Then They Looked at the Cost

The dream was to have a separate, Lexus-like dealer and marketing channel for Hyundai Motor Co. Ltd.'s new Genesis luxury sedan and upcoming coupe.

But it was not to be.

After extensive study, Hyundai leadership in Seoul, South Korea, determined that in the near-term there would not be enough products or volume to justify the $2.5 billion cost of creating such a dealership channel.

Instead, Hyundai retailers are being trained to handle a product and deal with a customer very different from current vehicles and clientele.

Company officials acknowledge selling a car costing as much as $42,000 fully loaded from its traditional dealer base will be a challenge, but they are hoping for a positive halo effect.

“We're going to do some incredible, comprehensive training with our sales people, with our parts and service technicians,” says Dave Zuchowski, Hyundai Motor America vice president-sales.

“We're going to be spending three to four days per market in 33 different markets. We're going to train our 6,200 dealership personnel on both product and the expectations of the customer.”

The auto maker also will use a new information tool called “I-Tube,” a touch-screen device that sits in its own showroom kiosk and serves as a self-guided sales tool for customers and sales personnel.

Market research shows the Genesis attracts two broad groups of buyers, says John Krafcik, vice president-product development and strategic planning. One group wants to move up from a traditional family car, such as a Toyota Camry or Nissan Altima; the other group is looking to economize by moving down from an expensive premium brand.

Marketers expected Genesis to appeal more to the group striving to move up than those already in the premium segment, but it turns out the reverse is true.

“We call them ‘Been-There and Done-Thats,’” Krafcik says. These potential customers say things such as, “My life didn't change when I bought a Lexus. I enjoyed a car wash and a cappuccino at the dealer, but fundamentally it's an expensive car with a big payment, and I'm not sure it's worth the money.”

Hyundai still has its work cut out. Ward's parked a Genesis at a Starbucks in upscale Santa Barbara and conducted some impromptu man-on-the-street interviews.

Several passersby were impressed with the design, including a Mercedes owner, but they balked at the idea of paying over $40,000 for a Hyundai, even one fully loaded. Most thought a more reasonable price was around $33,000, where the base model starts.