Who'd Buy a $55,000 Hyundai? Surprising Answers

By Michelle Krebs May 25, 2010

If you were born before 1990, you might remember the "old" Hyundai. That was the company 2011 Hyundai Equus exterior - 275.JPGwhose first U.S. model, the Hyundai Excel, was barely a step up from a Yugo. The old Hyundai didn't build cars you wanted to drive; it built cars you could afford.

We're all familiar with the "new" Hyundai. That's the company surprising us again and again with refined and attractive new vehicles such as the 2010 Hyundai Genesis and the 2011 Hyundai Sonata -- cars that are not only terrific values but also, arguably, class-leading in design and execution. The new Hyundai makes cars you want and can afford.

Until now. The 2011 Hyundai Equus, recently introduced at the New York Auto Show, breaks new ground by being the first Hyundai you may really want but -- at an estimated $55,000 -- probably can't afford.

And if you can afford to buy one, would you? 2011 Hyundai Equus front - 235.JPG

We've turned to the enthusiast community on Edmunds.com's Inside Line for some insights.

 Edmunds.com's Inside Line readers are split on the car's appearance; what some find "attractive" and "beautiful," others call "gaudy" and even "hideous." The sharpest barbs are aimed at the car's front end, with readers saying, "Why does Hyundai keep screwing up the grilles on their upscale cars" and "looks kind of like a Chrysler Sebring ... NOT a good thing."

Folks are also divided on the interior. One commenter declares "comparing it to a Lexus LS 2011 Hyundai Equus interior - 275.JPGinterior is laughable," but another claims, "If they slapped a Lexus badge on it, nobody would think twice about purchasing it." And the ample wood on dash and door panels is called both fantastic and fake.

Less ambivalent are those who have seen the car, who seem to agree it "looks good in person, like a mini S-Class," and is "far more impressive ... than in video or print."

Looks aside, the Equus debut provokes our readers to debate a bigger question: Is Hyundai ready to take on the likes of Lexus, BMW and Mercedes?

Several suggest this "is too much too soon" for Hyundai, asserting the carmaker ought to "give time for the Genesis and Sonata to build up the company image before unveiling this top of the line model" and should wait to "make it a better car than its competitors and surprise the consumers."

One observes, "the Equus might be a terrific car and even a terrific value, but most $50K sedan buyers aren't really value shoppers." Another predicts, "This is going to be Hyundai's version of the VW Phaeton -- nobody went to VW for their $60K V12 sedan and nobody goes to Hyundai for their $50K+ V8."

Others argue "the point of this car is ... to prove that [Hyundai] can build a 50K+ car" and "they are not looking at volume but to pamper each customer on a individual level" by offering cutting-edge perks such as having "most maintenance ... scheduled via the [included] iPad owner's manual, with a valet bringing out a Genesis to drive while the Equus is being worked on."

Still, at least one reader opines "Audi, BMW, Lexus, Infiniti & Mercedes have nothing to worry about here. It would be like Rolex worrying about a $20,000 Casio watch -- not in the same league." Another points out, "Since we all know this car will depreciate at least somewhat faster (if not much faster) than an LS460, the Equus purchased new could actually cost more to own than the LS."

Hyundai Equus table.JPGOn the other hand, some believe that, in the wake of the recent recession, this car offers buyers a chance to "have your cake and eat it too." One reader reports, "I have owned a Lexus LS and Mercedes S550, and I feel why spend the extra money for one of them when you can get a Hyundai Genesis or better yet Equus for so much less." Another says, "I can do without the Taj Mahal showrooms and private breakfast bars @ Lexus, thank you."

Interestingly, the comments about the car grow more positive as the thread continues. One sums things up this way: "Given what Hyundai has done in the last 5 years, I wouldn't bet against them. They might not be BMW or Mercedes, but Lexus should be worried." Another says, "This seems more Lexus LS than VW Phaeton" -- perhaps the highest praise Hyundai could ask for.

In the end, as one notes, "The mere fact that there are this many comments ... proves that the Equus is already causing a stir."

 And that's the word on the street. - Mark Holthoff, Edmunds.com manager, Customer Support

Hyundai pricing graph - 509.JPGPhotos by Hyundai

1 - The 2011 Hyundai Equus goes on sale in the fall, starting at $55,700.

2 - Comparisons on the interiors of the 2011 Hyundai Equus and the Lexus LS are mixed.

3 - The sharpest criticism of the 2011 Hyundai Equus is for its face. 

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pushrod says: 4:52 AM, 05.25.10

Didn't Toyota have similar issues when the first Lexus models came out? Sure, they weren't badged as Toyotas, but I do seem to recall hearing people say "that much for a Toyota?" at car shows. The comments I recall reading and hearing were similar: complaints about the appearance (attempting to look like a Mercedes, or just plain boring), power (not enough) or simply "Mercedes/BMW/etc have nothing to worry about".

That being said, at least Toyota built a separate brand for the upscale cars (at least in N. America), and didn't try to piggyback it on the Toyota brand directly. You didn't see the LS400 sitting next to a Corolla in the showroom (although the ES sure felt like a Camry with fancier seats). This is where Hyundai's challenge could be, similar to the VW Phaeton comment: would you really buy a $55k+ car with the same logo as a $15k car?

1487 says: 1:05 PM, 05.25.10

what the media continues to ignore is that the Genesis is NOT selling. Edmunds, nor anyone else has talked about Genesis sales. The car got rave reviews (both versions) and its not selling. They aren't even moving 3k units a month including the coupe. That isn't impressive at all, especially when you consider the coupe is very affordable.

The Equus is a nice car and offers impressive features but the success (or lack of) of the Genesis suggests that its not going to do well. People want to pay under $25k for a Hyundai product. The Veracruz has been a flop too- not that the media ever talks about that vehicle. Hyundai is doing well but that success is due to its mainstream, affordable products like Sonata and Elantra.

bc1960 says: 3:48 PM, 05.25.10

It is true that I have seen some unsold 2009 Genesis sedans still on dealer lots, mostly V8s. Which suggests that maybe the V6s are more attractive from a price/performance point of view, which I think most reviews concluded. Also, if 2009 models are unsold when 2010 model clearance is underway, it's time to bite the bullet and drop the price already--waiting for a rich moron who's willing to overpay for something which will have a full 2 years of depreciation in a few months is a crap shoot I wouldn't undertake.

As for Lexus, when they started out they were selling a near-S-class sized car with a V8 for less than a V6 E-class, which, combined with Toyota's reputation and existing customer base, was quite an attractant. Hyundai's improvement is still a story in progress, and a sizeable portion of their customer base is lower-tier. Plus they are entering the heart of the luxury market with a car that may be a value proposition but isn't exactly low-priced. And I agree that the styling is not as elegant and international as the Genesis sedan; it's distinctly Asian and not in the best way. If I had to guess, they will attract older customers who used to buy de Villes and Lucernes but don't like "Government Motors" and their more stylish new vehicles. And equally old customers who will miss the Town Car and Grand Marquis, if they can afford an Equus.

pushrod says: 8:57 PM, 05.25.10

bc1960: my point is that, had Toyota tried to sell the ES and LS as Toyota's, it wouldn't have worked, or at least not nearly as well. The Lexus brand was able to piggy-back on the Toyota brand's reputation for quality, but was different, upscale and new enough that people didn't mind shelling out the extra cash because they were getting "more than a Toyota". Had Toyota tried to put the LS in the same showroom as the Corolla, it likely wouldn't have done as well. It would have been the same basic question then as Hyundai is making people ask today: they want *how much* for a Toyota? By creating an upscale brand, Toyota was able to command the prices that they did. Hyundai isn't doing that, and they are creating a marketing challenge for themselves as a result.

hyundaismoke says: 9:10 PM, 05.25.10

Its not like this is a new Car guys.

Hyundai has been building Equuses For other markets for the last 10 years. The Equus does fine overseas, why not in America. Sure this will be a low volume 500 or so a year model, but for this car that's quite fine.

As a Hyundai Fan Im not a Fan of the Equus Grille to be honest, but Im a fan of the idea of the car. It brings the brand "HALO" even higher.

Hyundai is the separate luxury Brand they are trying to create. Its called image makeover. They do have 2 brands you know, Hyundai making cheap cars really hurts KIAs sales badly, and they had to do something or the business case for keeping KIA in the US was going to dry up.

VW did it, and now VW CC comands a price close to the Merc C-Class.

Hyundai has learned from V Dubs mistakes, hence the reason why Equus is priced at $55K.

Korea isnt Japan, its an Asian Germany. It was only a matter of time before the Koreans stopped following Cheap Japanese cars from Honda and Toyota around, and started to follow the more premium Germans.

believe it or not, in 20 years Hyundai will be audi, and VW will be VW.

You might as well get over it now, because in 2 years KIA will have its own RWD Genesis car too. Youll see!!

j2j says: 11:42 PM, 05.25.10

@1487

The Genesis sedan has been a modest success for Hyundai (considering that it was launched in the US at the onset of the recession).

In 2009. the Genesis sedan OUTSOLD the Lexus GS and Infiniti M by a 2:1 margin and was the 3rd best selling import E segment sedan (after the E Class and 5 Series).

And unless the new M sees an appreciable increase in sales, the Genesis sedan may very well outsell the M this year as well.

As for the Equus, it is basically a marketing exercise by Hyundai in preparation of developing/launching a premium brand 5-6 years down the line (in time for the debut of the next gen Genesis sedan and coupe).

Hyundai isn't expecting big sales and thus, is only allocating about 2,500 Equus models to the US annually.

Anyway, the 1st year's allotment is already spoken for - anyone interested in the Equus will have to wait for next year's allotment.

soakee says: 5:04 AM, 05.26.10

I was born before 1990 and I remember the Excel. Sorry, but Hyundais always will be cheap cars in my mind, regardless of how good everyone claims they are. No Hyundai should sell for more than $15K. The Genesis isn't selling well because the intended buyers also remember the Excel. Much like the $90K+ VW Phaeton of not too long ago, Hyundai is shooting at the wrong target with the wrong weapon. A $55K Hyundai?...Can you hear me laughing?

1487 says: 5:35 AM, 05.26.10

j2j:

Lets not be ridiculous and compare Genesis sales to similarly sized MB and Infiniti products. That is absurd. The Genesis competes price wise with the G37, TL, CTS, etc. It has not outsold those cars. You failed to mention that Genesis sales figures include the COUPE. Hyundai does not separate out sedan sales so we can assume the sedan's sales alone would not come close to the sales of the ES350, CTS, TL, etc. Outselling the GS or M is pretty easy when a car costs many thousands less than either. In addition, both of those luxury models are dated and barely competitive. The M has been replaced as you know but the GS is 5 years old.

2500 Equus models for the year sounds about right. I think that' all they can expect. The question is this: why push this car out before establishing the Genesis as a real success? I have not seen an add for the Genesis since it was first launched. They spent millions to introduce the car and then stopped running ads.

soakee:

I dont think they care if you laugh. They are increasing their share every year in this market at the expense of American and Japanese competitors. Before the incentive push Toyota was losing share and Hyundai was gaining.

soakee says: 5:38 AM, 05.26.10

And as for the new Sonata, I saw a TV commercial and asked myself if the car could actually be that ugly. So I drove past a dealer to see for myself. I was wrong, it's uglier than I thought.

alman08 says: 4:36 PM, 05.26.10

and guys like "soakee" should just stay inside a cage and live there happily ever after.

ed124c says: 4:03 PM, 05.27.10

When the initial 2 Lexus models came out in 1990, as well as the Miata, the economy was in good shape. This gave Lexus (and Miata) a 'turbo' boost that gave them momentum that has served them well over the past 20 years.

I agree with those who say Hyundai's intent is to bring the Hyundai brand name upscale from Kia. The Genesis and Equus might do that. Whatever, Hyundai is on a roll and if, as some have said, the existing Equus is successful outside the US, I don't think its possible failure in the US would damage Hyundai's reputation. The Phaeton disaster did not hurt VW, and now the CC and the Vw are doing well. We all live and learn, including car manufacturers.

@soakee: You are in very select company with your evaluation of the styling of the new Sonata. I would like to know what you consider to be a stylish midsize family sedan.

hyundaivirgin says: 4:01 PM, 06.18.10

I am sure Hyundai is not oblivious to the Toyota/Lexus differentiation. Perhaps their strategy is to eventually introduce a luxury brand, but not yet. There are two possible reasons to not do so yet.

First is the cost – they would need to have a full lineup of cars ready and a huge marketing push, and with the economy still shaky and stubborn labellers like soakee (I was born in 1973 but it seems like unlike him/her I am capable of considering new evidence on an ongoing basis), maybe now would not be the best timing.

Second is they may think they can try to help the Hyundai image in the meantime by introducing these luxury models. As others have said, these models are sold elsewhere, so Hyundai only needs to pay a little more to do some limited advertising and certification for the US. That effort would pay for itself easily in the long run because it would get these models reviewed and talked about. Reviewers speaking highly of the models and the existence of $55k Hyundais may over time pull up the overall perception of Hyundai, allowing them in the future to increase their sales margins across their whole lineup.

If all goes to plan, then the Hyundai brand will become similarly reputed to Honda and Toyota. Then assuming the economy is a little better, the company can introduce a premium brand. Then they will have a 3-tier organization like Toyota, with Kia = Scion, Hyundai = Toyota, and NewBrand = Lexus.

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