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Hyundai Motor Co.'s new premium sports sedan, the Genesis, has drawn hot reaction from South Korean consumers in the first three months of its launch. But what about Canadians and Americans, many of whom remember well the days when Hyundai was apparently the Korean word for "Yugo?"

We'll find out, starting this summer.

As Hyundai officials noted at last month's New York auto show, the Genesis is central to Hyundai's efforts at attracting performance-oriented buyers and in doing so take this historically inexpensive, entry-level brand to a place it's never been before — upscale.

Hyundai used New York to unveil the 2010 Genesis Coupe, which is planned to hit showrooms in January. This car is all about performance. In New York, Hyundai unveiled the car wreathed in smoke from burning rubber, as professional drivers spun "doughnuts" in a closed-off area of New York's Jacob K. Javits Convention Center. Quite the performance.

Earlier this year, in January, Hyundai showed the Genesis sedan at the Detroit auto show, pitching it with an optional V-8 as a $30,000-range competitor to more prestigious and expensive luxury brands such as BMW. The V-8 Genesis sedan, along with a less expensive V-6 model, will go on sale in Canada this summer.

The coupe will be sold with a choice of a 306-horsepower, 3.8-litre V-6 or a 212-hp turbocharged four-cylinder engine.

John Krafcik, Hyundai Motor America vice-president of product development and strategic planning, called the V-6 Genesis Coupe "the most affordable, 300-plus-horsepower sports coupe on the planet."

How affordable, exactly? Krafcik wouldn't talk pricing, and neither will Hyundai Canada marketing vice-president John Vernile. Our bet is that it'll be in the high-$30,000s — to undercut vehicles such as the Infiniti G37 and the new Audi A5.

The Genesis project is a bold move for an auto maker now celebrating 25 years in Canada. The first Hyundai model, the sub-$5,000 Pony, was a bare-bones runabout that took a recession-weary Canada by storm in the mid-1980s. In its first year on sale, Hyundai Canada sold about 25,000 Ponys.

Within a few years, though, Hyundai had gone into a ditch. Sales plummeted despite ambitious product plans designed to fuel expansion. The low point was perfectly symbolized by the Hyundai Stellar, a truly disastrous model famous for rusting and breaking.

Hyundai spent much of the 1990s retrenching and rebuilding, but still struggled in the late 1990s in the wake of the Asian economic meltdown. Only in this decade has Hyundai hit its stride.

By combining with Kia and focusing on quality and manufacturing efficiencies as its product lineup expanded, Hyundai has done the near impossible — become solidly profitable while buffing up a reputation for reliability that is now backed up by solid, above-average scores in studies by Consumer Reports magazine and J.D. Power and Associates.

Today, Hyundai and Kia form the Hyundai-Kia Automotive Group, the world's sixth-largest auto maker. It has ambitions to crack the top five by 2010.

Genesis is part of the plan and a huge step for the group, one fraught with risk and the possibility of failure. Making things even more interesting, the launch comes after a difficult period during which Hyundai dealt with a series of costly labour strikes and saw its chairman, Chung Mong-koo, convicted and sentenced to three years in prison over a slush fund scandal. An appeals court judge suspended the sentence last year, saying Chung was simply too important to South Korea's economy to do time in jail.

As for Genesis, the original plan was to launch a new luxury brand, but that was wisely scrapped because of the enormous marketing expense. Instead, Hyundai dealers will create special areas to showcase Genesis at their stores.

The idea is to use Genesis to upgrade Hyundai's image. This follows on last year's launch of the Veracruz, which fully dressed out in all-wheel-drive mode lists for $46,295.

"I had dealers who said to me, 'How am I going to sell a $40,000 Hyundai?'" says Vernile. "Well, you know what? Our best-selling (Veracruz) model is the Limited; it's 70 per cent of our volume. We can sell a $40,000 Hyundai."

One way to sell pricey Hyundais is to invite comparisons to German auto makers, even if they are somewhat specious. In December, Hyundai brought reporters (but not this one) to a test track in South Korea to drive the Genesis back-to-back against the Mercedes E350 and the BMW 530i. South Korean TV commercials show a Genesis smashing head-on into an Audi in a testing centre.

"Genesis symbolizes our determination to enter the highly competitive arena of luxury cars now dominated by the Europeans," Hyundai chairman Chung said in a statement at the car's launch in South Korea. "Genesis will pave the way forward for our leap into the global market."

Bold words, but Hyundai officials in North America are somewhat more realistic, suggesting that the real targets for the Genesis are Japanese and Detroit-based mid-range luxury cars such as the Chrysler 300, the Lexus ES350, the Acura TL and TSX and the Cadillac CTS. These comparisons make more sense, but are still a stretch for Hyundai.

In a nutshell, Genesis is a gamble. The Hyundai brand in Canada and the United States is still generally seen as all about the deal first and foremost; the product itself comes next, despite solid results in the various quality studies.

Hyundai Canada, for instance, just launched a national promotion touting a $9,995 version of its Accent subcompact and just weeks ago at the Vancouver auto show, Vernile announced price reductions on the face-lifted 2009 Sonata mid-size car. Now the four-cylinder Sonata GL starts at $21,995 with a manual transmission and the GL V-6 starts at $27,795.

The marketplace understands that Hyundai is still about the deal and responds accordingly. In Canada, February and March sales set records, with increases of 7.6 per cent and 6.5 respectively in an otherwise flat market.

The Genesis, though, must be more than a good buy, though the marketing will surely emphasize the value story. Hyundai spent between $500-million and $600-million (U.S.) over four years developing the Genesis and sees the new model as a way to create a more sophisticated presence in the market, one that commands higher pricing.

Nonetheless, Vernile and others at Hyundai, as well as many dealers, concede that it is a stretch to have $40,000-plus upscale models and $10,000 grocery-getters in the same showroom. Eventually, Hyundai will need to launch a separate upscale brand if it wants to expand any further up-market.

That is not beyond the realm of possibility. Hyundai has been thinking about a luxury car since the first Lexus LS 400 reached American shores almost 20 years ago. A decade ago, Hyundai had initial plans in place to develop a luxury V-8, but the 1997-98 Asian financial crisis hit South Korea hard and those plans were shelved.

Internally, Hyundai thinks it produces vehicles just as good as the Japanese and there is frustration over the fact its models sell at a 20-per-cent discount to top-tier Japanese and European models.

That may remain the case for some time.

Branding experts suggest that it takes years and years, even decades, to change a brand's perception. Sometimes it never happens at all, no matter how good the product. In other words, cheap and cheerful may always be cheap and cheerful.

Other factors further complicate Hyundai's plans for the Genesis. For one, the sedan and coupe are entering a crowded field where quality is a given. For another, image matters much more to both buyers and sellers of upscale products.

Hyundai make be able to make a rational case that its new rear-wheel-drive vehicle is a match for the best vehicles from around the world. But that may not be enough for image-conscious buyers — buyers who opt for a brand-name product even when less expensive but anonymous ones are as good or better.