Will Genesis hurt Lexus?

[GSCT]

With a generally well reviewed, good looking initial lineup of three cars, SUVs in the pipeline, “come to your home” servicing, good warranties, aggressive pricing and thoughtful perks like no charge GPS updates (are you listening Lexus?) I have to think Genesis will have an impact on the Luxury market. My question for your comment is “who will they steal their share from and how likely will it be Lexus?”. Personally, I don’t think Lexus is as vulnerable as some other brands with less loyalty and less reliable reputations. Accordingly, maybe brands like Lincoln, or even Acura may get hit harder.

 

[bogglo]

I don't think Lexus has anything to worry about. If anything I think Genesis should be worried especially with how Lexus just priced the LS. All the home service and stuff is expected when you are trying to establish yourself the real challenge is being consistent. And am pretty sure Lexus is keeping an eye on Genesis. The only thing I fear is Genesis might beat Lexus to a real SUV I mean a real SPORT UV emphasis on sport.

 

[krew]

All the home service and stuff is expected when you are trying to establish yourself the real challenge is being consistent.

@bogglo hits the nail on the head here -- it's good in theory, but the devil is in the details. I don't have an article to point to, but casual conversations with automotive journalists at the LS launch suggest this is going to be the main problem.

...and thoughtful perks like no charge GPS updates (are you listening Lexus?)

They are! Map updates are free with the new LS.

 

[spwolf]

With a generally well reviewed, good looking initial lineup of three cars, SUVs in the pipeline, “come to your home” servicing, good warranties, aggressive pricing and thoughtful perks like no charge GPS updates (are you listening Lexus?) I have to think Genesis will have an impact on the Luxury market. My question for your comment is “who will they steal their share from and how likely will it be Lexus?”. Personally, I don’t think Lexus is as vulnerable as some other brands with less loyalty and less reliable reputations. Accordingly, maybe brands like Lincoln, or even Acura may get hit harder.

After 10-15 years of fear mongering from western automotive media, we can NOW conclude that Koreans never took significant market share from Toyota.
Caddy, Buick, Infiniti, Acura, brands like that... are first... brands who sell cheap leases are 2nd.

Not that they should not worry about everyone... and that they should not compete with everyone.

But I dont see Genesis seriously getting any real luxury brand until they completely separate operations and develop full lineup of vehicles. Since I am from Europe and have worked with Toyota in past (9 years), I can say that selling Accent together with $80k cars dont work. Servicing even less.

And thats why you have huge discounts on Genesis models now.

Getting buyers who care about lowest possible price is not what you want.

 

[spwolf]

I still want to add that Genesis is great move by Hyundai. They need to keep at it and continue doing it for 10 years.

I hope that their current sale situation where their sales dropped 10% worldwide wont influence their decisions on future on Genesis and its separation into separate brand.

 

[mmcartalk]

Accordingly, maybe brands like Lincoln, or even Acura may get hit harder.

Unlike Acura, which is distinct from Honda dealerships, Lincoln and Genesis are actually in the same category of being upmarket-nameplates that are sold out of selected lower-line Hyundai and Ford dealerships. Only selected Ford dealerships handle the Lincoln nameplate, and only selected Hyundai dealerships handle the Genesis nameplate. The Genesis network has the added restriction that some only handle the G80, others both the G80 and G90. A complete mess, if you ask me.

The Genesis network also has the restrictions of having so SUVs (yet)....so, as far as them being competition to Lexus, the G80 and G90, IMO, are only directly competitive to the Lexus GS and LS. I have driven and reviewed most of the products of both divisions, and, in directly comparing them, I would say that Genesis has an edge in door/sheet-metal solidness, solidness of interior materials, solidity of the exterior/interior hardware, and in ease-of-use of many of the controls. Lexus has better overall fit/finish, slicker paint-jobs, better noise isolation (on some models), and a smoother-operating, possibly more durable powertrain.

Genesis, of course, will also be soon introducing a smaller RWD G70 sedan......it will probably go toe-to-toe with the Lexus IS. But that vehicle is not ready yet.

 

[bogglo]

The Whole Hyundai Line up is going to keep playing catch-up unless they can invent something of their own to stand out. No doubt their Sedans are good looking and have good value. The biggest mistake They made was Using the Genesis name. Before Infinity became a brand, I don't remember ever seeing a Nissan infinity model, neither did I see a Honda Acura model, or Toyota Lexus model. but we all know the Hyundai Genesis, and that's going to take a while to shake off. When lexus debuted the first LS, there was nothing already in Toyota line up that could compare. But the G90 was hyundai Equus like 2-3 yrs ago same with the G80 and the prevous Hyundai Genesis. The G70 is an awesome car, but the Kia Stinger is going to be the problem for both the G70 and G80. Just like the ES and GS only this time they are RWD/AWD so the playing field is even.

 

[mikeavelli]

Absolutely not. As many stated I think the other lower tier brands are in far more danger and have already suffered an image hit when Hyundai/Kia brought big V-8/RWD cars before they did. Note the big sedan is something most don't even offer. I've spent time quite a bit in a K900 recently and its like a big comfy 1990s Lexus.

 

[Tragic Bronson]

Dealers are not there, and they don't have SUVs, right now, definitely not. They might only poach some luxury car buyers for sure and have, but they're not a threat yet to Lexus.

 

[mmcartalk]

I've spent time quite a bit in a K900 recently and its like a big comfy 1990s Lexus.

I did a full-review of a K900 a few years ago. That's one thing I find interesting....exactly what you mentioned. Yes, the old-time Lexus faithful (the ones who liked the Cush-Tush 1990s Lexus products) complain that many of today's Lexus products aren't cushy and quiet enough. Yet, when the Koreans give them just what they are looking for, with vehicles like the K900, Genesis, and Equus (and with longer warranties to boot), they balk and won't go buy them. Look at the K900's pathetic American-market sales....that alone tells the story.

 

[mmcartalk]

Dealers are not there, and they don't have SUVs, right now, definitely not. They might only poach some luxury car buyers for sure and have, but they're not a threat yet to Lexus.

They can't possibly be a true threat to Lexus with only two sedans...or even the third, upcoming smaller G70 sedan.

 

[GSCT]

Interesting comparison of the Genesis G 70 and the IS from Club Lexus.

https://www.clublexus.com/articles/genesis-g70-lexus-is/

 

[Gecko]

Until Lexus launches the next gen IS, ES and RC with new powertrains - as well as performance CUVs - I do believe that Genesis will be siphoning off a small number of buyers from Lexus.

IS is in such bad need of an update that it isn't even funny... it's had the same top engine option for 13 years now. In addition to that, the 8AR-FTS isn't a particularly great engine. At this stage in the game, Lexus isn't hard to beat with entry level product.

New ES is just around the corner, thankfully. But the midsize G80 already offers top end options with 365hp and performance packages. What does Lexus have to counter that? Right now, nothing. 306HP ES F Sport FWD? lol.

Once Genesis starts dropping RWD/AWD performance CUVs with 300-400+ horsepower, Lexus should really be worried. They have no competitor to the X5 or any of the M/AMG products, and that's the market Genesis is clamoring for. As consumers continue to shift towards CUVs, we are still a ways away from redesigns for RX and GX... Lexus has no way to counter something like an X3, X5, etc. competitor from Genesis.

Remember that shoppers now are much more style-conscious, and that seems to be something Genesis is doing well. Reliability, dependability and the ownership experience mean less now than they did before - not good for Lexus, very good for newcomers.

Getting beat up a bit by the Koreans would be good for Lexus, IMO.

 

[krew]

Remember that shoppers now are much more style-conscious, and that seems to be something Genesis is doing well. Reliability, dependability and the ownership experience mean less now than they did before - not good for Lexus, very good for newcomers.

Getting beat up a bit by the Koreans would be good for Lexus, IMO.

Completely agree with this. It's one thing to struggle against the Germans, but Lexus getting its lunch eaten by Genesis would spur on a mountain of hand-wringing and countermeasures.

 

[bogglo]

Just waiting to see what happens next week in Tokyo. hopefully they give us something worth talking about till NAIAS in January.

 

[spwolf]

Until Lexus launches the next gen IS, ES and RC with new powertrains - as well as performance CUVs - I do believe that Genesis will be siphoning off a small number of buyers from Lexus.

everything is siphoning small number of buyers... you can say the same about BMW or MB since Genesis will undercut their vehicles by 10k at least.

Unless they separate dealers, it wont do much good to Hyundai really. They also made wrong judgment of doing sedans first - their sales are very small now so they spent billions on selling 50k cars worldwide.

Talk is cheap, proof is in the pudding. Sonata was once heralded as Camry and Accord beater and look at it now, almost 3x smaller sales than Camry.

 

[ssun30]

Completely agree with this. It's one thing to struggle against the Germans, but Lexus getting its lunch eaten by Genesis would spur on a mountain of hand-wringing and countermeasures.

Sad thing is, Japanese corporations are usually slow to realize the situation and counteract. Look at the downfall of the entire japanese electronics industry (and the rise of the koreans), it's painful to watch them missing the obvious. And when they finally woke up and panic it became even worse. Sony tried to rectify its problems with some of the most talented executives, but they achieved nothing and left with frustration. Their problem is institutional and cannot be simply solved by strong leaders. Akio-san may have big plans and deep visions, but turning such a big ship is extremely difficult.

Let's hope history does not repeat itself.

IS is in such bad need of an update that it isn't even funny... it's had the same top engine option for 13 years now. In addition to that, the 8AR-FTS isn't a particularly great engine. At this stage in the game, Lexus isn't hard to beat with entry level product.

The success of the xR series of engines is biting back at them. These were so ahead of the technology curve when they were launched in the mid 2000s that TMC keeps building them to make as much profit as possible. Meanwhile they slacked in drivetrain R&D and is now half a decade behind.

Sounds familiar, right? The japanese electronics industry enjoyed a massive lead in technology in late 90s; they dwelled in their superiority and lost track of their competitor's progress.

 

[krew]

The success of the xR series of engines is biting back at them. These were so ahead of the technology curve when they were launched in the mid 2000s that TMC keeps building them to make as much profit as possible. Meanwhile they slacked in drivetrain R&D and is now half a decade behind.

Sounds familiar, right? The japanese electronics industry enjoyed a massive lead in technology in late 90s; they dwelled in their superiority and lost track of their competitor's progress.

This analogy is depressing. The parallels are uncomfortably close. ensive:

 

[Gecko]

Japanese culture can be so secretive and self righteous that they tend to think, "We're so great that we're only competing against ourselves," and then they lose touch with reality, so when the rest of the pack/industry/competition starts moving away from them, the Japanese companies just button down and become even more blind and self righteous. And soon enough, they are indeed "just competing against themselves," while everyone else is miles ahead or in a totally different playing field.

As @ssun30 points out, we've already seen this happen with electronics. If we're being honest, this is also what happened to Lexus from pretty much 2004 until probably 2015/2016. Now we're at the point where we all have to hope they can play catch up. LS without a V8 is one such glaring mistake.

"When you're looking through rose colored glasses, all the red flags just look like flags."

On the flip side, you have the Koreans who are so incredibly bullish and aggressive, for better or worse. They set their sights on something and don't stop until they've achieved it. While far from perfect, Hyundai and Kia have built a pretty strong platform over the last 10 years and are building much better cars now than many of us ever thought possible.

So while Lexus has spent the last 11 years asleep at the wheel, the Germans unleashed an unprecedented product and technology onslaught, Audi became "a thing" and passed Acura and Infiniti handily, the Koreans were working on a war chest that would eventually allow them to compete at the very top of the market, and Volvo and Jaguar have been reborn.

Not trying to be a fatalist here, but Lexus is facing an uphill battle over the next ~5 years because essentially, everything they do or touch needs to be revolutionary to be competitive. A simple evolution - Lexus' signature recipe - won't really work anymore. Every product needs an "LS in '89" level of thinking and execution to be done right. Can they do that?

 

[spwolf]

As @ssun30 points out, we've already seen this happen with electronics. If we're being honest, this is also what happened to Lexus from pretty much 2004 until probably 2015/2016. Now we're at the point where we all have to hope they can play catch up. LS without a V8 is one such glaring mistake.

....


Not trying to be a fatalist here, but Lexus is facing an uphill battle over the next ~5 years because essentially, everything they do or touch needs to be revolutionary to be competitive. A simple evolution - Lexus' signature recipe - won't really work anymore. Every product needs an "LS in '89" level of thinking and execution to be done right. Can they do that?

Well, that is maybe your opinion based on your own personal requirements. However Lexus sold 394,000 vehicles in 2004 and 677,615 in 2016, all while bringing their vehicle average $ numbers up, without crazy incentives that competition resorts to.

Surely only requirement for success is not if there is a twin-turbo V8 or not?

Also, why is Lexus in dire straits? Their sales are about the same this year, with all of their models late in model bicycle (between 3 and 6 years).

Lexus is never going to be at start of 1989 again. You will never get pricing like Hyundai with Lexus. If the only requirement is pricing, Lexus should not serve "your" needs. If we look at Lexus ES and Genesis G80, their average transaction price is the same (with G80 having 6k-8k discounts) and Lexus ES sells 3x the numbers.

Again, recipe for success cant be bi-turbo V8. It isnt for sure because Lexus is very successful and it is making Toyota most profitable manufacturer in the world.

As to the Sony, Toshiba, Panasonic and death of japanese electronics industry, if thats going to happen to TMC, it will happen after GM, Ford, Hyundai, Fiat, VW, BMW and MB die first. It is most successful and most profitable manufacturer in the world.

On the other hand, Hyundai sales are down 10% worldwide, this is on catastrophic level and while industry is growing, and you can guaranteed change of leadership and strategy if this does not change in 2018.