Can Genesis really compete with Mercedes-Benz, BMW and Audi - or will it suffer the same fate as Infiniti? Why 2022 could be a pivotal year for Hyundai's premium brand in Australia

The GV70 midsize SUV is Genesis Australia's most important model.

It can be said that expectations were low when Hyundai first spun off Genesis as its own luxury brand in Australia.

After all, the South Korean brand's decision to launch a separate luxury brand coincided with the slow and painful failure of Nissan's own attempt at Infiniti.

Despite the marketing team's best efforts, any optimism about Genesis was tempered by the fact that it launched the G70 and G80 sedans, the types of cars that even luxury buyers were ditching in favor of SUVs.

However, talking to insiders at the time revealed the company's long-term vision and provided some hope for the future.

While not publicly announced, there was a sense that the G70/G80 pair was a "soft launch" for the brand, paving the way and helping the new brand iron out any kinks before the all-important new SUVs arrive.

And they've arrived, and the big GV80 and the midsize GV70 have hit showrooms in the last 18 months. Sales improved accordingly in 2021, with Genesis sales up 220 percent last year, though it's easy to see big growth starting from such a small number.

Genesis sold 229 vehicles in 2020, so the 734 vehicles sold in 21 was a big increase, but still modest compared to the sales of the "big three" luxury brands - Mercedes-Benz (28,348 sales), BMW (24,891 sales) and Audi (16,003 XNUMX).

Anyone inside or outside the company who really expects Genesis to compete with the German trio is fooling themselves. So what's a realistic goal for Genesis in 2022 and beyond?

The most obvious target is Jaguar, the established premium brand, which had a disappointing 2021 with just 1222 cars sold. If Genesis can make it in 22, then it should set a medium-term goal of moving closer to brands like Lexus and Volvo, both of which sold just over 9000 vehicles last year.

Achieving both of these goals will require sustained growth, which is why 2022 is so important. If the brand stalls and loses momentum this year, shortly after launch, it will make further progress much more difficult.

That's why Genesis Australia has opted for a "slow and steady" approach with limited dealers (called studios) and test drive centers. There are currently only two Genesis Studios, one in Sydney and one in Melbourne, with test drive centers currently located in Parramatta and the Gold Coast, with plans to open soon in Melbourne, Brisbane and Perth.

Instead of investing millions in offline dealerships that are not needed for a relatively small lineup, Genesis Australia has decided to focus on a customer service model that will try to separate it from larger brands.

Its "Genesis to you" concierge service is the centerpiece of this concept: the company delivers test vehicles to interested parties rather than forcing them to come to dealers. The same service also accepts and delivers cars for scheduled maintenance, the first five years of which are included in the purchase price of the car. 

It would be next to impossible for larger luxury brands to offer such a personalized service, which is why Genesis is currently using its small size to its advantage. But he can't stay small forever. The brand has made it clear that its goal is to eventually gain 10 percent market share in whatever segment it competes in.

Currently, the best-performing model in this scenario is the G80 sedan, which accounts for 2.0% of the large luxury sedan market, one of the smallest segments in the country.

SUVs aren’t faring much better, with the GV70 having a 1.1% share of its segment in 2021 and the GV80 having a 1.4% share compared to the competition.

The coming year will be a decisive test for the Genesis brand and the GV70 in particular. it was always expected to be the brand's most popular model, so its first full year on sale will be an indication of how well Hyundai is received in the luxury segment.

Most importantly, however, the Genesis cannot fall into the same trap as Infiniti, which was a lackluster product and a confusing marketing message. It must make itself known and offer competitive models, even if they are sold in smaller volumes.

Luckily for Genesis, it will have three new models this year - the GV60, Electrified GV70 and Electrified G80, all due in the second quarter. 

The GV60 is the Genesis version of Hyundai-Kia's "e-GMP" EV, so it's closely related to both the Hyundai Ioniq 5 and Kia EV6, both of which sold out immediately. This forces Genesis to do the same, because it would not be very good for a premium brand to fight a task that the mainstream brands easily handled.

The same applies to the electrified GV70. Demand for electric vehicles is on the rise, and Genesis has long said its future is electric, so it will need to push its battery-powered models aggressively in 2022, although the Electrified G80 will be a niche model given limited interest in sedans.

In short, Genesis has the ingredients it needs to be a successful luxury brand in the coming years, but it will need to continue growing this year or risk losing its path.