A Price Leader Enters the Performance Leader Market

Hyundai has announced that it will offer a luxury sedan in the U.S. market this Fall. The new model, the Genesis, purports to offer Lexus and BMW quality for a price 35% less than those competitors.

This is quite a leap for Hyundai. Its reputation in the domestic market is that of a Price Leader competitor selling primarily smaller cars. Its larger, Standard Leader, products, such as the Sonata, sell slowly in the U.S. (See the Perspective, “Why do Leaders Lead?” on StrategyStreet.com for more insight.)

The company is making a classic low-end competitor attack on this Performance Leader market. It does not claim to be as good as its competition, such as the BMW. It claims only that it is good enough to be
compared to BMW and Lexus. In return, it offers a substantial discount. The company hopes to attract what it calls “non-conformist” consumers who appreciate luxury but are not concerned about the brand of luxury car they drive.

The Genesis offers all the bells and whistles of the luxury sedan category. The company is putting its warranty money where its quality mouth is. Its warranty, at five years or 60,000 miles, is far better than the four years or 50,000 miles more typical of the luxury market.

Hyundai expects that the new automobile will increase its market share and boost its brand image. If the new car is as good as its early reviews, it is likely to do both.

Posted 9/8/08


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