THE AUTOEXTREMIST

October 7, 2009

Hyundai wants more - and displaced Saturn dealers might just be The Answer.

By Peter M. De Lorenzo

(Posted 10/6, 10:00AM) Detroit. The collapse of the Saturn deal - and ideal - has been devastating to a lot of people. For Roger Penske and his team - who worked tirelessly and almost non-stop over the last several months - it was a tremendous blow. It turns out that an agreement between Roger and Renault-Nissan CEO Carlos Ghosn wasn’t good enough for the company’s board of directors, who questioned why the company would want to supply vehicles to Penske’s dealer network (after the GM agreement expired) to sell against its own Nissan vehicles in this market.

And a done deal that was all but signed, sealed and delivered - complete with a new kickoff advertising campaign and dealer rallies planned for this week - came unglued with one phone call.

But the real devastation occurred to the Saturn dealers, who were completely left out in the cold with no backup plan. After all, with Roger Penske involved they didn’t have to worry, right? He’ll come through and it will be good, right? Yes, some of the best dealers in this business just assumed that it would all be good, and with one bolt of negative lightning they were left standing like houses by the side of the road, with no contingency plan, no “Plan Bs,” no nothing.

A lot of people are going to lose their jobs over this, and this development is a swift kick in the head to these dealers and their families, this after a season of uncertainty had finally looked to be turning into a fall full of promise too.

But some visionary thinking might just provide an answer for these discarded Saturn dealers, and it could blend nicely with Hyundai Motor America’s product plan, which is turning sharply up market.

Already playing in the overly-crowded near-luxury premium segment with its Genesis sedan, Hyundai’s ambitions – which have always soared beyond reasonable projections and in some cases have led to disastrous consequences for both its U.S. executives and its dealers – are about to take off again, because late next year, Hyundai is going to bring its full-bore luxury sedan – the Equus - to these shores.

The Equus will be a full-size, no excuses $65,000 luxury sedan aimed right at the heart of the U.S. luxury market currently dominated by Audi, BMW, Mercedes-Benz and Lexus. Early impressions of the car are positive, with the words “surprising” and “serious” being bandied about. My colleague John McElroy had a very brief exposure to the car and shared similar sentiments with me about it.

But I’m not blindly confident that Hyundai can pull this off, even as well-meaning and well-thought-out as their plan is. We’ve all been to this rodeo before with Hyundai, with the usual assortment of promises and boasts followed-up by missteps and stumbles, but there’s no question that Hyundai at least seems to have turned the corner in this regard, and along with VW and Ford, Hyundai clearly has serious momentum going on, especially here in the U.S.

Hyundai, along with its affiliate Kia, has gobbled up market share at a dizzying pace in this market - gaining a full two percentage points this year - a staggeringly impressive performance for the Korean conglomerate. High quality ratings and a product lineup that improves with every new vehicle launch have drawn the attention of U.S. shoppers to Hyundai (and Kia), and it has paid off handsomely for the brands.

But even though American consumers have warmed up to the Genesis sedan at $33,000, the idea that Hyundai can attract an entirely new strata of buyers willing to pay double that figure for a top-line luxury model bearing the stylized “H” will be an entirely different task altogether.

In order to succeed at this level, Hyundai will have to entertain the notion that well-heeled buyers aren’t going to want to go traipsing through their showrooms in search of a $65,000 luxury sedan. There will be an obvious disconnect for these people when they have to stumble through the balloons to get a better look at the Equus.

The Equus will need its own carefully-crafted theme if it is going to gain consideration from the kind of buyers with the wherewithal to actually buy one. The Equus will require sophisticated imaging and tone, and that means an “aura” has to be created for it - compete with the proper dealer experience that goes with it - much like Saturn did at its launch with the original - and brilliant - Hal Riney-orchestrated ad campaign.  

And this is where the Saturn dealers come in. I first mentioned this idea on ”Autoline After Hours” last Thursday evening, but if I were John Krafcik, the CEO of Hyundai in the U.S., I’d be calling every top Saturn dealer in the country inviting them to become Equus dealers, because if this moon shot from Hyundai - and make no mistake, this is a moon shot - is going to have a chance of succeeding, then the Equus will need its own highly-distinctive persona completely separate from Hyundai’s mainstream product offerings.

There’s no question that Hyundai has grandiose ambitions - it’s part of their raison d’etre after all - but with the Equus they’re going to be putting it all on the table. Even though they’re talking limited volume for this new luxury machine to the tune of a couple of thousand units per year, I’m not buying it.

Because Hyundai wants more than that. Much more.

As a matter of fact Hyundai wants it all. It wants to eventually compete with everyone worth competing with and at every level, too, and the Equus is their first serious shot across the bow of every other established world-class manufacturer. So it might be a couple thousand units at first, but after that, Hyundai is going to start pouring it on.

So I say Go Big or Go Home, Hyundai.

If you’re going to play with the grown-ups then give the Equus every possible opportunity to succeed, and separate dealer showrooms - and all that goes with that idea - will be an absolutely crucial component to making it all work.

And I know a “turn-key” group of dealers out there just chomping at the bit for a new lease on life…

Thanks for listening.

See another live episode of "Autoline After Hours" hosted by Autoline Detroit's John McElroy, with Peter De Lorenzo and friends this Thursday evening, October 8, at 7:00PM EDT at www.autolinedetroit.tv.

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