At least in the States, the 528i starts with "leatherette;" real leather is an extra-cost option. Same with the E-Class and "MB-Tex;" real leather is an extra-cost option. Acura puts fake wood even in their flagship RL, and there's no option for real wood.
Also, you said earlier that Lexus, Acura, etc were luxury brands from the beginning. Ask people what 1980s Acura they think of first and most will say "Integra." Was there ANYTHING luxurious about the Integra?
But the best example of a brand changing segments is Volkswagen. In the 1940s and for a couple decades afterward, it was Germany's Kia. Nowadays, even though the Phaeton failed, have you priced a Passat VR6 4Motion, or a Tuareg? Have you looked inside either of them? These are luxury vehicles, even if VW isn't a luxury brand and even if there's nothing "luxurious" about the New Beetle and Golf 2.5. Hyundai is just trying to do what VW has successfully done.
In Canada, 2011 528i comes standard with leather. So does the A6 and the GS.
So are BMW and Merc luxury brands in Canada but not in the United States?
The thing is, at least the leather is available on every trim where there is no option to replace the plastic wood and silver trim with the real stuff in Genesis in any trim. Sure, there is a leather (BTW: is that syntetic leather or genuine leather?) dash option on higher Genesis trims, but the big silver plastic pieces are still there even at 50K.
What about the Acura RL I mentioned then? No real wood option there either. Is that not a luxury car?
(BTW: is that syntetic leather or genuine leather?)
The leather on the dash is real.
VW has been for years a "premium" brand so their flagship models are rather luxurious indeed. Still, I don't hear anyone calling the Passat and Touareg luxury vehicles although IMO they are more luxurious than the Genesis.
A premium brand for years? First, even if they're a "premium brand," not just a brand with some premium models, they still haven't ALWAYS been that way. There was a point when they first crossed that boundary. Hyundai is approaching that point now.
Second, I can't comment about Canada, but the MkVI Golf starts at US$17,620 and the MkV Jetta starts at US$17,735. That's firmly in Corolla/Civic/Mazda3 pricing territory. The GTI's base price matches that of the Civic Si. Volkswagen has some models that are "premium" or "luxury," but it also offers plenty of mass-market choices.
Finally, as for "I don't hear anyone calling the Passat and Tuareg luxury vehicles," when you try to build a VW CC on the VW US webpage, the loading screen says "The People want German luxury sedans without the German luxury price tag." And the press release for the new 2011 Tuareg says: "In the front-end styling of the Volkswagen Touareg, designers implemented the new Volkswagen face for the first time in a luxury class vehicle."
All in all, it seems VERY analogous to the Genesis for me. It's a premium vehicle being offered up as a "luxury" competitor to steal sales from the well-establshed luxury brands, being offered by a non-luxury automaker who started out selling bargain-basement cars but now sells respectable, well-made mass-market cars.