Column: On the Road

Growing up, luxury vehicles for me essentially included anything brought over from the European continent – from the classics like Mercedes-Benz and BMW to Audi, Saab and even the short-lived Peugeot 505 sedan (although looking back on it the Peugeot might have been a bit of a reach). A generation before, it was Cadillac and Lincoln marques that were held up as aspirational vehicles, with stories of people working their entire lives to finally afford a Cadillac in the driveway.

So when a colleague brought in the new Hyundai Genesis sedan to our Ann Arbor shop and described it as an early Lexus LS, I just had to see if this newest introduction to the luxury sedan segment was really as advertised.

Hyundai began making noises about entering into the luxury stratosphere just a couple of years ago, accompanied by chortles from the media and perhaps even from consumers too. No more. The Genesis won North American Car of the Year in 2009 – an award compiled from automotive media voting on dozens of new models from multiple pricing segments.

The car has been reviewed to death in other publications so I won’t say much more than it checks all of the boxes for a luxury sedan: quiet, smooth ride, luxurious interior ensconced in leather, a full spate of electronic gear. The catch – a $40,000 price tag versus $50,000 and up for other comparable sedans of this size and equipment level. The Mercedes-Benz E-Class, the BMW 5-series and Lexus GS are targeted rivals in this segment.

Hyundai plans to introduce another luxury model even above the Genesis later this year, the Equus. It will go up against the big flagships: Mercedes S-Class, Lexus LS450 and BMW 7-series. And if their pricing strategy holds, this model too is likely to come in under the high price tags seen in this segment. Rumors have it pegged at $60,000 but the company has yet to confirm pricing and it’s not clear if that is with or without heated tilting seats and TV screens … in the back.

This rollout strategy is nothing new. Lexus debuted in the American market with pricing well below its competitors, and sustained those prices for several years until Americans were willing to give the tires a kick. In fact, the prices were so low compared to the competition that Toyota was accused of “dumping” vehicles on the market in order to gain market share.

Now it’s Hyundai’s turn. And the question is whether or not consumers are willing to see the brand in a new light. Instead of an inexpensive transportation option with a legacy of quality issues (issues that more recently have been resolved just to note), Hyundai is asking buyers to see the Genesis and its larger kin Equus as luxury vehicles with equal gravitas as a Mercedes, but at a lower cost.

Hyundai isn’t the only one pushing this paradigm. Buick has recently set its sights on Lexus, positioning its Buick Lacrosse squarely against the Lexus ES model. The model is comparable in almost every way – from equipment to design and appointment – but comes in well below the cost of the ES. In fact the loaded Lacrosse can be had for slightly less than the base Lexus ES. Some auto reviews insist that the Lacrosse is even superior to the ES model, leaving only the brand itself to differentiate the two models.

Cadillac too is trying a sort of renaissance, pushing more aggressive design and more youthful advertising into its brand in an effort to tamp down a median buying age that at one point was so high that the company stopped releasing the figure for some time.

In the wake of last year’s economic pub crawl into the gutter, and the hangover that still ensues, perhaps these new, or renewed brands have a better chance of getting noticed than ever before. As they make their value proposition, cost-conscious consumers may drop their prejudices towards luxury staples of years past, and give these new and revised brands a more serious look.

By the way, consumers may want to do that sooner rather than later. As some of these new efforts gain market share, automakers are likely to push their pricing strategies up, opting to compete head-to-head and taking a bigger margin on each unit sold.

Meanwhile, car shoppers looking in or at least around the luxury sedan segment have many more options than ever before and will likely be surprised at how far their dollars will go … as long as they can see the car behind the badge.

About the author: Rob Cleveland is CEO of ICON Creative Technologies Group and a co-owner of Grange Kitchen and Bar in Ann Arbor.