Hyundai Considers Lexus-Fighting Premium Crossover

Just the Facts:
  • Hyundai is considering the development of a premium crossover or SUV that likely would target the Audi Q5, Lexus RX 350, Cadillac SRX and other luxury models in that segment.
  • The vehicle might share a front-drive platform with the seven-passenger Hyundai Santa Fe.
  • The challenge is to make the premium model stand out from other Hyundai crossovers and SUVs, Hyundai's North American boss told Edmunds.

MONTGOMERY, Alabama — Hyundai is considering development of a premium crossover SUV that likely would target the Audi Q5, Lexus RX 350, Cadillac SRX and other luxury models in that segment.

But the lack of a premium distribution channel with separate showrooms is making the business case to develop and market the vehicle a challenge.

"We definitely studied a premium people mover, if you will," Hyundai Motor America CEO Dave Zuchowski said in a recent interview. "It is not in the plan and it is not eliminated. It is something under consideration."

He added: "One of our problems is we made a conscious decision on our premium products not to establish a secondary distribution channel. And that decision, and we absolutely think it is the right decision, has some flow-through impact on products."

Unlike Nissan and Toyota, which created the Infiniti and Lexus brands, respectively, to market premium and luxury models, Hyundai decided that one brand and one showroom will suffice.

A dealership's floor may feature the entry-level Accent to Hyundai's Mercedes-Benz E-Class competitor, the Hyundai Equus.

Today, a rear-drive configuration distinguishes Hyundai's premium models from its mass-market lineup, which is composed of front-drive vehicles. The rear-drive models are the Equus sedan and the Genesis sedan and coupe. But Zuchowski suggested a premium crossover SUV might share the front-drive platform with the seven-passenger Santa Fe, creating a challenge to clearly distinguish those models in the eyes of consumers.

"For us that (premium) vehicle would be on the same lot as the Santa Fe," he said. "It might be more difficult to try to get the premium you need to justify the price when they are sitting next to each other on the lot" even if the styling is completely different.

Zuchowski said the Toyota Highlander and Lexus RX 350 crossover SUVs share a front-drive platform, but the automaker has no problem selling the more expensive Lexus.

"The RX is basically the Highlander and they can charge a premium for that vehicle because they are sold in different showrooms," Zuchowski said.

Zuchowski did not suggest a sticker price if the premium crossover SUV is developed. The base seven-passenger 2014 Santa Fe stickers for $30,775 including an $875 destination charge. Prices for the 2015 model have not been announced.

While it is "not impossible" to market a premium crossover SUV alongside the more mainstream Santa Fe, Zuchowski said: "It makes it a little more challenging for us, but it is certainly something that we are looking at."

Edmunds says: Once Hyundai works out a business case, expect a premium crossover to follow.


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