Will Hyundai's New Luxury Car Be Like The BMW 5 Series Or The VW Phaeton?

Implications: Automotive insiders are taking a "wait and see" attitude regarding Hyundai's attempt to market a luxury car in the U.S. Many remember the fate that befell VW's Phaeton. 

Analysis: Reading about Hyundai's plans to break into the luxury car market reminds me of the days when Acura first launched and the parts under the hood still said "Honda" on them. It was a mistake that slowed the Acura's initial progress towards being recognized as a legitimate luxury automaker.

I'm also reminded of the more recent launch of the VW Phaeton, which was a flailure despite it being a great car. The problem was never the car but the shoppers VW was pursuing did not shop at VW dealerships. The car probably would have been a success if it had been marketed as an Audi.

As a premium rear-wheel drive sedan, the Genesis faces some well- established competitors such as BMW's 5 Series. So far this year BMW has sold more than 27,000 5 Series.

When I first read about the Genesis I thought:

If VW can successfully sell the Passat (itself a $30-$40 K car) within the Premium/Near Luxury market and yet fail with the Phaeton, what does that say about Genesis' chances when Hyundai isn't in the same league as Honda, Nissan, Toyota or VW? Are consumers going to be especially keen on spending $40K at the same dealerships that are presenting themselves as low cost providers, offering financing to those with bad credit and where the customer experience will pale with what they're used to?

What Hyundai is missing is that luxury cars aren't commodities that are purchased based on how well a particular car company's branding message reached a particular customer. Instead it's a fiercely competitive field where dealers don't compete on price but by trying to sell their interpretation of the best luxury car on the road within a certain price range, class, etc. You build a luxury car business by selling people on the idea that your car is the best solution for their luxury car needs, because people are more concerned about the nature of the car than they are about price.