How Hyundai could win with Genesis in Europe

Will the Genesis brand finally make its European debut? "That could happen in a couple of years' time," Hyundai Chief Marketing Officer Cho Won Hong told Automotive News Europe during a recent interview in Milan.

Cho is well aware of the risks. "I know the European market is very difficult for new entrants such as Genesis," he said. That is why he said Hyundai would try to "build greater awareness of the Genesis brand even before selling cars." For example, Hyundai will build a Genesis experience center in a major European city "where people can get to understand what the brand is about," Cho said.

Despite the positive spin, there are doubts that Genesis' European debut is close. "If they don't give specific plans, I wouldn't be so sure the launch will actually happen," JATO Dynamics analyst Felipe Munoz said. "Two years is a long time and many things can change."

There are two huge hurdles for Hyundai's premium brand. First, Genesis has a sedan-heavy portfolio and no crossovers, which would be disastrous in Europe, where SUVs are hot-sellers and large sedans struggle to find buyers. Three years ago Hyundai Europe Chief Operating Officer Thomas Schmid said Genesis's European launch would be postponed because the brand lacked SUVs and suitable engines, specifically diesels. These issues are being addressed.

Hyundai Executive Vice Chairman Euisun Chung said in January that a Genesis crossover would be unveiled this year.

Cho told ANE that the brand would add "two to three new models" in the coming years.

The second hurdle is the nature and structure of the European premium market, which is very crowded and dominated by the German automakers. "Any new brand will have a very tough time cracking it," JATO's Munoz said.

Many automakers that have tried to take a share of Europe's growing premium market have failed or are struggling. Nissan premium brand Infiniti spent more than a decade fighting for a foothold in Europe, but collapsing sales forced Infiniti to announce in March it would stop sales in Western Europe to concentrate on U.S. and China.

Toyota's premium brand Lexus has been competing in Europe for two decades but remains a small player in the segment. Honda was wise to decide against bringing its Acura premium brand to Europe.

It is not just Asian premium brands that have struggled to build up a presence in Europe. Fiat Chrysler Automobiles' Maserati and Alfa Romeo brands and PSA Group's DS Automobiles have had a tough time gaining traction.

There is one way a premium newcomer could jump ahead of the competition in Europe: by debuting something its rivals lack. "If you want to make a dent in the German domination, you have to offer something different, especially from a technological point of view," JATO's Munoz said. He pointed to the recent success of Tesla's full-electric cars in Europe as an example.

As a brand, Tesla outsold Lexus, Jaguar and Alfa Romeo in Europe in March because of strong demand for its recently launched Model 3 midsize sedan.

Volvo is trying to follow Tesla's path, betting big on its Polestar electrified brand. Hyundai would be wise to hold back on launching Genesis until it can provide a cutting-edge technology. If this is not the case, it will travel a very rough road in Europe.