It’s been a tough year for the U.S. auto industry, and few expect to see a real recovery anytime soon. The overall market is expected to tumble by as much as 25% this year, with no segment harder hit than luxury sedans.
Despite the weak numbers, Mark del Rosso is firmly focused on the upside. The CEO of Genesis Motors North America is quick to note that the Korean luxury brand has outperformed most of its high-line rivals, despite the fact that its total sales were off 24.7% for the first six months of the year.
“In the three segments in which Genesis currently competes, those are the three segments that are down the most in the entire industry but, from a share point of view, we’re up,” del Rosso said during an interview with TheDetroitBureau.com.
It might sound like the Genesis CEO is trying to make lemonade out of lemons, but a quick look at the numbers backs him up. BMW, for example, saw U.S. sales tumble 28.4% for the first half of 2020 – and when you look at just the passenger car side of its line-up, the decline was a stiff 31.6%.
Demand for the new Genesis G90 actually was up by 22.2% through the end of June, one of the rare luxury sedans to land in positive territory, certainly since nationwide lockdowns to deal with the coronavirus began in March.
All told, American luxury buyers bought 7,540 vehicles from Genesis during the half-year, down from 10,007 during the same period in 2019.
“That’s low volume,” said Stephanie Brinley, principal automotive analyst with IHS Markit. “They still have a long way to go, but they are moving in the right direction.”
If anything, Genesis was showing clearly positive growth ahead of the pandemic after struggling during the first few years after the brand was spun off from mainstream brand Hyundai. Complicating matters, the company officials reversed course shortly after that spinoff, deciding that the marque needed its own, standalone showrooms, rather than sharing space with Hyundai.
The increase in 2019 sales, and the reasonably good numbers this year, said Brinley, suggests the brand’s slow and initially wobbly start had “more to do with not having their dealer network in place, rather than a lack of interest in their products. It suggests there is some upside potential.”
The real test of CEO del Rosso’s optimism will come in 2021, Genesis finally rolling out its first SUV, an absolute essential in today’s ute-crazed market. The new GV80 already appears to be connecting with potential buyers, Genesis reporting it already has logged 13,100 advance reservations. Even if a fraction of those eventually translate into sales, that would make the midsize model, by far, the brand’s best
“There definitely was a gap in the portfolio,” acknowledged del Rosso. “We needed an SUV.”
And Genesis isn’t planning to wait long to dive even deeper into the SUV pool, with a second model already well into development. Though company officials won’t provide details, the next ute is expected to be a compact that will be dubbed the GV70.
As for timing, del Rosso told TheDetroitBureau.com that he expects to have fully six models in the line-up “by the end of 2021” calendar year. With three sedans, the GV70 and GV80 SUVs, that would leave a gap for yet another product and, he confirmed, it will be a battery-electric model. Other company insiders previously said, on background, that the BEV will also be a sport utility, though specifics remain cloudy.
Longer term, Genesis is widely expected to add even more product, perhaps a competitor to the likes of the Mercedes-Benz GLS or Cadillac Escalade that would be dubbed the GV90. And, with parent Hyundai a serious proponent of fuel-cell technology, something powered by hydrogen is believed to be in the works. Notably, the original concept version of the GV80 was powered by a fuel-cell/battery hybrid system.
One thing Genesis officials have made clear from the start is that they see their push into the luxury market as a long-term play and analyst Brinley agrees, forecasting it will take “10 to 15 years” for the marque to give a truly serious challenge to global competitors like BMW, Mercedes and Lexus.
New product clearly will help, del Rosso underscored, but that’s just one critical element of the Genesis strategy. Like its plebian sibling, the automaker has made a push to improve quality and reliability and has become a routine chart-topper, this year coming in fourth overall, and the top-ranked luxury brand, on the J.D. Power Initial Quality Study.
Genesis has also been on the leading edge of the curve when it comes to shifting to more customer-focused sales and service “experiences,” including pickup and delivery for maintenance and repairs. About 12% of Genesis vehicles were purchased entirely online so far this year, said del R
osso, and 7% were delivered to a customer’s home, rather than requiring them to come to the showroom.
Add aggressive marketing – like the well-received Super Bowl spot featuring the husband-and-wife team of John Legend and Chrissy Teigen, and “our young brand has made enormous strides in awareness and consideration,” said del Rosso.
If all goes according to plan, that could play out perfectly as Genesis rolls out the GV80 and then gets ready to bring even more SUVs into its line-up, better positioning itself for today’s market.