By HANS GREIMEL, AUTOMOTIVE NEWS on 4/01/2011

Hyundai Motor Co. has ruled out spinning off the Genesis or Equus nameplates to create an independent premium brand along the lines of Lexus or Infiniti, partly because of the enormous cost involved and possible image damage to sibling nameplates.

"There are no plans for Hyundai to make a separate brand," Vice Chairman Shin Jong-Woon said in an interview Friday at the carmaker's headquarters in Seoul, South Korea.

Shin didn't elaborate on Hyundai's decision to keep the top-tier Genesis and Equus nameplates in the Hyundai family. But his comments counter speculation in recent months that South Korea's biggest automaker would follow Japanese rivals in creating an upscale line.

Hyundai considered such a move but ultimately decided against it, spokesman Frank Ahrens said. Executives worried it would cost too much and undermine the image of other models at a time when Hyundai is trying to position the entire lineup as "modern premium."

"It's expensive. Dealerships, marketing, all those things. You don't just spin it off at no cost," Ahrens said.

"Secondly, you've heard us talk a great deal about trying to raise the brand perception. And that's perception for all the vehicles. So how would it help the brands if we were to cut off our top level? We are hoping they will help lift the whole brand."

Hyundai has made rapid advances in quality in recent years. But executives say there is a big gap between their vehicles' actual and perceived quality. Lifting the perception is a top priority.

A more realistic--and cost-effective--alternative to building a new brand would be simply fleshing out Hyundai's upper range with additional models and variants, Ahrens said.

Shin declined to say whether Hyundai might resurrect the idea of a new brand in the future.

Carving out luxury lines from existing brands has met mixed success.

Toyota Motor Corp. scored big by rolling out the Lexus brand in 1989. It is now the best-selling premium brand in the United States, outpacing both Mercedes and BMW. But Honda's Acura brand, the first of the Japanese spinoffs in the United States, has had trouble gaining traction.

Sales of the Korea-built Genesis were up 23 percent to 4,224 units in the year through February. The Equus, Hyundai's highest priced entry, was launched last fall in the United States.

It sold 487 units in the first two months.

"Toyota Motor Corp. scored big by rolling out the Lexus brand in 1989. It is now the best-selling premium brand in the United States, outpacing both Mercedes and BMW. But Honda's Acura brand, the first of the Japanese spinoffs in the United States, has had trouble gaining traction."