Audi's New R8 seen on SuperBowl

The carmaker is kicking off its venture into the luxury market with its first Super Bowl ads in 19 years.

By Ken Bensinger and Alana Semuels, Los Angeles Times Staff Writers
February 2, 2008

Audi's top American executives were in Arizona this week, hosting golf outings with Ronnie Lott, tippling drinks with Kate Hudson and throwing swanky parties at an exclusive nightclub, all in conjunction with the carmaker's first Super Bowl advertisement in 17 years.

Hyundai is also advertising during the Super Bowl for the first time in years -- 19 to be precise -- to promote its new Genesis luxury sedan. Its on-the-ground Super Bowl effort? Inviting a handful of Hyundai dealers to attend the game with the corporate marketing chief.

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"It's a question of where we want to put our resources," explained Chris Perry, vice president of marketing communications at Hyundai Motor America, based in Fountain Valley. Yet considering the money involved -- an estimated $2.7 million for each 30-second spot, and Hyundai bought two -- as well as a public miscue that made it appear that Hyundai was pulling its ads, only to recommit a few days later, Hyundai's approach to the big game strikes an odd note at a crucial moment for the company.

The stakes couldn't be higher for the South Korean automaker, which is trying to push an upscale image in advance of the June launch of the Genesis. For years, the company has prospered at the bargain end of the car-selling spectrum, but it is facing a slumping market for cars in general and a looming threat from Chinese automakers eager to break into the area.

"This is extremely important for Hyundai," said George Peterson, president of industry consultant AutoPacific. "They have to move their product up in public perception. The question is: Can they position themselves as a luxury brand?"

If they can't, he says, the cost could be much greater than $5.4 million in airtime.
Last year, Hyundai sold 467,009 cars and sport utility vehicles in the U.S., according to AutoData, a record but well short of its target of 512,000. For 2008, the company expects to sell 500,000 vehicles, a tall order in an overall U.S. market expected to shrink, by Hyundai's expectations, by 4%. Last month, it sold 21,452 vehicles, down 22.6% from a year earlier.

The Genesis, though not expected to be a big seller at first, is a significant part of Hyundai's growth strategy. Since entering the U.S. in 1986, Hyundai has focused on cars priced below $20,000. Last year Hyundai had difficulty meeting dealer demand for its low-cost Accents and Elantras, but the carmaker had a surplus of Sonatas, which top out at $25,000, and it sold many into rental fleets.

The Genesis is a different animal. The company's first rear-wheel-drive vehicle, and its first with a V8 engine under the hood, the Genesis is a 375-horsepower machine packed with the kinds of features typically associated with BMW 5-series or Mercedes E class sedans. At a price that could surpass $40,000 (Hyundai hasn't released final figures), it will be the Korean carmaker's most expensive vehicle ever.

If it succeeds, said Bernard Swiecki, industry analyst at the Center for Automotive Research, it will help Hyundai "round out and be a full-product-offering automaker." Not only would the high-margin Genesis boost profit, he said, but, with inexpensive Chinese cars expected in the U.S. in as little as three years, it would also help spread growth across a wide spectrum of buyers.

Thanks to a 10-year, 100,000-mile warranty, Hyundai has succeeded in getting the word out about its much-improved quality. But persuading drivers to choose it for a luxury car is a matter of brand perception. Enter the biggest ad spend in the world.

For a company trying something new, the Super Bowl can be a great venue, said Tim Calkins, professor of marketing at Northwestern University's Kellogg School of Management.