History Repeats – Again

Hyundai are going to take this opportunity to turn the Genesis nameplate into a stand-alone brand.

2015 Hyundai Genesis: iihs.org
With thanks to Eoin for the use of the song title. 2015 Hyundai Genesis: iihs.org

This is worrying. The last time someone tried this, the bottom fell out of the market for prestige cars. I am thinking here of the time Mazda tried to catch up with Honda and Toyota and launch the Xedos brand in the wake of Acura and Lexus. Hyundai bravely envisage a range of six models, with design supervised by Luc Donckerwolke. The cars will have their own sheetmetal and distinctive appearance to separate them from the Hyundai range.

Rather than add more features, Hyundai wish to focus on customer service as they feel more complexity is not the way forward. This doesn’t leave much room for manoeuvre in the sense that planning for changes in salespeople’s behaviour is not as easy to implement as getting engineers to build in gadgets and devise different mechanical solutions.

Here’s Hyundai’s proposition: “We have created this new Genesis brand with a complete focus on our customers who want smart ownership experiences that save time and effort, with practical innovations that enhance satisfaction. The Genesis brand will fulfil these expectations, becoming a market leader through our human-centred brand strategy,” said Euisun Chung, Hyundai Motor Company Vice Chairman.”

The astute among you may wonder that if Hyundai are aiming at centring their strategy on humans then what life-forms have Ford, Audi and Kia et alia being dealing with this last long time. A new benchmark in brand speak has been set, if nothing else.

1994 Mazda Xedos 9: mobile.de
1994 Mazda Xedos 9: mobile.de

In 1992 Mazda launched the Xedos 6 as a BMW fighter and among its special touches was a nice, small 2.0 litre six. The Xedos 9 came out in 1994 and had a Miller cycle engine. Nicely styled as they were, there was no demand and the brand died in 2000. Mazda’s problems were that the cars were not distinct enough to convince new customers to buy them. Worse, the timing was bad due to a global downturn that sapped demand for more expensive cars. I am rather concerned we’re facing such a situation now. The runes are not good: JCB is laying off staff and when there is less demand for construction machinery demand for other things usually falls, trailing in its wake.

Author: richard herriott

I like anchovies. I dislike post-war town planning.

32 thoughts on “History Repeats – Again”

  1. The main difference between Mazda and Hyundai/KIA however is that the Koreans are likely in a much stronger position financially, and they have gone about this launch the right way round, by establishing their market presence and credibility first – particularly in the US.

  2. I agree with your first point. Kia’s ability to patiently win customers is impressive and has stood them well. They have more cash to support the venture. That said, Mazda could be said to have been in a similar position in 1992 with respect to their reputation and sales. What sank them had more to with the economic conditions than factors intrinsic to Mazda. I’m more concerned about the global economy than about Hyundai’s new marque.

  3. Funny that you should mention Xedos as just the other day I happened to spot a 6. The car was Strangely Immaculate ™ and looked nothing like 20 years of age (being a 1995 M-plate), perhaps an unintended effect of the car’s anodyne styling. Compact and low, I found it attractive.

    Funny how your mind works: spotting the Xedos 6 immediately put me in mind of the Daily Mail Motor Review. Long lost to the mists of time, the Motor Review was a card covered magazine featuring a little write up and stat box for every car available in the UK at the time of the Motor Show, arranged alphabetically by manufacturer, then by size of car. As a boy I used to devour every page of the early 1990s editions and Xedos was one of the last entries, most magazines of course being consumed backwards.

    I also remember the huge range of Japanese cars on offer in the UK, my readership of Motor Review coinciding with the tail end of the golden age of Japanese car manufacturing, before hubris and a decade of stagflation popped their bubble. Mitsubishi in particular had a huge range covering every niche, as did Toyota and Nissan; even Subaru, Daihatsu and Suzuki had a good presence. Korea by contrast offered only a handful of rather variable models (Hyundai was starting to put together a good range but Daewoo was trotting out prehistoric GM cast offs). How times change.

    1. The Daily Mail car review was a treasure because there was vastly less information available. Old copies are quite pricey now. I have a few of the last ones. They also had data on US cars, another thing you couldn’t easily get in the 90s. The internet wiped out that market totally. Wikipedia has it all and more. It lacks the mystery, though.

    2. I loved them, even though by that age my hatred of the Daily Mail was already beginning to solidify. One day I will disinter some old copies from my parent’s loft and write an article about them.

    3. This publication sounds a little like the catalogue issue of the “Automobil Revue” we have here in Switzerland. My dad collected all these; they came out every year on occasion of the Geneva Motor Show. They cover almost all cars that can be bought, even exotic ones not on sale in Europe, with a lot of technical data. I used to spend whole days as a boy reading through those.

    1. With that kind of belief, the car manufacturing landscape would never have evolved. I wouldn’t be surprised to see another long established brand fail before they do.

    2. I suppose Hyundai would be happy to build an Infiniti-like niche. With my Eurocentric view it is easy for me to forget that Infiniti, Acura and Scion do reasonable business in the USA. That said, the up-market mid-market market seems pretty crowded already. Take into account the up-market moving down-market (the German premium players) and one wonders if anyone really knows where to set their stall out?

  4. Evidently Hyundai think it´s more likely to be successful building up from the success of the Genesis than to gradually change perceptions of Hyundai as a brand. That doesn´t stop it being possible that the timing is wrong. Audi turned itself from an also-ran to a major player inside 20 years. Maybe they are an exception. Skoda? Or else one can look at Ford and GM who persist in insisting they will be seen as being “more premium” but always stay where they are. On balance, Genesis won´t get to the six models they are talking about. Come back to this in 2021, everyone.

    1. True the context is challenging to say the least, but I have a feeling Hyundai may well have hit the sweetspot with the Genesis the same way Toyota or Honda did 20+ years ago, by offering reliability and a lot of car for sensible money. That’s alway bound to go down well in the US (less so in Europe). And with VAG’s reputation in tatters, as well as the big 3’s questionable efforts in the premium market, there’s actually an opportunity here for the Koreans to make their mark.

    1. OK, it’s easy to laugh at Citroen, but I see DS as an attempt to build profitability in emerging markets – if it works in Europe, it will be a bonus. 10 years ago, the only Western companies with any significant presence in China were Citroen, Buick and VW – now look. They might not be as dumb as we think. DS models are built in China, avoiding import duties, and can be tailored more towards Asian tastes. Anyhow, I quite like the DS3, which is now being offered on very tempting leasing deals.

    2. If the DS cars weren´t so similar in feel to the Citroen cars I´d be minded to agree with you. Without trying to be funny, DS seems like half a brand, if such a thing´s possible. I get the impression Hyundai want a totally separate line.
      How well do you think DS is faring? That´s not a rhetorical question. I really have no feel for DS´s status in the world.

  5. Hi Richard, my impression is that the initial success of the DS3 gave them confidence to continue, but the DS4 and DS5 are deeply mediocre. I have no idea if they are achieving their targets in China with the bigger models, which frankly look pretty unappealing. However, there is no equivalent large Citroen saloon or SUV, so in that sense, they ARE quite different.

  6. Laurent: it’s easy to forget the US market. I haven’t really focused my thoughts on the different regions. A question: Lexus does well enough in its large cars, is it the same for the less “core” models? Or can what makes the Genesis work be translated to a 4 cylinder vehicle at half the price?
    The German brands seem to have a poor reputation for reliability (even before VAG’s problem). A clever company would step in with a USP addressing that.

    1. Breaking into the European market is difficult for any aspiring overseas manufacturers against the local (well, German mostly) brands. Which is why Hyundai’s priority are quite sensibly elsewhere:

      “Initially on sale in the Korean, Chinese, North American and Middle Eastern luxury car markets, the Genesis brand will expand its reach to Europe and other parts of Asia as the model range grows to full strength.”

  7. The bigger models in China might be different from Citroëns (e.g. the C5 – is that still sold in China?), but are they different enough from any anonymous car to be perceived as desireable for Chinese buyers? I don’t remember any exact figures, but every time I read about DS’s sales there, I am quite shocked. And as in Europe, the tendency seems to be rather downwards.

    As for the DS3’s success, much of it and the buyers’ confidence was destroyed by engine problems (timing chains). Furthermore, it suffers from lacking follow-up, that means facelifts and a broader model range.

    1. Alas, it’s the latter. According to PSA’s statistics, it’s 16’000 units so far in 2015. At least it’s a little bit better than in the same period of 2014, but it’s still less than 10% of Citroën sales (which, by the way, have declined by 12% compared to last year).

  8. They missed an opportunity when Volvo and Saab were for sale: recognised brands with existing customers, including a large presence in Europe. They can try on their own now, but probably they will not achieve what they could have easily done with Volvo or Saab, certainly not in Europe.

    1. When you say “they” do you mean GM and Ford? Those two represent a considerable missed chance. Ford needed a good upper middle market brand and so did GM. MBA courses must love both a case studies.
      At least Volvo escaped alive and didn’t get neglected to death like Saab and Lancia (under Fiat). As I write I realise both firms poured a lot of money into the Swedish businesses. Money wasn’t lacking but good management. Hyundai avoids the clash of cultures by expanding its domain instead of conquering new territory, so to speak.

    2. I think he/she meant that Hyundai had the opportunity to buy either brand rather than create a new one. I would argue that that was probably the more expensive approach, more than likely well beyond their means.

    3. Hyundai could have done almost immediatly well with Volvo or Saab. Now they will spend years and years to maybe get somewhere close to Lexus.

    4. All this at a (high) cost. Saab would have required a fair bit of investment, just as Volvo, and that would have cost a lot more to buy.

    5. At the time of sale, both Saab and Volvo were very cheap. At that time, these companies had excellent engineering capabilities. At that time, both brands were well regarded, only lacked new product. So the only investment needed was new product and an initial amount of money to buy the company.

      For Genesis, Hyundai will need to invest in (1) new models, (2) marketing a new brand from zero (2) expanding r&d and design facilities (4) expanding factories (5) creating a dealer network.

      Maybe in the USA it’s easier to start from zero, but in Europe you better have a decent brand if you want to sell a profitable number of cars.

  9. It´s hypothetical though: Saab was surely dead before Hyundai decided to make this move with Genesis and hasn´t Tata owned Volvo since 2010? Ford bought Volvo for about a billion, I recall. They said cheerily the S80 platform was worth more than that. I love the S80 in all its forms but obviously the S80 platform wasn´t worth a billion dollars. This reminds me….

    1. Saab is dead now, but there was a time when they just launched the new 95 and finally had an SUV and the future looked quite good. Remember, when Spyker took over Saab had 3 new models! Unfortunately Spyker ran out of money… so Saab went bankrupt … then came a Chinese (so GM didn’t want to cooperate any more) … then it went bankrupt again. With Hyundai, the story could have been very very different.

      About Volvo, it’s owned by the Chinese who invested heavily and have now access to technology and engineering (certainly on safety) Hyundai can only dream of.

  10. I’m inclined to agree that had the timing been right, Saab and Volvo would have made potential start points for Hyundai. The timing wasn’t right and Geely got there first.
    Let’s also consider that hands-off, “developing world” Tata and Geely are getting nice results from their charges in under five years. Ford and GM took much longer and failed due to their instincts to merge their new brands so as to share engineering. Result: watered down products which lost customers (though the S40 seemed to be a hit). Lesson: buy, invest, leave alone. Now the counterpoint: BMW left Rover alone for quite a while and they just ate money.
    We ought to find some books on this!

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