• by Karl Greenberg , Staff Writer, April 18, 2014

Who is competing with whom? Frankly it's getting hard to tell, especially on the show floor at the New York International Auto Show (NYIAS). Here's a simple illustration. Jim Sanfilippo, who used to be the marketing chief at Innocean, Hyundai's AOR, showed me a launch ad for the late-generation Accent compact car, not exactly a luxury nameplate. The ad sets the tone for where the market is today. Actor Jeff Bridges, in his inimitable tone says, in essence, and paraphrased liberally herein, that the Accent doesn't always get its innovations from Hyundai's high end; sometimes the osmosis moves in the opposite direction: sometimes the small, modest-market car gets the good stuff first. In other words, luxury features are everywhere, and so are mass-brands shifting up market. 

Exhibit two: Kia K900. Who would have thought five years ago that Kia would field a luxury car in the U.S? You can bet the luxury brands are biting their nails trying to figure out how to kick the upstart crows off their stage.

Cut to Javits. At the auto show this week, Toyota unveiled its aggressively updated current-model Camry with a new look and a mess of new tech. Around the same time, about 100 yards away, Hyundai unveiled the new Sonata. That temporal proximity mirrors the convergence in look and features. There are more table-stakes than tables: both offer the newest tech, more refined looks, new drivetrain features, amenities, and personality. The Sonata has moved away from its segment-testing fluid look embodied in aqueous body panel waves and swooping lines, unusual for mass-market midsize cars, to a more conservative look. The Camry, meanwhile, has also evolved design-wise in perhaps the opposite direction, dialing up the design flavor. And both looking a lot more like Euro luxury cars. 

And vice versa. Remember Popeye? Probably not, but anyway, there's alway some situation in the cartoon where the sailor or his girlfriend, Olive Oyl, end up in some grotesque situation where they are being stretched like  rubber bands. That's the luxury market. The premium brands are trying to keep the brand equity from snapping while stretching down market. How far down can they go? That's another column. 

In any case, Sanfilippo points out that the risks in this bit of market yoga are all on the luxury players. "Listen, it's easier for a populist brand to go up-market because the objectives are clearer. It's just easier to have clarity about how to achieve opulence than clarity about how to be populist, how to compete in the mass market. If you are a luxury brand, you have lots to lose in that head-on collision; it's just not one you want to have."

"The Korean management was never thrilled about the [late] U.S. version; they thought it was way too expressive. They have always had a more conservative version in Korea, where they also have 50% market share," Todd Turner of Car Concepts says. "They would probably blame the much smaller market share here partly on that design. So management won that battle."

Says Sanfilippo, “I think Hyundai was convinced they had pushed too far [with the last version]. Some people wanted them to push even further, but you can't accuse Hyundai of being short-sighted. They want big volume here.” 

Sonata’s design certainly evinces the company's luxury ambitions to be taken seriously as a thinking-professional's car. Actually, its Equus flagship is a bona fide luxury car. Steve Shannon, VP marketing at Hyundai Motor America, told me that both Genesis and Equus are achieving their growth from luxury brands. "We have shown we are a brand with a broad lineup that can successfully sell a luxury car," he says. "If our national market share is 4.5%, our market share in luxury is higher." He says that across the Elantra sedan, Santa Fe and Tucson crossovers in their respective segments, plus Genesis and Equus, the company's getting over 50% conquest. 

Well, Toyota is still on top in car sales with Camry, and they want to stay there, but they see serious challenges from cars like Altima, Ford Fusion and Honda Accord. Not to mention Kia, Subaru, Chevrolet, Chrysler, Volkswagen, the near-luxury brands, the luxury brands. Did I miss anyone?