Movin’ on Up? Hyundai’s Luxury Brand Aspriations

One of the most impressive brands during the recession was Hyundai. The auto brand would have had every reason to wallow in the misery of American consumers and blame poor sales on a bad economy. Instead, the company saw its market share rise in 2009 on the heels of a bold program called Hyundai Assurance, which gave buyers the option to return a new car to Hyundai during the first year if they could not make payments. Hyundai was recognized by Advertising Age as Marketer of the Year for 2009 because of its proactive response to the recession.

I have been admirer of Hyundai for some time. In addition to the innovative Hyundai Assurance program, the company’s “Think about It” campaign was a creative way to attempt to reshape consumers’ image of Hyundai as an entry level economy car. The message that Hyundai is a quality brand was an attempt to bring Hyundai on par with Toyota, Honda, and other imports that enjoy quality associations with consumers. Hyundai’s boldest move yet is to take the brand upscale- the question is will consumers accept it? Hyundai introduced the Genesis sedan at a price point in the area of $40,000 in 2008, and it is about to debut Equus that will sell for $55,000 range.

Will consumers buy into the idea that the Hyundai name should be equated with upscale automobiles? Will Genesis and Equus be high selling models for Hyundai? Does Hyundai even care how many of these cars it sells? What was that? Of course Hyundai would care how many units of Genesis and Equus it sells… unless there is another motive behind the move toward the upscale segment of the auto industry. The motive seems to be to persuade buyers of cars at moderate price points to rethink their perceptions about the quality of the Hyundai brand. If Hyundai is marketing high priced cars, then a high level of quality must be present, too. This reasoning could change consumers’ perceptions about Hyundai’s quality across all of its models.

Hyundai faces a huge challenge if it intends to convince buyers of upscale cars to include Hyundai among the brands they consider worthy of purchase. It is very difficult to extend a brand into upscale segments when it is known as a moderately priced brand. Other auto companies went upscale by creating brands separate from their core offering (Toyota > Lexus, Nissan > Infiniti, Honda > Acura). Hyundai’s decision to forgo this approach to branding suggests it seeks to impact quality perceptions of its core brand by offering high end products. It seems to be another form of “Think about It”; surprising consumers by showing how Hyundai is capable of creating a luxury car experience.

The Wall Street Journal - "Can Hyundai Sell Pragmatic Prestige?"

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