By Tom Ziegler
January 18, 2011

The year just ended was a sensational one for Hyundai, and the Korean automaker begins 2011 by introducing a sensational car.

Hyundai exceeded 500,000 unit sales in the U.S. in 2010 and established itself among the industry’s top seven sellers.

Equally important for the long-term future of the brand, it created, right out of the box, a premium luxury car in the Equus that is the equal of the Mercedes S-class and Lexus LS 600 in everything except profile and price. The former will grow in time; careful shoppers who don’t believe that luxury pleasure comes with price-tag pain should hope the latter never grows.

In the events surrounding its creation, the Equus has been widely compared with the Lexus and the Volkswagen Phaeton and appropriately so. They are the last two cars to make a try at cracking the premium pantheon of Mercedes, BMW, and Audi.

Lexus succeeded in joining the Germanic club despite the evident discomfort of its incumbent members, who continue to disparage the brand to this day. “Did you know that the best-selling Lexus model is an SUV?” one CEO whispered to me over lunch the other day.

Lexus demonstrated some dramatic competitive advantages when it was introduced in 1989. It was quiet and highly reliable, and fussed over by some of the best dealers in the business. And it was priced at the very appealing, if artificial, level of $35,000 — a bargain even back then.

The Phaeton, on the other hand, was a failure. It was built on the shaky base of Volkswagen’s declining fortunes, dodgy quality, and even dodgier dealer network. Class-leading features were hard to identify. What the Phaeton resembled more than anything was a watered-down version of the Audi A8, on which it was based.

That made it difficult to justify the $75,000 price, which was expensive even back then. VW pulled Phaeton from the U.S. market in 2006 after four underperforming years.

Now comes Equus. Hyundai is being appropriately modest about the car. It will only be bringing a few thousand in from Korea annually and hasn’t created a second luxury channel to bestow upon it some ersatz exclusivity.

But in classic passive-aggressive Hyundai fashion, it has posted a chart on its website comparing the Equus with the Lexus and the Mercedes S550.

The chart contains a couple of surprises. The Mercedes is the longest of the trio by a couple of inches; the Lexus is the lightest; the Equus is the widest and highest. All three have engines that put out about 380 horsepower; the Lexus has an eight-speed transmission, the Mercedes seven, and the Equus six.

When it comes to features, Hyundai has check-marked the ones it considers exclusive, like second row side airbag, exterior mirrors with turn signals, and windshield wiper deicer.

The punch line is the price. Hyundai has made its name by offering superior value, and the Equus is no exception. While the similarly-equipped Mercedes checks in at $93,875 and the Lexus at $70,205, the Equus can be had for $65,400.

Is the Equus worth it? In a word, yes. There is nothing particularly distinguished about it, but it refines everything to a high degree. To my eye, it is closer to today’s Lexus than the 1990 Lexus was to the Mercedes of that era.

Standouts include the instrument panel graphics and easy-to-use navigation system. The powertrain delivers seamless torque, and if performance suffers by the absence of two gears, it isn’t evident.

Some reviewers have complained about excessive isolation in the passenger side and the absence of road feel for the driver. But with the suspension adjusted to “sport” I felt as much of the road as I wanted to.

In sum, the Hyundai is a complete premium luxury car at a bargain price. I wouldn’t be surprised to see a new ethos develop among customers who ignore the status conveyed by hood ornament in favor of value.

When the Lexus arrived, an import car executive confidently told me that as good as it was, Toyota would never be able to build a Jaguar. Only Jaguar could do that.

Hyundai will never be able to build a Lexus or a Mercedes. But it has built an awfully good Hyundai. In a couple of years, that may be enough to raise it to the reputational level of the German trio.

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