Genesis launches the G70 in the Russian market at the Museum of Moscow. Russia chips in annual volume only in the “four digits.”
TOKYO — As thorny as Genesis’ retail rework has been, the U.S. dealer showdown is just one of many trials testing global brand chief Manfred Fitzgerald as he births the Korean luxury brand.
There is also a push to start sales in other regions, such as China. There is the move to establish the marque’s own design language and product planning division. And there is the campaign to pitch vehicle quality as a notch above that of the mass-market Hyundai brand that spawned it.
And finally, there remains the biggest challenge of all: simply getting people to know the brand exists.
Seen in that broad picture, where the U.S. accounts for only a quarter of Genesis’ global sales, the startup premium brand has made big strides since going solo in 2015, Fitzgerald said in an interview here.
“I can’t recall any other example of creating a brand at such a fast pace,” he told Automotive News. “It took other companies decades to do that.”
But the birth of Genesis is in some ways as chaotic as it is rapid. The mixed signals on hammering out an independent U.S. retail channel underscored the pitfalls of speed. In January, Genesis announced it would launch a separate network of about 100 stores in 48 cities. By May, it had changed course, saying it would offer franchise agreements to all Hyundai dealers.
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Globally, Genesis is a work in progress on other measures.
One of the biggest hurdles, Fitzgerald says, is simply shifting the mentality of the South Korean home office. After decades of building volume cars for reliable transportation, Hyundai must transform itself into a purveyor of luxury items customers crave.
“The hallmarks of success are not characterized by volume,” the brand boss said. “And that’s totally different. It has to do with a lot of soft factors that are not related to nuts and bolts. To get that thinking across is definitely a true challenge.”
Analysts say that, despite obvious birthing pains, the Genesis rollout has been largely successful, with critically acclaimed vehicles. But those birthing pains continue to hamper the brand.
For starters, the brand was launched with a holdover design language from its days under the Hyundai umbrella. Fitzgerald and design boss Luc Donckerwolke have only just begun to imbue Genesis with its own DNA. The brand was further handicapped by taking wing without a fully fleshed-out product lineup or even an entry in the hot crossover and SUV segments.
‘Relatively unknown’ overseas
Crucially, while Genesis has traction as a premium contender in the home market, it is largely off the radar overseas, notes Park Sangwon, an auto analyst at Heungkuk Securities in Seoul.
“With so many brands in the premium markets, having consumers try out a relatively unknown premium brand from Korea will be difficult,” Park said.
“With the advent of car connectivity, autonomous cars, shared cars and electrification of cars, building a new luxury brand will be much more difficult than when the Japanese launched luxury brands back in the 1980s,” he said.
Since taking the wheel in 2016, Fitzgerald has been fighting battles on multiple fronts.
The early days entailed multiple trips to Hyundai Motor Group’s mammoth factory in Ulsan, South Korea, where Genesis cars are produced on a dedicated line. That raised eyebrows among some Korean colleagues, he said, but helped underscore the importance of quality to workers.
“I remember asking the HR department, when can I go down to the factory? And they looked at me: ‘To the factory!? What do you want to do at the factory?!’ ” Fitzgerald said.
“I said, I want to see it. I want to know where the products are built and how they’re built and what the whole workflow is. For me, product is core.”
Attention to detail paid off. This year, Genesis supplanted Audi atop Consumer Reports’ annual ranking of automotive brands, based on road and safety tests, owner satisfaction and reliability.
A year earlier, it ranked No. 2 on J.D. Power’s Initial Quality Study.
Fitzgerald also has ramped up the brand’s dedicated staff — including an independent product development team. Genesis began life with just five people in South Korea. Today, the fledgling brand has more than 300 employees, including more than 100 at its headquarters in Seoul and another team of engineers and designers at Hyundai Motor Group’s Namyang r&d center to the south.
In the U.S., Genesis directly employs more than 30 people, Fitzgerald said.
Genesis won its own product development resources only last August. Going forward, that will help Genesis chart a course independent of Hyundai and Kia, Fitzgerald said. This is especially true in areas such as electrified cars and sporty offerings, where Genesis can better leverage its dedicated rear-wheel-drive platform for differentiated products.
“Product management and product development is under the Genesis division now, not Hyundai anymore,” he said. “I have my own product group, which steers this whole process.”
For instance, Genesis will jump straight to a full-electric model, skipping the plug-in phase and introducing two dedicated electric vehicle platforms, starting around 2021, he said.
Overseas expansion is more unfinished business.
South Korea accounted for the lion’s share of last year’s global volume of 82,367 vehicles. A toehold presence in the Middle East and Russia chips in annual volume only in the “four digits.”
But Genesis will debut in Australia with the G70 and G80 sedans in the second half of this year. And Fitzgerald then aims to tap into China and Europe “over the next couple of years.”
“We are right now finalizing the entry plan,” he said.
Launching in those countries should go more smoothly than in the U.S. because the markets aren’t fragmented by complicated state-by-state franchise laws, Fitzgerald predicted.
“It’s definitely a bumpy ride. I’m not going to sugarcoat this,” he said. “That’s what this company is good at: keeping so many balls in the air. We’re dealing on so many fronts.”