Will Success Spoil Hyundai

As it enters its third decade in the U.S. market, Hyundai certainly has reason to celebrate, despite the generally dismal state of the American market. Its market share has never been higher. And it has pushed into Japanese territory on most of the credible automotive quality studies. It also scored an unexpected victory this month when a panel of 50 North American journalists voted the automaker's first luxury model, the Genesis sedan, its North American Car of the Year (NACOTY). The Genesis also ranked high as a 2009 Motor Trend Car of the Year finalist.

"We need third-party validation, says Hyundai Motor America CEO John Krafcik, adding that, "In the end, you can only say so much on your own and need the endorsements."

The Korean automaker's push into the luxury segment is a cautious one. Hyundai officials initially considered the creation of an entirely new marque, much like Toyota's Lexus or Nissan's Infiniti, but decided to keep Genesis "in-house." The NACOTY award "validates the decision we made (and) has gotten the spotlight shining on Hyundai," contends Krafcik.

In the coming weeks, Hyundai will slowly roll out its second Genesis model, the Hyundai Genesis Coupe, a car that company officials promise will have more of a "bad boy attitude." So far, Korean planners have been reluctant to commit still more Genesis product, at least for the States. They're taking the nameplate even more upscale in the home market, with a series of models that will launch over the next several years. But according to Krafcik, the car of the year win is leading the automaker to think again about that timid strategy.

"It will get us to think long and hard about where we want to go," says the former Ford product development executive. And while it will take several years, he hints that an expansion of the Genesis line-up is growing increasingly likely. Indeed, success has Hyundai revisiting the idea of setting up a separate Genesis division.

Such prospects raise some fundamental questions about Hyundai's overall direction, especially when it comes to the products it has best been known for.