In March 2025, Genesis announced the launch of a localization plan for new energy vehicle models, becoming another imported luxury brand after Lexus to bet on localized production in China. This decision is both a confidence in the potential of China's new energy market and a desperate gamble for the brand's survival in China.
Genesis logo
The core logic of Genesis' localization is cost reduction and market adaptability. Its imported models are subject to 25% tariffs, 13% value-added tax and 10% consumption tax, and the terminal price competitiveness is weak. For example, the entry-level G80 is priced at 300,000 yuan, but the BMW 5 Series has approached this range through price cuts, and Genesis, which lacks brand premium, is difficult to compete. After localization, relying on Hyundai Group's idle factories in China (such as Beijing Hyundai's idle factories) and local supply chains, manufacturing costs are expected to be reduced by more than 30%. At the same time, new energy models can leverage China's mature battery and motor industry chain to reshape the price system. It is worth noting that Genesis has clearly limited localization to the new energy field, and fuel vehicles are still sold as imports. This strategy is both a bet on the growth rate of China's new energy market and a protection of the brand's tone, to prevent domestic fuel vehicles from lowering their "imported luxury" image.
For a long time, although Genesis's product strength has been evaluated by the industry as "performance and luxury are not inferior to BBA", its brand awareness on the C-end is still difficult to jump out of more than 10 stores across the country. Its logo is often mistaken for a "copycat Bentley". Its cumulative sales in China for four years are only 4,710 units. In 2024, its sales fell 24.8% year-on-year to 1,328 units, with a loss of up to 3 billion yuan. "Repairing the car requires crossing provinces, and waiting for parts for two weeks" has become a daily routine for Genesis owners. This experience is tantamount to cutting off one's own life in the Chinese luxury car market with "rolling service".
Even more severe is the market environment. Local brands such as Weilai and Huawei have seized the minds of high-end new energy vehicles, while traditional luxury brands have consolidated their market share by cutting prices. Genesis has to deal with the price cuts of BBA and catch up with new forces in terms of intelligence and user operations. Its dilemma of surviving in the cracks is obvious.
Opportunities do exist.
Zhu Jiang, a veteran professional manager in the Chinese auto industry, is regarded as a key variable in Genesis' transformation. This operator, who has helped BMW MINI and Lexus build their brands in China and led user operations at NIO, is promoting the "showroom +" asset-light model and plans to open a new store in Shenzhen by the end of March 2025, and use the existing after-sales network of Hyundai Group to alleviate service shortcomings. His proposal of "deepening the Chinese market with the attitude of a startup company" implies the importance of flexible decision-making and localized innovation.
At the industrial chain level, the global export potential of China's new energy supply chain may make Genesis' domestically produced models a springboard for its global electrification layout. For example, models such as the GV90 integrate Korean design and Chinese local R&D. If they can achieve differentiation in areas such as smart cockpits and autonomous driving, they may be able to replicate Tesla's path of "Made in China feeding the world."
The localization of Genesis is a typical "latecomer's breakthrough". Its predicament reflects the general anxiety of foreign luxury brands in the Chinese market. Like Lexus, it wants to maintain the aura of "high-end import" but has to compromise with localization.
On the other hand, Hyundai Group's global strength provides Genesis with confidence, but the particularity of the Chinese market requires it to break away from the "group mentality". After all, Yang Honghai, the last Kia China executive who always mentioned the "group", has left. If Genesis only regards localization as a cost optimization tool instead of truly integrating into the local innovation ecosystem, it may not be able to escape the fate of not being able to adapt to the local environment.
Genesis' localization is both a self-rescue measure and a gambling element.
Although Genesis did not set sales KPIs for its Chinese team when it announced its return to China with a drone show over the Huangpu River, times have changed. If it fails to achieve breakthroughs in brand recognition, product innovation and channel efficiency in the next three years, the prediction that it will withdraw from the Chinese market again may come true.
If Zhu Jiang's proposal can be implemented - reconstructing user value with an "entrepreneurial mentality", then this "only Korean luxury brand" may be able to open a crack in the new energy track. After all, in the Chinese auto market where disruption has become the norm, nothing is impossible.
