Hyundai, VW Look To Move Upmarket With New Models

Vwhyundai

Would you pay $40,000 for a sedan from Volkswagen — or from Hyundai? Both automakers are betting that at least some consumers will part with Lexus- or BMW-type money for their latest creations. Aside from each having four doors, the cars are seemingly disparate: The Volkswagen Passat CC is a four-seater with coupe-like styling, while the Hyundai Genesis is a bigger, full-blown luxury sedan. For their respective brands, though, each car represents a gamble by going upmarket.

At Volkswagen’s straight-laced confines in Detroit’s Cobo Center, head spokesman Steve Keyes seemed upbeat about the Passat CC’s chances. It won’t be another Phaeton, he assured us, referring to a $65,000-plus juggernaut Volkswagen unleashed earlier this decade that was a resounding sales failure.

“This maybe should have been the car we had before the Phaeton,” Keyes said, adding that the Passat CC will start “in the mid- to high 20s.” The two examples at Volkswagen’s display were loaded to the gills with massive sunroofs and button-strewn dashboards, while press materials detailed high-tech features like lane-departure prevention systems, dynamically adjustable suspensions and even a self-parking feature. Keyes said the cost of a fully loaded Passat CC hasn’t yet been determined, but it will likely be much more than the regular Passat, which tops out around $40,000.

Volkswagen does sell one model in this price range — the Touareg — but it’s an SUV, not a premium sedan. This is definitely new territory for VW, Keyes said.

It may not be as risky as it sounds. Lonnie Miller, an automotive analyst at R.L. Polk & Co., said the Passat CC isn’t a major stretch for the automaker, as many buyers already see Volkswagen as a premium brand. It should attract its share of upward-leaning Passat buyers, though the car may have more trouble gaining traction with buyers less familiar with VW.

“I think their challenge will be from an entry-luxury audience,” he said. “You’re not going to get the intuitive luxury buyer looking at the Passat.”

Would those shoppers look at Hyundai’s new Genesis? The rear-wheel-drive sedan can come equipped with a leather-wrapped dashboard, navigation system and Hyundai’s first V-8. Though it will compete with large sedans like the Toyota Avalon and Chrysler 300, Hyundai compares it to pricey nameplates like the BMW 5 Series and Mercedes E-Class.

Miller sees the car as a stretch for Hyundai, but one buyers will entertain.

“The Genesis is a step, but Hyundai is already in a state of flux in terms of growing their portfolio,” Miller said. “They might have more permission from the market to be going this far with this vehicle.

“Hyundai and Kia, they’ve been stretching. I think their most challenging thing will be that you’ve always been able to get a Hyundai [for] under $30,000.”

Hyundai product planner Michael Deitz said he expects the bulk of Genesis models to sell for “upwards of $35,000” — albeit with the V-6 engine, not the top-of-the-line V-8. That price is a leap for Hyundai, but it isn’t unprecedented.

“I remember when I came to an organization that said you don’t sell a car over $25,000,” Deitz said. He’s been at Hyundai for four years.

“The Veracruz transaction price is in the $36,000 range,” he said, referring to the full-size SUV Hyundai advertisements compare to the Lexus RX 350. “That’s what really measures growth in our organization.”

He called the Genesis a “natural progression” for Hyundai buyers, but added that the carmaker will provide a different buying and ownership experience for Genesis buyers to differentiate the car from its less-expensive siblings. He couldn’t provide any details, but said Hyundai is detailing the specifics with its dealers.

Will that help bring luxury buyers into the Hyundai fold? That will be the Genesis’ toughest challenge, Miller said.

“They haven’t had any experience overlapping with the luxury base, so that will come in with execution of the product itself,” he said. “[The car] has to say something about the buyer. To the person who says, ‘I’ve got to have a Mercedes or a Bimmer,’ Hyundai’s going to have a problem.

“They are still the new kids on the block in terms of automotive brands. … Their freshman year with this better be strong so they attract future luxury buyers.”

Related
More Hyundai Genesis News (KickingTires)
More Volkswagen Passat News (KickingTires)

Comments 

LM

Unlike Hyundai, VW has a luxury brand and they should use it. VW is not synonymous with value, unlike Hyundai, as well. Where are the smart product planners these days?

I think ur right about VW they have Audi. The passat is already steppin in the A4-A6 range. Hyundai on the other hand just needs a Luxury title. I would be out to concider the genesis if it had a name like Acura,Lincoln or lexus. I mean if ur gonig to spend 35,000 to 40k you would want to have a little bragging right other than saying i drive a hyundai or a VW!!!

Bowrider

I concur. Perception is the where the rubber meets the road, regardless of how great the vehicle is. If Hyandai wants to move upscale, they should have developed a new brand. As far as the Passat goes, I think buyers who will be shopping for a VW will consider a Passat CC. But buyers who are shopping for an Audi, BMW, etc., won't consider the Passat CC. My 2 cents.

maybe Hyundai shoppers are so sensible they'd rather the car company save the $100s of millions it would take to launch a separate brand and instead spend it on the car/s themselves and pass it on to the customers.

Just a thought.

I have been a supporter of the Hyundai car line for almost 8 years now and I even stepped up and bought one of their top selling vehicles, the Sonata!

I have owned my Sonata now for 7 years and I still have folks saying to me, "what a good looking car, what make is it?", when I tell them it is made by Hyundai the look on their faces is great, often they will say in response to finding out the make of the car, "really, I thought Hyundai only made economy cars?".

I believe that the people that really do their home work before buying their next new vehicle, will take a look at the great new products from Hyundai!

You can't beat their warranty, 10 yrs/100,000 miles! And 5 yrs/60,000 miles bumper to bumper!

And with Hyundai in the top five for the last three yrs with J.D. Power and Associates in new car quality, the Hyundai line of automobiles is a fine new car buying choice in my opinion!

people will do homework and for 40,000$ is a no brainer Im going to bet me a luxury car not a huyndai or a VW. The only way i would spend that amount is in the form of a SUV or Real Luxury car. Ok OK mabye a 425+ 300SRT but nothing else.

Mike B.

Anyone else feel that the Genesis is the more attractive of the two? Odd, considering that the CC's strong suit is supposed to be its swoopy styling....

Bowrider

The problem, KellerE, is that your typical buyer does not do their homework. The point is that the buyer in the market for a 30-40K car doesn't consider the Hyandai. The reasons you've stated for considering a Hyandai don't apply to the Genesis. A fine car maker, it is. But case in point, made by yourself, not an upscale manufacturer.

Guy S

I think that just as there are people who are attracted to the luxury badge more than they are to the car, there are lots of people who would rather do without the luxury badge if they could get a nice car without it. That is the market for these cars. I think the Hyundai will do pretty well. The VW may have a harder time, because its whole reason for being is style, and value customers who visit VW may find the standard Passat more practical and a better value. Customers who care more about style and image might have preferred the car not share the Passat name.

trainer

The Hyundai looks like a good car. The VW looks very good, but will likely be overweight, like all recent VWs and Audis. VW's early advertising campaigns criticized Detroit for building cars that were too large, heavy and wasteful with the slogan "Think Small." A 2007 Passat weighs 3,829 pounds, several hundred pounds more than a full size 1964 Chevrolet Impala with a 283 V-8, which weighed in at about 3,400 pounds. Maybe the big Detroit iron of the past wasn't as socially irresponsible as people were led to believe, and maybe VW owes GM an apology for its past advertising.

JM

trainer: you can't compare a car from today to a car from 44 years ago. nowadays, we've got so many more saftey features (like, um airbags...ring a bell, yes, they have a weight to them) and more interior features than back then. also, cars are expected to be able to hold up in a crash, so automakers make them beefier.

the passat 3.6 will probably be able to outrun the '64 impala and much better mpg.

all of the rest: if it is ok for hyundai to have a :uxury" car, then why is it so bad for VW? at least VW's ahve been known for YEARS to have fantastic interior fit and finish, while hyundai's have just had a recent "turnaround" in the past two or so yeas.

Trainer

JM, Of course cars have changed in 44 years, and all of your points are well taken. But compare the VW/Audis to other current cars and you'll find they are much heavier than their contemporary rivals. I find it ironic that the company that made its name criticizing the heft of Detroit iron is now building today's lead sleds. Also, despite 44 years, there are still several areas where a 64 Impala outclasses a new Passat:
1) trunk room
2) interior room
3) ride quality
4) durability
The only VW in the class of GM's classic full size sedans was the porky Phaeton, and VW tried to get $100,000 for one of those. How far they strayed from being the "people's car."

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