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Korean Car Makers Shift Gears, Take Aim at Luxury Markets

/ Source: The Detroit Bureau
Drivers don't usually think Kia or Hyundai when they think luxury. Those two automakers would like to change that.
Drivers don't usually think Kia or Hyundai when they think luxury. Those two automakers would like to change that.KIM HONG-JI / Reuters

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Kia’s edgy GT show car may soon make the transition from concept to production, a move that might come as a shock to motorists who have long thought of Korean cars as some of the cheapest and least exciting on the market.
How close to the concept the production model will be remains to be seen, but according to comments made by Kia officials during the Paris Motor Show, they hope to target such established upscale competitors as the Audi A7 and even the Porsche Panamera with the GT. The car reportedly will reach showrooms in 2016, about two years after Kia’s first foray into the luxury market, the big K900 sedan.
Kia isn’t alone. Its sibling, Seoul-based Hyundai, recently launched the second generation of its Genesis sedan – which targets the likes of the BMW 5-Series and Mercedes-Benz E-Class – while preparing an update of its even bigger and more expensive Equus model.
“It elevates our brand and says we can compete with the best in the world.”
The original Genesis delivered a shock to the established automotive system when it won the coveted North American Car of the Year trophy, and it has become Hyundai’s halo car, according to U.S. CEO Dave Zuchowski. “It elevates our brand and says we can compete with the best in the world.”
Korean executives have suggested that they would like to fill in even more niches in the luxury market. They caution, however, that they don’t expect to go one-on-one with German high-line leaders like Mercedes which has promised to roll out one all-new or completely updated product every quarter between now and 2020.
And Hyundai has opted against launching a proposed second dealer network that would focus on luxury cars – a strategy that would have echoed Toyota’s Lexus and Nissan’s Infiniti brands.

Budget Upscale

Nonetheless, analysts like David Sullivan, of AutoPacific, Inc., see opportunities for the Koreans to expand their offerings, especially to buyers who want something upscale for a relatively budget-oriented price. The Hyundai Equus, for example, comes in about $20,000 below comparable European offerings.
The rise of the Koreans could pose a problem, some observers warn, for weaker brands among the traditional luxury nameplates, such as Cadillac or Lincoln, which are struggling to take on the segment’s leaders.
Despite their push up-market, Kia and Hyundai insist they are not about to abandon their traditional market segments – though even in their lowest-end models they have tried to shift their image from being the cheapest products to offering especially good values for the money.
Hyundai is “committed to invest in all of our existing vehicles,” asserted U.S. CEO Zuchowski.
Not everyone is convinced. Analyst Sullivan would not be surprised to see the Koreans abandon low-end models such as the Hyundai Accent should Chinese “econoboxes” enter the market.
As to what other possible luxury products are coming, Hyundai’s U.S. chief executive quickly suggests, “The space that seems to hold the most potential for us is the BMW 3-Series space,” adding that, “We’re looking at it closely.” He would not say how soon it could arrive, but company insiders hint it could be in U.S. showrooms within the next two years or sooner.

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