Hyundai Motor Group's luxury brand Genesis is experiencing urgency in sales in the U.S. market. Genesis exports most of the vehicles it sells in the U.S. after manufacturing them domestically, as the Trump administration has warned that it will impose a universal tariff of 10 to 20% on all imported goods. To maintain price competitiveness, local production in the U.S. is inevitable, but this requires obtaining the consent of domestic labor unions.
According to the finished car industry on the 2nd, Genesis sold a total of 75,003 units in the U.S. last year. This figure represents an 8.4% increase from the previous year. Genesis sold 229,532 units in the global market last year, including Korea, and the U.S. market accounted for 32.7% of this total, marking an all-time high.
Hyundai Motor Group launched the Genesis brand in 2015. It was introduced as a luxury brand with the goal of overcoming the limitations of being perceived as a mass-producing automobile company known for cost-effective volume models, competing with the likes of Toyota's Lexus.
Genesis has shown remarkable growth since 2020. Global sales increased sharply from 77,135 units in 2019 to 132,450 units the following year. The company has been expanding its lineup by continuously launching popular sports utility vehicles (SUVs) and introduced the compact electric SUV GV60 in 2021.
Sales have also rapidly increased in the U.S. market, known as "the battleground for luxury cars." In 2020, sales in the U.S. amounted to only 16,384 units, but the following year, it surged to more than triple that figure at 49,621 units. Since then, sales performance in the U.S. continued to rise each year. It is still difficult to compare with Lexus, which sold over 320,000 units in 2023, but there are many evaluations in the finished car industry that Genesis is steadily maintaining growth and smoothly establishing itself in the U.S. market.
The previously smooth sales of Genesis in the U.S. face significant variables starting this year. During a Senate confirmation hearing held on the 29th of last month (local time), nominee Howard Rutnick, who will oversee industry and trade policy in the Trump administration, expressed intentions to impose high tariffs on countries exporting to the U.S. Rutnick remarked, "Allies have taken advantage of our goodwill. It is now time to bring production bases to the U.S." He mentioned South Korean home appliances and Japanese steel exports.
Currently, Genesis exports most of the vehicles sold in the U.S. from domestic plants. The only model produced locally among the U.S. sales models, the GV70 electric vehicle, sold only 2,976 units last year, accounting for less than 4% of total sales. With the Trump administration's policy to reduce support and benefits for electric vehicles, the sales of the GV70 electric vehicle may decrease further.
In the finished automobile industry, there is speculation that Hyundai Motor Group will find it difficult to avoid high tariffs from the Trump administration if it does not produce Genesis in the U.S. Lexus, Genesis' main competitive brand, has been producing its major models locally in the U.S. since 2015. If Genesis becomes subject to high tariffs, its competition with Lexus will become unfavorable.
For Hyundai Motor Group to produce Genesis in the U.S., it must obtain consent from domestic labor unions. Hyundai included a clause in the collective agreement signed in 1999 that states, 'If transferring vehicle models to overseas factories or producing a model currently manufactured domestically abroad, it must go through reviews and decisions by the joint labor-management committee.'
The Hyundai Motor labor union holds a negative stance on the overseas production of popular models, citing a decrease in domestic employment and significant disadvantages in performance bonuses. During the previous Trump administration, Hyundai Motor Group reportedly considered producing some Genesis models locally in the U.S., but halted the plan due to concerns over union pushback.
Genesis also has the weakness of lacking hybrid models, which are in rapidly increasing demand in the market. In 2021, Genesis announced a plan to only produce 100% electric and hydrogen vehicles starting in 2025 instead of developing hybrid models. However, it revised this plan last year, stating it would add hybrid models to all vehicle types starting in 2027. With the electric vehicle chasm persisting for several years, it is projected that Genesis may face challenges in competition until hybrid models are released.
An industry source noted, "The labor and management must agree to produce even some models of Genesis locally in the U.S. as promptly as possible. If it becomes subject to tariff imposition starting this year and its growth curve in the U.S. is broken, Genesis risks becoming a luxury brand that only operates in Korea."