Hyundai Motor’s premium strategy in the U.S. has recently hit a snag.

In the first quarter this year, sales of the Equus sedan decreased 12.3 percent to 928 units from a year ago, while the best-selling Genesis also saw a 1.4 percent decline to sell 8,232.

Hyundai Motor Group chairman Chung Mong-koo immediately urged a prompt response to the lackluster performance, which came amid a booming U.S. luxury car market. 

“Premium car sales are crucial for Hyundai’s brand image. The weak sales of such vehicles could shake our entire image,” he was quoted as saying in a meeting with company executives.

The Korean carmaker has strived to shed its “cheap car” image for years. And its efforts have started to bear fruit in the U.S. and elsewhere.

Last year, Hyundai saw sales of its four luxury models ― Equus, Genesis, Genesis Coupe and Grandeur ― surge to 46,376 vehicles, making up a record 6.6 percent of its total car sales in the U.S.

The Genesis, which hit the market first in 2008, sold the most at 22,980 vehicles, followed by the Grandeur with 8,431 and the Equus with 3,972.

Their 9 percent retail market share in their premium segments was higher than the 5 percent overall average for Hyundai brand cars in the U.S., according to the company.

“Considering we are a latecomer to the premium market, we are satisfied with the growth pace. More importantly, we are considered on the shopping list of luxury consumers in the U.S.,” said a Hyundai official.

“In Middle East, the Genesis and Equus claim market shares of 11.3 percent and 4 percent in their respective segments. Our efforts for quality products lead to success globally.”

However, Hyundai is expected to face a bumpy road in continuing its climb in the luxury market as its Japanese and German rivals are upping their efforts in the U.S., where the luxury car market is booming.

While Hyundai saw a slight decrease in its premium sales in the first quarter, the Lexus LS sold 72 percent more cars from a year ago. The Audi A8 and the Mercedes-Benz S Class also posted 37.3 percent and 20.2 percent growth, respectively.

Toyota last month announced that it would build its Lexus luxury car for the first time in the U.S., while Nissan’s Infiniti plans to complete a new plant by 2017 to produce 100,000 vehicles per year.

German carmakers such as Mercedes-Benz and BMW have also announced plans to expand U.S. production.

Chung, the Hyundai chief, hinted last week that the company could build new factories, without elaborating further on the possible destination, purpose and timing.

Hyundai pins more hopes on the next-generation Genesis, which will make its global debut in the latter half of this year. A concept car, unveiled during the Detroit motor show in January, featured a rear-wheel layout and sportier and coupe-style design.

Its overseas sales and marketing teams have also started discussions to revamp their strategies in the U.S. market, especially against Japanese rivals that are benefiting from the cheaper yen.

“Having suffered from large-scale scandals such as the mileage overstatement and recalls, it’s a time for Hyundai to overhaul its operation there. Performance in the U.S. will greatly affect the carmaker’s future brand image,” said an industry source.

By Lee Ji-yoon (jylee@heraldcorp.com)