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Hyundai Motor says price of Genesis luxury car will be higher

The retail price of Hyundai Motor Co.’s new Genesis luxury sedan will be higher than that of BMW AG’s 3-Series in the United States, an executive of the South Korean carmaker said Monday. Last week, Hyundai Motor launched the Genesis in South Korea, its first foray in the high-end segment to compete with BMW’s 5-Series, Daimler AG’s Mercedes-Benz E-Class and Toyota Motor Corp.’s Lexus GS.

Hyundai Motor hasn’t yet set a price range for the new model, which will be available for sale in the U.S. in June.

In South Korea, the Genesis is selling at a price of between 40.5 million won (US$43,150) and 53.8 million won, depending on accessories and engine types.

“The prices will be set around April, but they will be higher than those of BMW’s 3-Series,” said Lee Hyun-soon, president of Hyundai Motor’s R&D division, on the sidelines of an auto industry fair here.

The Genesis with a 4.6-liter engine will retail at a price higher than that of BMW’s 5-Series, Lee said.

The Genesis is Hyundai Motor’s first luxury model, aimed at shaking off its image as a producer of cheap first cars.

Launching the new model in South Korea, Hyundai Motor said it expects to sell 55,000 of the vehicles this year, 35,000 at home and 20,000 overseas in the U.S.

Some analysts, however, remain skeptical over Hyundai Motor’s move into the luxury market, citing an expected decline in U.S. auto sales this year because of sluggish demand on the back of higher oil prices and rising defaults on subprime mortgage loans.

Posted By Mehul Brahmbhatt
Jan 15, 2008
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Small cars have big potential

Even as Tata Motors’ Nano went on display at the Auto Expo, a survey by Invest India Market Solutions (IIMS Dataworks) shows that as many as 12.8 million Indian households can be potential buyers for entry-level cars in the years to come, 1.6 million of them in 2008 alone.
 
This is more than double the entire annual car market of 1.2 million and indicates the potential market for competitively-priced entry-level cars, since this is the level at which Indian non-car owners typically enter the market in India.
 
Last week, Crisil Research said the Nano price point would see a 65 per cent increase in the number of families that can afford a car.
 
However, it forecast that at the significantly redefined threshold for car ownership in India, annual car sales have the potential to increase by 20 per cent over 2007-08.
 
India’s entry-level car market is estimated at 400,000 units a year, primarily consisting of Maruti-Suzuki’s 800 and Alto and some base models of the Hyundai Santro and Maruti’s Wagon-R, cars that are priced below Rs 3 lakh to Rs 3.5 lakh on the road.
 
The Nano, which is expected to hit the market in September/October 2008, will be priced at roughly Rs 1.3 lakh (Rs 1 lakh excluding VAT and transport costs), promising to be the world’s cheapest car.
 
Several other manufacturers — Bajaj Auto, Ford and Honda among them — are also planning entry-level car launches, but they are unlikely to be at price points as low as the Nano.
 
IIMS Dataworks, a research firm specialising in retail finance markets, conducted the survey between December 2006 and July 2007 before the Nano was displayed.
 
The Invest India Incomes and Savings Survey 2007 focused on a wide range of product categories with a car being one of them. Participants were asked to select items out of a detailed list that they wanted to own over the next 12 months.
 
The immediate potential demand for a car at 1.6 million units is based on non-car owner respondents who were asked whether they were aspiring to buy a car — any car — in the next 12 months.
 
The survey had a sample size of 1 million households, extrapolated to 215.9 million households in India with at least one earner.
 
The survey analysis suggests that the potential buyers of cars are households with an annual income of Rs 2 lakh and above that do not own a car.
 
The analysis considers all households that can afford a small car and do not currently own a single car. According to the survey, which had a sample size of nearly a million households, over 12.88 million households out of the 19 million households with annual income above Rs 2 lakh currently do not own a car (either new or second hand).
 
“In the case of households with annual income between Rs 1.5 lakh and Rs 2 lakh, there are 10 million households that own a two-wheeler, but do not currently have a car,” said Sandeep Ghosh, executive director, IIMS Dataworks, adding that it is unlikely that there will be many households with high incomes who do not own a car.
 
The survey shows nearly 55 per cent of the 1.6 million demand is expected from rural India and smaller towns, with the near-term demand from the six super metros estimated at 0.25 million. Within this, as many as 0.8 million non-car households, who were planning to buy only a two-wheeler may now aspire for a car due to the lower price point for a car like the Nano.
Posted By Mehul Brahmbhatt
Jan 15, 2008
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