Genesis's Chief Operating Officer States the Brand's Case
Genesis Motor America's Erwin Raphael on why he believes in the brand.
On a trip to the yachting mecca of Newport, Rhode Island, in a 2020 Genesis G70 from my New York home, I am quickly impressed by this sedan's grace and superior value, a promising combination in the hotly contested, if ever shrinking, entry-level luxury-sedan market where the car competes. On an afternoon with a lot of headache-inducing traffic, the G70 provides an unexpected refuge, a sense of welcome well-being further drawn out the following day when driving other G70s, including a new model with a six-speed manual gearbox, a specification that places this machine into the "treasured rarity" category right out of the box.
Joining me for a few hours of G70 wheel twirling in the coastal lowlands of Rhode Island and southern Massachusetts is Genesis chief operating officer Erwin (pronounced Er-Vin) Raphael. A hale, affable fellow hailing from the Virgin Islands, Raphael came to U.S. to attend university in 1984, and since then has had considerable experience in the U.S. industry, working in diverse fields including manufacturing with Toyota, Chrysler, FCA, Hyundai, and International Truck and Motor. He spoke on a variety of topics, including Genesis's decision to round out its sedan lineup with the G70 before going all SUV on us, like the other luxury makers, and on the idea of Genesis in the first place.
Automobile Magazine: Everybody seems to be focused on SUVs, but Genesis's attack so far, since its launch in 2017, has been exclusively sedans. Which is the exception in these all-crossover all-the-time days, especially in the near-luxury arena, and many makers are getting out of making cars entirely. Not that there's anything wrong with what you're doing—it's a badge of honor in my book—but what's the thinking?
The truth is many Gen Z-ers want cars. In fact, a lot of ethnically diverse sets of people are more interested in cars than crossovers. That's really my feeling; it just seems like this [shift back to cars] is inevitable, and the reality is 40-percent-ish of new vehicles in America are still cars. And so we shouldn't ignore the fact that there are some seven million new cars sold every year. To ignore that would not be wise. That's just not good business. Secondly, our foundation is in cars and you can tell by the quality of the products that we've brought to market, that we've done a phenomenal job. So we came with our strengths and we delivered very, very well.
The younger generation tend to see SUVs as their mother's car, their father's car, the car that they were shuttled around in to soccer games in. And so there is a bit of a desire to run countercurrent, if you will, and to get something different than my parents had. And the last thing I'll say is people haven't had a lot of really cool, sexy, performance, designed, purposefully designed cars. A lot of the research and the effort is going into SUVs. And so cars might not have been that exciting.
There's always a push and a pull and there's not much pulling people into the car segment. So we chose to lean on our strengths and design beautiful, appealing cars, engineer them so they're fun to drive, they're high performance, [and] chock-full of content. And look at the advanced safety features in this car that come standard. Who's doing that? It's Genesis. And then lead with that product. So you asked if I could do it again if I would do it that way? That's exactly what I would do.
So what about SUVs?
And of course it doesn't mean that we're ignoring the growing SUV segment. We're in a great position to launch our first SUV, the 2021 GV80, based on the new G80 platform, and get into that game as well.
We've started with an amazing car. You make it even better, and then you build an SUV on that platform. The materials are truly exceptional. The fit and finish, it will be best in class. Amazing electronics and navigation and infotainment systems. We're seriously massaging the engines so they are special to this car, so it's a Genesis. There's nothing that you've seen out there by any manufacturer that you can say, "This is what it looks like or that's the starting point." This is Genesis. This [vehicle] is all Genesis, and we do it the Genesis way.
Don't the economics dictate otherwise, more platform-sharing, not less, as other makers seem to think?
I can't and won't attempt to speak for any other manufacturer. You are correct when you say there're economies to be gained by spreading fixed costs across many units. And we're doing that as well. So you'll see this GV80 not being totally its own, but sharing a platform with the G80. Combine those volumes and with the global volume, it sits a pretty decent population. It's not 300,000 or 400,000 cars or—
—or four million.
Or four million, and the reality is yes, correct, it's just arithmetic. As you build more units, the cost per unit for tooling and engineering and whatnot can be spread across more units. And so there's improved profitability, but you have to ask yourself, if you do too much sharing, do you take away identity? Or the personalization? And so are people less willing to pay more for that product because it's really just like another product with another skin? It's a balancing act.
Now that doesn't go to say that thing that are not visible can't be shared. There's no reason why a hinge or brackets and things like that [shouldn't be shared. It] makes a lot of sense that we should share telecommunications, the underpinnings of the electronic system. There are a lot of areas where sharing makes a lot of sense. Engines, transmissions, but you still tune the engine-control unit to fit that particular car and you tune the transmission to fit that car. So I don't know if it's something that we know that they don't or vice versa. I think this is our way of doing things and we want to bring the Genesis brand that we know and that we have developed from the ground up to customers. And right now it's being very well received.
That seems far-sighted. So what is Genesis? Is there something fundamentally different about the Korean mindset or the Korean financial markets to the extent that your shares are traded, and you have to listen to people who want maximum profit all the time? The way that Ford and GM have to deal with it here? Many places, it's seemed to encourage a sort of "race toward the bottom" mentality and I'm just wondering what is it that as has allowed your group to resist that?
Our company is publicly traded. It's a very large company. A conglomerate, and the fourth largest auto manufacturer on the planet. So it's not like it's a small company, it's the Hyundai Motor Group, it's a huge company.
And it's also successful in doing things its way. So this is our ability to develop our own luxury brand and to take that brand to the market. If we were just trying to rebadge other cars and sell them, could we make more money in the short term? Yes. But that's not what this was about. This is about building our brand and creating a real luxury brand with a desirability that people want to own and want to embrace. It's not that they're looking for a badge per se, it's when you drive a Genesis, you want to feel like you're driving a Genesis and there's no other way to get that feeling.