South Korea's free trade agreements with the U.S. and European Union have opened Hyundai's home market to greater competition. Last year, almost one in every two vehicles sold in South Korea was made by Hyundai. Last month, Hyundai's share had dropped to 42 percent.
Japan's policy, meanwhile, of weakening the yen has given Japanese automakers a competitive edge in international sales. And a series of Hyundai recalls in North America and Asia have hurt the automaker's image. Hyundai's U.S. car sales rose 1.6 percent in the first nine months of this year compared with overall growth in auto sales of 8.1 percent.
The new Genesis models will be sold at between 46.6 million won (US$43,908) and 69.6 million won (US$65,582) in South Korea. Prices for the U.S. have yet to be announced, but the new models will be cheaper than cars from BMW or Mercedes-Benz, Hyundai officials said.
Eventually, Hyundai thinks car buyers will not balk at paying a premium for the Hyundai name.
"Hyundai cars are known for good value for money. But such perception can no longer make us competitive," said Park Joon Hong, a research fellow at Hyundai's R&D division.
Hyundai, the maker of the Elantra compact and Tucson crossover, was the world's 43rd most valuable brand this year, according to Interbrand, a consultancy. But it is far behind the carmakers that Hyundai is trying to compete with in the luxury market. Toyota, Mercedes-Benz and BMW are in the top 12.
Park said quality control has become more rigid in response to recent recalls.
In the U.S., nearly 1.9 million Hyundai and Kia cars and SUVs were recalled in April to replace faulty brake light switches or for other reasons.
Last month, South Korea's government ordered the recall of 100,000 Genesis sedans to fix potential rusting in anti-lock brake system that could cause brake failure. That was preceded by another brake defect that led to the recall of more than 800,000 vehicles by Hyundai and Kia.
The redesigned Genesis comes packed with new features, technology, greater leg room and other improvements.
It is Hyundai's first all-wheel drive sedan, which should give greater stability on slippery roads and also appeal to drivers in regions with heavy snow, such as the U.S. east coast.
Hyundai used more high-strength steel for better performance and safety. About 50 percent of the new Genesis is made of high-strength steel compared with 14 percent in the older model.
Other features include a trunk that can be opened wirelessly and carbon dioxide control inside the vehicle to prevent drowsiness.
"If Hyundai can achieve its sales target without giving cash incentives, that would be a change for the better," said Lee Hyun-soo, a Kiwoom Securities analyst.
-AP
