DETROIT – A possible luxury brand forMotor Co. Ltd. still is on the table, a top Hyundai Motor America official tells Ward’s here.
HMA CEO John Krafcik says the plan to place’s Genesis and Equus premium models within a separate space in Hyundai dealer showrooms doesn’t preclude a future luxury brand.
“We could still some day do a luxury brand,” Krafcik says.
The showroom-within-a-showroom plan, first revealed by Ward’s, calls for Hyundai dealers to carve out a unique space for the Genesis and Equus, Hyundai’s highest-priced and most luxuriously appointed U.S. models.
The tactic is seen as a cheaper alternative for now to creating a full-blown luxury brand with separate showrooms.
Hyundai in May 2008 estimated the cost of a separate luxury channel, and the resulting dealerships, at $2.5 billion over about a 13-year-period.
Krafcik declines to disclose the cost of the showroom-within-a-showroom plan but says it will be cheaper than the “hundreds of thousands” of dollars a dealer source told Ward’s he expected to have to spend.
“I think that person who might have said that was thinking we were going to require a new building; we will definitely not be requiring any building,” Krafcik says.
However, he notes some Hyundai dealers have approached him asking if they could build a separate showroom, an idea to which HMA is amenable.
“A lot of our dealers are raising their hand and saying, ‘I want to build a completely separate showroom. Is that OK?’ Yeah, sure,” Krafcik says.
Some of the dealers asking for a separate Genesis and Equus showroom are ones that previously sold a scuttled domestic brand and now have an empty store. “We’re going to work on a case-by-case basis (with each dealer),” he says.
Krafcik points out only Hyundai dealers with standalone showrooms will be allowed to create a showroom-within-a-showroom, or possibly a separate showroom. “So if you’re dualed with, you’re not going to sell (the) Equus,” he says.
Exclusive Hyundai dealers make up 62% of the brand’s total U.S. dealer count.
The notion of carving out a unique space for Genesis and Equus was inspired byMotor Corp.’s Scion youth brand, which does the same at its Toyota-brand stores.
The plan also was influenced by the Magnolia section of electronics retailer Best Buy’s big-box stores.
“You know their mission, but they’ve also got Magnolia, which is high-end audio and video stuff; home theater, really premium brands, much higher prices,” Krafcik says. “And they put their best salesmen in there. They have a very premium showroom setup, but it’s within the Best Buy big-box store.
“There’s Best Buy and there’s the Magnolia part of Best Buy, where I always go because there’s the cool stuff in there. And (we want) the same kind of thing with Hyundai and Equus and Genesis.”