Conspicuous consumption has geared down during these hard times, and an apparent beneficiary of that is the Hyundai Genesis, introduced last year as an affordable upscale sedan.
Starting at $32,250, it has drawn buyers who until recently might have opted for more costly prestige cars, such as the Mercedes-Benz S-Class (stickered at $89,350 and up), says John Krafcik, president and CEO of Hyundai Motor America.
Such a downshifting in consumer preferences may be tied to today's public disdain of perceived excesses, from Wall Street bonuses to corporate jets. If there's a time for flaunting it, it's not now.
So, the Genesis becomes an understated luxury for many affluent consumers who want to avoid overt displays of extravagance and status, Krafcik says.
“A huge number of Genesis buyers are coming from premium brands,” he says at the New York auto show, where Hyundai unveils its Nuvis concept cross/utility vehicle. It also displays the Equus, a costlier car than the Genesis, but only sold in South Korea, Hyundai's homeland. Ward's has reported Hyundai hopes to sell the Equus in the U.S. in about two years.
“A lot of people, who a year ago strove for prestige brands, now want to be less conspicuous, less ostentatious,” he says.
Speaking to journalists, Krafcik cites a hypothetical example of an executive at a financially ailing newspaper choosing not to lease another BMW 7-Series while staffers make sacrifices to keep the publication afloat.
He tells of an Aston Martin owner who traded in that ultra-luxury vehicle for a Genesis at a Carlsbad, CA, dealership. “I think it's a bit of reverse social stigma,” Krafcik says.
There are past cases of that in automotive history, such as how early Buicks got nicknamed “the doctor's car.”
Back when physicians made house calls, many of them shunned driving Cadillacs, General Motors Corp.'s top-line car, lest arriving in one would elicit clucks from bill-paying patients. Instead, doctors drove GM's next-best make: Buick. It offered nearly as many accouterments as Cadillac, minus the high-brow image.
The Genesis sedan, Hyundai's first foray into the U.S. premium market, has “exceeded expectations,” Krafcik says.
Since the vehicle went on sale last June, Hyundai has sold 6,167 units in 2008 and 3,945 units in the first three months of 2009, according to Ward's data. Its market share in the lower luxury-passenger car market has climbed to 3.57%.
Along the way, the car has garnered various awards. It was named North American Car of the Year at the Detroit auto show. Its V-8 is one of Ward's 10 Best Engines for 2009.
Genesis has buffed up the overall Hyundai brand, which in the U.S. once was strictly entry-level and a dubious player at that. There's the story of a Hyundai salesman who, on a demo drive with a customer in an '86 Excel, had to turn off the air conditioner to conserve enough power to get up a hill.
Ninety-two percent of Genesis shoppers never considered a Hyundai until the Genesis, Krafcik says. “Seventy percent of Genesis owners never owned a Hyundai. So those are all conquest buyers.”