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Two Tiers from Hyundai: High-End Luxury and Great Fuel Economy

The established luxury brands -â€" including Mercedes-Benz, Audi, Cadillac, BMW, Lexus and Acura -- will ignore the new upmarket 2011 Hyundai Equus (with a promised high level of customer assistance) at their certain peril. And while they're refocusing their attention on the upstart from Korea, they might also want to take note of Hyundai's ambitious plans with both fuel economy and hybrids.

I think Korean automakers, including some we don't know yet (like CT&T) are the ones to watch in this decade. They've beat the quality issue still dogging Chinese carmakers, and they've learned all the valuable lessons worth knowing from the Japanese. Going forward, the Koreans are quite likely to be underestimated. It's happened before.

I was at Manhattan's Tavern on the Green in the 1980s with a bunch of Mercedes executives when the big subject was the forthcoming Lexus, Acura and Infiniti cars. The consensus among the Daimler braintrust was that the Japanese could make economy cars, but not luxury ones. They also laughed about the American love of cupholders, but they soon changed their tune on both those things.

Hyundai, which started U.S. sales in the mid-1980s with rock-bottom (in both price and quality) economy cars, has been moving steadily up market since it debuted the Sonata in 1989. The Equus is an upmarket version of the Genesis ($33,000 to $38,000), itself a very credible luxury sedan when stacked up against the Mercedes E-Class, Lexus LS, Infiniti M or the BMW 5-Series, though the emphasis is on comfort rather than performance.

The Equus continues that emphasis. There is the requisite V-8 under the hood (the name is a reference to "horsepower," after all), but the suspension is soft, and -- at least on the Korean market car that's been shown -- a high level of appointment (suede headliner, lots of leather, window shades, etc.), especially for rear-seat passengers (who will benefit from such optional features as an eight-inch LCD screen, DVD player, both heating and cooling in the reclining seats, and huge amounts of legroom). That makes sense, because in Korea most of these cars will be chauffeur-driven. Here's an early look on video:
What is even more intriguing about the Equus, which with a $50,000 to $60,000 price tag will get Hyundai into a whole new price point, is the planned level of customer service. Shades of Rolls-Royce: Equus customers will enjoy the attentions of a valet, who will make house calls if the car should do anything as impertinent as break down. Loaners will be available, and those will be delivered, too, as will vehicles for test drives, if the Lord of the Manor is thinking about replacing his Benz or Beemer. They'll also bring you the owner's manual on your own brand-new Apple iPad. I'm not making this up.

In fact, the Equus may be sold only through such personalized appointments, which go under the name "Your Time, Your Place." The car will have only two trim levels, and both are likely to be heavily loaded. The Equus won't be a Maybach, but it's being marketed like one.

It's interesting that Hyundai hasn't created a new luxury brand, which could erase any lingering stigma about the cruddy Excels in the company's past. But the Equus has very little Hyundai badging on it, and there's even a new hood ornament.

At the same time as all this is happening, Hyundai is making bold pronouncements about achieving a corporate average of 50 mpg by 2025. Introducing the thirsty V-8 Equus is not likely to get in the way of this too much, because it will likely be a very low-volume prestige model.

Much more likely to sell in high numbers is the 2011 Sonata Hybrid (37 mpg city/39 highway), which is part of a larger "Blue Drive" strategy that uses a bunch of different technologies to increase fuel economy. Expect to see both conventional and plug-in hybrids, as well as use of turbocharging on small-displacement mentions, direct injection and lightweighting on future Hyundais.

And so the company's two-tiered strategy -- a showcase high-end car to burnish the image, and innovative fuel savings lower downmarket -- makes imminent sense to me. And if I were a carmaker involved in either tier, I'd be paying close attention.

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Photo: Flickr/Raymond Chen