Party Crasher!

But now Korean automaker Hyundai seems set to crash the luxury party. Hyundai’s first full-size luxury sedan, the Genesis, was released stateside in 2008. The company followed up with the overtly opulent and even larger Equus model two years later. Even Hyundai’s corporate cousin, Kia (Hyundai has part-owned Kia since 1998) is getting in on the act. Kia’s unveiling of its Maserati-esque GT Concept coupe at last month’s L.A. Auto Show is a fairly obvious signal that it, too, harbors upscale ambitions.

A hard landing

Hyundai got off to a shaky start in the U.S. with the 1986 release of the $4,995 subcompact Excel. The company set a first-year sales record in the United States with 168,882 vehicles sold, but the Excel soon developed a reputation for questionable reliability. Sales slumped and Hyundai became fodder for stand-up comics (Jay Leno once quipped that filling up a Hyundai doubled its value).

But unlike the similarly ridiculed Yugo (a budget-priced Yugoslavian marque sold in the U.S. from 1984 to 1992), Hyundai was able to turn its stateside reputation around. The company did this through heavy investment in state-of-the-art design and manufacturing facilities like the $30-million Hyundai-Kia Motors Design and Technical Center in Irvine, as well as long-term research and fastidious quality control. Underlining its confidence in the resulting vehicles, Hyundai backed them with a remarkable 10-year/100,000-mile powertrain warranty, the first of its kind.

By 2003, Hyundai was tied with Honda for second place (behind Toyota) in Consumer Reports magazine’s reliability ratings. Three years later, it leapfrogged Toyota to third place in J.D. Power and Associates’ Initial Quality Study, trailing only Lexus and Porsche.

Hyundai’s renaissance was confirmed when the Genesis was named 2009 North American Car of the Year by a jury of 50 independent automotive journalists. The rear-wheel-drive Genesis Coupe, released in the U.S. that same year, also wowed critics: In a comparison road test, Popular Mechanics preferred it to an Infiniti G37 costing $10,000 more. 

“I think the Genesis was certainly a critical benchmark for Hyundai,” said Kristina de la Cuesta at Intellichoice.com. “It illustrated to the public that they were not to be thought of as the red-headed stepchild any longer.”

American drivers have responded enthusiastically. Hyundai sold more than 538,000 vehicles in the U.S. last year and set an all-time sales record in September. Having established a strong reputation for dependability and value with big-selling models like the compact Elantra and the Sonata sedan, Hyundai appears poised for a credible crack at America’s luxury auto market.

“The Genesis has been well-received and generally praised,” de la Cuesta said. “With a freshened exterior, as well as the new 5.0 R-Spec trim offered for 2012, the Genesis is currently well positioned in the marketplace against its premium sedan rivals.”

Starting at $58,750, the elegant Equus, which offers distinctly upscale amenities like a massaging rear seat and adaptive-damping air suspension, goes toe-to-toe with Mercedes S-Class, BMW 7-Series and Lexus LS models costing at least $10,000 more. Just a year after its U.S release, the Equus took top spot in the large premium car segment of J.D. Power and Associates’ 2011 APEAL (Automotive Performance, Execution and Layout) Study — the first time since the survey’s 1996 inception that any vehicle other than an S-Class, 7-Series or LS has done so.

“There is no doubt: [The Equus] offers a tremendous amount of luxury features that are typically found on much more expensive cars,” de la Cuesta said. 

Meanwhile, based on its continued stateside success and the favorable market response to recent vehicle launches, Hyundai might eventually take the path of some its Japanese competitors by creating a distinct new luxury brand, de la Cuesta said.

“Street cred takes time, but I think Hyundai can achieve that level of success if it stays focused,” she said.