Hyundai Motor looks to new Genesis to lift U.S. sales


* New Genesis, Sonata key to reversing fortunes in S.Korea,U.S.

* Hyundai looks to sell 10 percent more cars in U.S. nextyear

* Fuel economy drops, prices rise in S.Korea

By Hyunjoo Jin

SEOUL, Nov 26 (Reuters) - Hyundai Motor unveileda sleek revamped version of its high-end Genesis sedan in SouthKorea on Tuesday, a key model along with the upcoming Sonatafamily car, to revive momentum in its key home and U.S. markets.

Hyundai, the world's fifth-biggest automaker along with KiaMotors, is looking to lift its total U.S. vehiclesales by 10 percent next year on the back of the release of thenew Genesis and, more importantly, the Sonata sedan.

The South Korean automaker said the new Genesis would offerimproved riding, handling and high-tech features to take on thelikes of higher-priced Mercedes and BMW,but the model's fuel economy dropped.

The new Genesis will arrive in U.S. showrooms in the firsthalf of next year, followed by the Sonata, Hyundai's secondbest-selling car in the United States.

Hyundai aims to sell 32,000 new Genesis cars in South Koreaand 30,000 in overseas markets next year. The Genesis will besold in Europe for the first time.

"We will remain as a follower if we fail to make cars thatcan compete with top-notch models. The Genesis has a bigsignificance for us, and at the same time marks a challenge,"Park Joon-hong, a research fellow at Hyundai's Research &Development Division, told reporters last week.

Hyundai's Park said the company has undertaken rigorousquality checks preceding the launch, after a series of recallsand consumer complaints hurt the company's reputation.

The Genesis, which was first rolled out in 2008 and won theNorth American "Car of the Year" the next year, is not ahigh-volume model like the Sonata, but is designed to raise thecompany's image.

"A higher brand value has a ripple effect on sales of smalland mid-sized cars. If sales of the new Genesis falls short ofexpectations, it will hurt the brand, and dampen expectations ofthe new Sonata due next year," said Lee Hyung-sil, an autoanalyst at Shinyoung Securities.

Although it will come with a cheaper price-tag than itsEuropean premium rivals, Hyundai has raised the price of themain V-6 3.3-litre model by 2.3 million Korean won to 52.6million Korean won ($49,500).

The 3.3-litre model gets fuel economy of 9.4 km/litre (22.1miles per gallon), a slight drop from the current 9.6, and itdoes not come in more fuel-efficient diesel or hybrid options,models that are gaining in popularity in South Korea. The 3.0, 3.3, 3.8 and 5.0 engines are availabledepending on the markets.


Y.J. Ahn, a U.S. sales executive, said the company waslooking to lift its U.S. vehicle sales by 10 percent next year,adding the figure was not finalised.

Hyundai saw its U.S. sales rise only 2 percent from Januaryto October, lagging the market, as its Japanese and U.S. rivalshave launched new models.

Shinyoung's Lee said Hyundai may miss this year's U.S. salestarget and it may be challenging to achieve a 10 percent salesgrowth next year given that its U.S. and South Korean factorieswere running at full capacity.

The Genesis unveiling comes a day before Daimler plans tobring its Mercedes-Benz S-Class luxury sedan to South Korea.Daimler chairman Dieter Zetsche will make a rare visit to Koreato attend the S-Class event.

South Korea, dominated by Hyundai and Kia, is a small marketfor imported cars, but foreign sales have soared 21 percent sofar this year in a flat market helped by free trade deals. Forthe S-Class, South Korea is the fourth-biggest market afterChina, the United States and Germany, although its sales ofabout 1,000 from January to October trail the top three by along way.

Peter Schreyer, a former Audi designer who leads design ofboth Hyundai and Kia, acknowledged it was not easy for the SouthKorean automakers to go up-market, saying it took 30 years forAudi to become a premium brand from a "boring company".

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