Hyundai Motor Co. (005380) unveiled a new luxury sedan in South Korea as the country’s largest automaker seeks to defend its most profitable market from Bayerische Motoren Werke AG (BMW) and Daimler AG’s Mercedes-Benz.

The carmaker introduced the new front-wheel drive premium sedan, codenamed AG, at the Busan International Motor Show today. Hyundai, which also showed a diesel version of the Grandeur sedan for the first time, plans to begin sales of the AG in the second half of the year, the Seoul-based company said.

The AG comes after deliveries in South Korea, where Hyundai got 44 percent of its revenue in 2013, fell for two consecutive years as BMW, Mercedes-Benz and Volkswagen AG’s Audi lured buyers with imports of fuel-efficient diesel models. Hyundai is counting on the new sedan to boost annual sales and help offset profit declines overseas amid a strengthening won.

“Our high-end customers seeking to move up from the Grandeur sedan started to turn to imported brands,” Kim Sang Dae, director at Hyundai Motor’s domestic marketing group, said in an interview. “The price gap between the Grandeur and the Genesis, which are priced at around 30 million won and 50 million won, respectively, seemed to play a part.”

The AG is Hyundai’s answer to the customers’ demand for a premium car above the Grandeur and the company is planning on pricing the new AG at around 40 million won, Kim said.

Korea accounted for 66 percent of the company’s global premium sedan sales in 2013, according to company figures.

Market Share

This year, sales of Hyundai’s revamped Genesis luxury sedan, which was introduced in November, jumped more than threefold in the quarter ended March. That helped Hyundai’s premium sedan deliveries rise 23 percent from a year earlier, according to data on the company’s website. It also helped sales rise for the first time in four quarters in South Korea, the data shows.

“By introducing a new premium sedan, the company will be able to offer a more refined line-up of models, which will help it secure its market share in South Korea,” said Shin Chung Kwan, an analyst at KB Investment & Securities Co.

Still, Hyundai’s 4.5 percent increase in sales volume in South Korea for the quarter trailed behind the company’s full-year target of 6.4 percent growth. By comparison, Mercedes-Benz’s sales jumped 45 percent and Audi’s surged 54 percent in the same period, according to the Korea Automobile Importers & Distributors Association.

Competition Overseas

For Hyundai, competition is getting tougher in overseas markets including China, where the carmaker ranks fourth in sales among foreign automakers. The company’s 8.8 percent growth in China last quarter lagged behind an industrywide expansion of 10 percent, data compiled by Bloomberg shows. Among the competition is Ford Motor Co. (F), whose China deliveries surged 45 percent in the first quarter.

Hyundai’s sales in the U.S., the company’s biggest market by volume after China, fell 2.6 percent in the quarter.

The strengthening won, trading near levels not seen since 2008, is draining profits. Hyundai’s net income last quarter fell 0.9 percent to 1.93 trillion won.

The Korea Automotive Research Institute, part of the Hyundai Motor Group, expects the won’s appreciation to accelerate in the second half of 2015, leading to the currency trading at around 900 won against the U.S. dollar, it said in a May 26 report.

In March, Hyundai unveiled a revamped Sonata, targeting sales this year of 63,000 vehicles in Korea and 165,000 overseas. The Sonata, Hyundai’s most important new model this year, made its U.S. appearance at the New York International Auto Show last month.