Does the World Need Another Luxury Car?

At a time when auto sales are struggling, Hyundai is introducing its Genesis luxury car. The timing is bad, but the car is surprisingly good

Hyundai Motor (HYMLF), a little Korean startup company just over 40 years ago, grew into a global brand by selling inexpensive vehicles. Now the company is entering the highly competitive luxury-import market to go toe-to-toe with such automakers as BMW (BMWG), Lexus, and Mercedes-Benz (DAI). Hyundai is offering startling prices, too.

There could not be a worse time to introduce a new brand of luxury car. Oil costs more than $130 a barrel, the economy is in a shambles, unemployment is rising, salaries are stagnating, the housing market is a disaster, and most industries are suffering. As the "R" word circulates broadly, the new car business is sluggish. "Stinks" is the description I've heard from some dealers.

Despite the obstacles, Hyundai will start selling a new luxury car in just a few weeks! A new luxury car?

Do words like "nuts," "gutsy," and "crazy" come to mind? Obviously not to the Koreans. "It's just challenging," Dong Jin Kim, Hyundai's vice-chairman, said at a recent meeting in Seoul. "We have invested a significant amount in time, resources, and money to assure the Genesis is a successful marketing launch."

More Than a Word
"Luxury" is a disruptive, troubling term with significant socioeconomic resonance. The go-go 1980s and '90s firmly established the credo: "You are what you eat, drink, wear, think, read, and of course, drive."

Arguably, the most opulent automotive brands are Rolls-Royce and Bentley now owned by BMW and Volkswagen (VOWG), respectively. With sticker prices ranging from $25,000 to $400,000 depending on the extras, these are the epitome of high-priced wheels. For most drivers, though, luxury begins north of $35,000.

Mike Jackson, president and CEO of Fort Lauderdale's AutoNation (AN), one of the nation's biggest sellers of luxury cars, detailed in a speech earlier this year the benchmark characteristics customers seek in a luxury automobile.
Starting with many of AutoNation's specifics, I've added a few details to capture the vagaries and subtleties that collectively contribute to a customer's appreciation of the luxury cars previously mentioned. There is no ranking order, merely a simple thumbs-up for yes, or a thumbs-down for no. It seems the Genesis stacks up pretty well. As it should: In creating the Genesis, Hyundai closely studied the competition's features and design cues. Many drivers may find the look derivative of more established luxury brands but this charge has been aimed at automotive upstarts since the birth of the internal combustion engine. But just because Hyundai wants to build a luxury car, that doesn't mean it can. It takes more than clever copyists to deliver the goods. To find out for myself if the Genesis is the real deal, I traveled to Hyundai's Namyang, South Korea, research and development center a few weeks ago to put the vehicle through its paces. Here are my perceptions:

Visual Impressions

• Showroom stance: sleek and smooth. Stylish without being over the top. Looks distinctive, with vague reminders of something I can't quite name. Looks expensive. Ready for snobbish valet parking attendants' front row, but will probably start out in the second line.

• Interior on first glance: uncomplicated with nonglaring accents and accoutrements. Colors are quiet, but not boring. Appears spacious. Not ostentatious, but certainly distinctive.

• Amenities: technological playground. Big-sound HD audio with XM, iPod, and Bluetooth functions. Hands-free phone, nav system, rear camera, rain-sensing wipers, and lots more.

• Driver's-seat perspective: instrument panel uncluttered, with a clear typeface on dials. Wish I'd inspected the car at night. Not overly complex. Good viewing area. Several seat adjustments to accommodate drivers of varying height.

• Passenger's-seat perspective: similar to the driver's.

• Rear seating: a big surprise. These seats are not just for munchkins, but for adults, too. I suspect my 6'5" son would be unusually comfortable.

Driving Impressions

Driving was done in a sterile format on a variety of test tracks, with no urban challenges. There were a smooth surface for high-speed straightaways, cone courses, and sudden stops; a bumpy, rutted surface reminiscent of most bad roads in Michigan; a short, undulating surface designed to make the person in the rear seats sick; and not least, a high-speed oval. All of the benchmark competitors' vehicles were on-site for comparison testing. My comments are based on driving and/or riding the rear-wheel-drive Genesis models in both the 3.8-liter V6 and the new 4.6-liter V8 versions.

• Engine startup: literally turn the key and go, without noticeable engine startup noise. Barely a whisper.

• Acceleration: kicked it at once to test speed and noise. Moved out quickly and quietly but not especially memorable or exceptional. After all, this is not a sports car, but a sports sedan. The Genesis will accelerate as needed to merge at high speed with traffic.

• Steering: during the acceleration test, made a quick switch halfway down the track to drive through a tightly spaced series of cones. This required weaving in, out, and around. Handling was light, quick, and responsive. Felt comfortable and confident, even on a very tight (over 30°) left turn of the wheel, and at a higher speed. Balanced, without heavy swaying, or side-to-side tossing, in the driver's or rear seat.

• Handling: on a customized road course that included a variety of twists and turnsboth right and left and was several hundred yards long. Drove the course four times, first to get the general layout and then in three runs at ever-increasing speed. The electronic stability control on the tightest turns, at what seemed nearly unsafe speeds, straightened the vehicle out with little more than some tire squeal. That's all. Very nice.

• Sudden stopping: fast and faster halting! During my acceleration test, the ride-along engineer ordered "Stop!" I did, without swerving or feeling at all loose.

• High-speed track: Unlike Nascar's left-turn ovals, this was a banked, right-turn-only track, five lanes high and a mile long. This road's rule is simply the faster one goes, the higher the groove. While a couple of velocity-obsessed writers favored speeds in excess of 140 miles per hour, I opted for a prudent 100-110 mph, feeling comfortable and in control throughout.

Now for price: The Genesis will make its debut in a few weeks at several thousand dollars less than its rivals cost. The V6 will sell for $33,000, and the V8 for $38,000. In comparison, the BMW 535i commands just under $50,000, while the Mercedes-Benz E350 goes for a little more than $52,000.

Frankly, it will take time for Hyundai's name to become synonymous with luxury, privilege, and quality—if it ever does. But the team that designed the Genesis has taken a commendable leap into the luxury market. Assuming people are still buying luxury cars in 10 years, I'd love to see what Hyundai will be producing then. Some people once laughed at Lexus and Acura.