming Genesis sedan into a can-do mindset.

Currently the most expensive Santa Fe is running at around 50 per cent of total orders, which is well above company expectations – especially for a model that has been on sale for almost two years.

“The car gives us a lot of confidence is the Santa Fe,” Mr Elsworth told the Australian media at the Genesis first drive in South Korea this week.

“There are not a lot of people who would have ever thought that the Santa Fe could sell as many as it has at the top end. Half of what we sell is over $50,000. So that gives us a lot of confidence with Genesis.

“We only sell about five per cent of the four-cylinder version of the Santa Fe.”

While Hyundai did not confirm sales expectations, Mr Elsworth has no illusions about how challenging it will be for the marque to break into such a heavily brand-conscious market.

Besides aiming directly for the Holden Calais V, Ford Falcon G6E and Chrysler 300 large cars, the Genesis will have the entry-level versions of the BMW 3 Series, Lexus IS, Audi A4 and Mercedes-Benz C-Class in its cross-hairs in the $50,000 to $65,000 luxury segment.

“It’s a pretty broad (space) – the Genesis goes from the Calais right up to the Benzes and BMW,” Mr Elsworth said.

“But it is very difficult getting people out of their Benzes and BMWs. There will be lots of conquest business because we don’t sell this sort of car, so we have to poach them from other manufacturers.

As a result, HMCA will only sell two variants to begin with when the vehicle launches in about November this year, to help ease itself, as well as the dealer body into the luxury car process.

“It’s not a big volume car,” he said. “It’s not a big market. And we’re a new brand in a small market, so it’s logical that we won’t have huge volume aspirations.

“And then when you have complexity in that from an ordering point of view, when you then try to distribute those cars around five states and across 160 dealers, it’s very difficult.

“What you don’t want is to get to the point of is that you’ve got the wrong stock at the wrong places because you ultimately end up distress marketing those cars because the dealers don’t want them.

“That’s what we want to avoid. One thing that can stop distress marketing is by having fewer models.

While not divulging local prices just yet, Mr Elsworth admits that the Genesis probably won’t be a money-spinner for HMCA for a while at least.

“This is not a car that we’re intending on maximising profitability on,” he revealed. “It has to be a brand statement. It has to be introduced in the market at the right price, at the right value equation, and if that means we minimise our margins then so be it.

“(But) across the volumes, it won’t be a dramatic impact on our local business.

To us it’s about diversifying the brand a bit. Hyundai is famous for small cars, famous for fuel-efficient cars, famous for great value.

“This is just pushing the brand in a different direction – it’s prestige, luxury, high-end, high-tech… very different. I think it’s just a true representation of how far Hyundai has come over the past 10 years.”

Mr Elsworth said that pitching the Genesis to limousine companies is a strong way of getting the message out there, adding that if a long-wheel base version of the Genesis sedan became available then he would consider that for Australia too.

“I would absolutely. The limo market is a massive market… we’ve been thinking about it since we decided to take the car.

“It is a big opportunity for us to sell the sedan to the limo market. They’re a great advocate for the product when you get it right. Limo drivers can influence people who sit in the back of the cars – they really can. They’re very well maintained cars, not like some normal taxis.

“They’re a really good demonstration for the brand. So we’re going to go really hard.”

To help sell the Genesis, many of Hyundai’s 160-strong dealers will be required to set some space aside within their facilities. Special training will also be undertaken – though not every one of them will stock the luxury car.

“Metropolitan dealers have to install some showroom delineation so the Genesis has its own place in the showroom,” he said.

“The training will be a bit more intense. We will ask for specialists. We will ask dealers to nominate who will sell the car, so when buyers come into a showroom armed with a lot of knowledge, then we will be in a position that the sales people will have more product knowledge than the customer.

“That doesn’t happen a lot these days with everything being digital. Customers come in armed with a lot of information nowadays. That will require some intense training. We will probably fly everyone to Sydney and put them through an immersion process.

“A lot of the smaller rural dealers haven’t been asked to do the things we’ve asked of the bigger metropolitan dealers.

“You have to be sensible what you ask rural dealers to invest in. Otherwise you can push their business over the edge. But they will be able to sell it.”

Finally, the Genesis will embark on an Australian tour as part of a mobile road show to help drum up rural business for the luxury car.

“We’ll probably have a fleet moving around the country. We won’t ask them to stock cars, because it just absorbs a lot of their floor plan and cash. It is very difficult to ask a dealer to stock a blue one or a red one because invariably they might be stuck with one of them.”

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