Top Margin Menu

Genesis Faces Harsh European Test; Could Electric Cars Tip The Balance?

Genesis Faces Harsh European Test; Could Electric Cars Tip The Balance?

The difficulty is the lack of a brand history. The sedans and SUVs are very impressive, but disruptive products are required”

Cynics may say Genesis, Hyundai of Korea’s premium subsidiary, is dreaming the impossible dream by venturing into the German fortress that is Europe’s luxury auto sector. But amid the wreckage of many other expensive failed attempts, Genesis’s ability to handle the electric revolution might be the ace in the hole.  

After all, the well laid plans 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 have never even dared try. Toyota’s Lexus, hugely successful in the U.S., has barely established a beachhead after about 20 years of trying. Tata Motors’ Jaguar is now barely hanging on, despite possessing that crucial ingredient for luxury market success – a unique history and a degree of public awareness, charisma even.

Tesla’s success in Europe has shown how excitement about electric cars can produce astonishing results. 

In an interview, Genesis Motor Europe managing director Dominique Boesch is clearly aware of the uphill struggle ahead and eschews ambitious predictions.

“We want to establish our brand and learn now to retail luxury at very high levels. Europe is a laboratory for us,” said Boesch, who joined Genesis from Audi.

 Genesis is initially avoiding dealerships by selling online and offering long-term service deals which include the collection of cars which require work with a guaranteed replacement. In the U.S., where Genesis has operated since 2015 with a similar formula, it is currently moving to standalone dealerships for the brand.

Wannabe global luxury brand
Boesch said Genesis wants to become a global luxury brand and that requires success in Europe.

“This is 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 which has tremendous product. Initially we’re not sales driven, but if we can succeed in Europe we will be recognised as a truly global premium brand,” Boesch said. 

 And there’s not much doubt that Genesis has some very impressive products. The range starts with 5 new models; the big G80 sedan, GV80 SUV, smaller G70 sedan, SUV and Shooting Brake. Later this year there will be 3 electric models, the G80, GV60 and a completely new GV70. 

“Success for us will not be measured in quantity, but a perception in how the brand is valued. We’re not here to compete with established brands, but we are devoted to improve and create different customer experience,” Boesch said.

That’s just as well because analysts don’t see much impact in the luxury market for some time.

Ian Fletcher, auto analyst for IHS Markit, said sales expectations are weak, with Genesis market share in Western and Central Europe making up less than a 0.1% share 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 a 0.4% share of the market in 2025, while Audi will take an around 4% market share, BMW 5% share and Mercedes almost 6%.

Analysts at French auto consultancy Inovev reckon Genesis will take a 1% share of the European premium market in 2025, and 1.5% in 2030.

Inovev said the difficulty is the lack of a brand history. The sedans and SUVs are very impressive, but disruptive products are required.

Genesis started selling in the U.S. in 2016 with 7,000 sales peaking at 21,200 in 2019 then slipping to 16,400 in 2020. In 2021 sales zoomed to nearly 50,000. 

Breakthrough opportunity
According to Ed Kim, president of Long Beach, California-based consultancy AutoPacific, electric cars may provide the breakthrough opportunity. 

Hyundai and its sister company Kia have made huge progress in the infant electric car market and this technology capability could well form the basis of an inside track for Genesis. 

“Genesis is about to launch several pure EV models into the (U.S.) marketplace and in many ways, the brand is very well positioned to do this. While most other luxury brands have been doing internal combustion engines since time immemorial, thus having legions of customers predisposed to gasoline powertrains, Genesis is a new brand and doesn’t have that legacy. Thus, it can potentially make big waves in the emerging luxury EV market with excellent products and a lack of customer expectations for gasoline engines under their skins,” Kim said.

“While I am less familiar with Genesis’ plans and goal for Europe and the U.K., I do think that the brand should focus on its EV offerings as they will be in the U.S. market. Again, without the legacy of gasoline and diesel in Europe and the U.K., Genesis can launch with its strong ICE products but quickly make the transition to electricity much easier than established German brands, who have long, long histories of splendid (ICE) over many decades,” Kim said. 

“In addition, the materials and build quality should be emphasized. I have been amazed at the build quality and level of fit and finish in the latest Genesis products and recently compared some of its models’ interiors to the competing German interiors, and the Genesis interiors are generally every bit as good. That’s the first time I can truly say that about an Asian luxury brand’s interior execution, and that’s truly an accomplishment that should be promoted,” Kim said.

 Analysis of Genesis’s prospects will note how Hyundai and Kia progressed sales in Europe’s mass market. They started out with cheap and cheerful but very reliable vehicles and with market leading guarantees, 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, combined Kia and Hyundai sales in Western Europe totalled 861,088 with an 8.1% share of the market, according to the European Auto Manufacturers Association. This took much commitment and a huge investment.

Brand perception and customer service 
Boesch says Genesis has a clear commitment to what the European upmarket customer wants – brand perception and customer service. 

“In this laboratory experience we are collecting information which will contribute to the overall position as a premium luxury brand. We speak about our different approach and it’s very simple Korean culture called “sonnim”. We will treat you as if you were a guest in my private house, that’s what we want our customers to feel,” Boesch said.

It will take more than a feel-good factor to create that global premium brand, but who knows, the new generation electric car, the GV70, might make that big step towards the impossible dream later this year.   


Print Friendly, PDF & Email

No comments yet.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Site Designed and Administered By Paul Cox Photographic