New Genesis Brand???

[Genesiswannabee]

I test drove a 4.6 Genesis with tech package today. I had the opportunity to speak to the owner about his plans for his dealership.

Owner of dealership indicated that he committed to the Equus showroom within a showroom concept even though he was spending $100,000 to remodel his showroom area for the Equus and Genesis and he expected to only sell 3 Equus the first year. His rationale was that he was told by regional HMA staff that Hyundai would be creating a Genesis brand within Hyundai within 1 1/2 years that would include the Equus, Genesis, Veracruz, the new BMW 3 equivalent, and one other model. These models under the new brand would only be available to those dealers that committed to Equus.

Do you believe this? Is this contrary to the halo effect that Hyundai has indicated?

He also indicated that he did not expect to see the 2011 model until mid next year.

 

[Mark_888]

It is possible that a new Genesis brand will be sold at the same location in selected existing Hyundai dealerships instead of completely separate dealer locations. They just need a separate showroom area, not a completely separate physical location. It is hard to justify completely separate dealerships in this economy. That will still provide a Halo effect to improve the Hyundai brand image. And at some point in the future, they may adopt a new strategy once the Hyundai brand is on par with Honda, Toyota, etc.

 

[MrB0462]

It is possible that a new Genesis brand will be sold at the same location in selected existing Hyundai dealerships instead of completely separate dealer locations. They just need a separate showroom area, not a completely separate physical location. It is hard to justify completely separate dealerships in this economy. That will still provide a Halo effect to improve the Hyundai brand image. And at some point in the future, they may adopt a new strategy once the Hyundai brand is on par with Honda, Toyota, etc.

Upscale buyers want a seperate facility. Whether it's snobbery or whatever selling a $60,000+ vehicle in the same building as a $ 20,000 is a turn-off. Also the upscale buyers will be provided more amenities. It's easier in a seperate facility just like Nissan and Toyota did with Infinity and LExus.

Look at the issues Chevy has with Corvette owners and Ford has with Ford GT (not a Mustang) owners. No real waiting rooms in most Chevy/Ford dealers, no white glove service, etc. I know this personally.

 

[Mark_888]

Upscale buyers want a seperate facility. Whether it's snobbery or whatever selling a $60,000+ vehicle in the same building as a $ 20,000 is a turn-off. Also the upscale buyers will be provided more amenities. It's easier in a seperate facility just like Nissan and Toyota did with Infinity and LExus.

Look at the issues Chevy has with Corvette owners and Ford has with Ford GT (not a Mustang) owners. No real waiting rooms in most Chevy/Ford dealers, no white glove service, etc. I know this personally.

What people want and what they are willing to pay for are two different things. There is a reason why the Genesis is $10K - $20K below equivalent cars. This is 2010 and the realities of the car business are much different now than when Acura, Lexus, and Infiniti created their luxury divisions (Acura was first). Dealerships are disappearing at a rapid pace.

Don't forget that the Equus comes with concierge service, so the customer does not even have to go to the dealer for service (they pick up and deliver the car for you).

I think the trend is going to be fewer dealerships, and more reliance on custom ordering, or just-in-time delivery, instead of dealers investing in large quantities of on-hand inventory.

 

[Hghwy52]

I test drove a 4.6 Genesis with tech package today. I had the opportunity to speak to the owner about his plans for his dealership.

Owner of dealership indicated that he committed to the Equus showroom within a showroom concept even though he was spending $100,000 to remodel his showroom area for the Equus and Genesis and he expected to only sell 3 Equus the first year. His rationale was that he was told by regional HMA staff that Hyundai would be creating a Genesis brand within Hyundai within 1 1/2 years that would include the Equus, Genesis, Veracruz, the new BMW 3 equivalent, and one other model. These models under the new brand would only be available to those dealers that committed to Equus.

Do you believe this? Is this contrary to the halo effect that Hyundai has indicated?

He also indicated that he did not expect to see the 2011 model until mid next year.

I heard pretty much the same thing at a dealership in CT. While my car was being serviced, a sales rep said that they would carry the Equus because it would be the only way they could continue to sell the Genesis. He also said it would cost $75,000 to upgrade the showroom and mentioned the other potential Genesis models as well.

 

[Genesiswannabee]

Hway52

Where in CT are you...I have not seen any Genesis in the Hartford area..

Which dealer told you this...I was test driving in Danbury...

 

[ilovemygenesis]

Hway52

Where in CT are you...I have not seen any Genesis in the Hartford area..

Which dealer told you this...I was test driving in Danbury...

I'm in CT as well, close to Danbury, i've only seen 1 since i've moved here from NY a year ago

 

[MrB0462]

Don't forget that the Equus comes with concierge service, so the customer does not even have to go to the dealer for service (they pick up and deliver the car for you).

I think the trend is going to be fewer dealerships, and more reliance on custom ordering, or just-in-time delivery, instead of dealers investing in large quantities of on-hand inventory.

It comes with concierge service for the very reasons I stated. Potential owners do not want to mix with buyers of significantly lower priced cars. It's a fact. That is why up-scale cars have more luxourious showrooms and amenities.

 

[Mark_888]

It comes with concierge service for the very reasons I stated. Potential owners do not want to mix with buyers of significantly lower priced cars. It's a fact. That is why up-scale cars have more luxourious showrooms and amenities.

It comes with concierge service because it is much cheaper to do that (along with spending about $100K for a separate showroom area) then to build a brand new separate dealership, which can cost from $5 million and up just to get started. They only expect to sell about 3 Equus models per year, per dealer. The average dealer probably sells about 4 Genesis sedans per month. The sum of those two (plus Genesis Coupe and a some new models) does not financially justify building a new dealership.

If separate dealerships were created, that would cause the price of Genesis and Equus to go up dramatically to cover the dedicated dealership costs. I don't think they would sell to too many if priced the same as the competition. After all, it is a Hyundai, regardless of whether it is sold under the Genesis brand.

Big expensive dealerships are passé. There are going to be different distribution models that will be tried as we progress into the 21st century. The Hyundai Circle (or whatever it is called) and the Costco deal are just one of these new distribution methods that are going to appeal to people who otherwise could not afford a car of this quality and luxury.

If you would like build a dealership that only sells the Genesis/Equus Line, you should contact HMA about that. You better have money to burn if you do it.

 

[Hghwy52]

Hway52

Where in CT are you...I have not seen any Genesis in the Hartford area..

Which dealer told you this...I was test driving in Danbury...

I live in the Farmington Valley area. I heard it at Torrington Hyundai. Don't know if it's true or not - could be Hyundai is saying something to get dealers to commit to the Equus and then later will change their minds about restricting sales of the Genesis, or the sales rep was misinformed - but I hope it's for real. Equus/Genesis sold only at select dealers and in a separate area is certainly a step in the right direction.

I've seen about 6 Genesis sedans and 2 or 3 coupes in the area since they came out.

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[Mark_888]

I live in the Farmington Valley area. I heard it at Torrington Hyundai. Don't know if it's true or not - could be Hyundai is saying something to get dealers to commit to the Equus and then later will change their minds about restricting sales of the Genesis, or the sales rep was misinformed - but I hope it's for real. Equus/Genesis sold only at select dealers and in a separate area is certainly a step in the right direction.

Right direction for whom? The fewer dealers there are who sell the Genesis, the less price negotiation there is going to be.

 

[Genesiswannabee]

Mark,

I am also in Farmington Valley. I am in Avon. Are you the only present owner of a Genesis in Farmington Valley? What color.

I heard this at Danbury Hyundai.

 

[MrPhantom]

Right direction for whom? The fewer dealers there are who sell the Genesis, the less price negotiation there is going to be.

But isn't this the point of selling the Genesis and the Equus. You are trying to bring the brand up. The separate showroom is used to distinguish the Genesis and the Equus. You don't want a big sign up on an accent that says $5000 off great deal, and have an Equus right next to it that says the same thing. Discounting hurts resale and will continue to leave the Hyundai brand below the competition. To bring up a brand you have to hold to sticker and then begin to offer aggressive lease offers which re-instills confidence in buyers that their $60,000 car will not be worth $20,000 in two years.

I like the idea, I thought Hyundai should have came out under a separate brand, but then the Sonata would not be in such high regards against the Camry and the Accord if the Genesis was not such a good car. It uplifts the whole brand.

 

[Mark_888]

But isn't this the point of selling the Genesis and the Equus. You are trying to bring the brand up. The separate showroom is used to distinguish the Genesis and the Equus. You don't want a big sign up on an accent that says $5000 off great deal, and have an Equus right next to it that says the same thing. Discounting hurts resale and will continue to leave the Hyundai brand below the competition. To bring up a brand you have to hold to sticker and then begin to offer aggressive lease offers which re-instills confidence in buyers that their $60,000 car will not be worth $20,000 in two years.

I like the idea, I thought Hyundai should have came out under a separate brand, but then the Sonata would not be in such high regards against the Camry and the Accord if the Genesis was not such a good car. It uplifts the whole brand.

Hmm. Are you associated with Hyundai in some way?

I think the separate showroom area (not sure if a completely separate showroom is required) is because it is cheaper than building new dealerships. If every Hyundai dealer had this, and every dealer sold Genesis/Equus, that would be ideal for consumers because there would be more competition and more upscale experience. But the basic problem is that Hyundai dealers are used to dealing with customers much less sophisticated than even Honda or Toyota customers, and it shows in their tactics and the kind of "stories" they try and get away with.

I would feel better about getting $5K off the price of a car up front, rather than worrying about if the car loses $5K resale value later. A bird in the hand is worth 2 in the bush. Resale value is based more on the reliability of the car rather than how much one pays for it, especially since a second owner is more likely to have problems with a car that already has some miles on it (and the 100K miles/10 year drive train warranty only applies to original owner).

 

[MrPhantom]

Hmm. Are you associated with Hyundai in some way?

I think the separate showroom area (not sure if a completely separate showroom is required) is because it is cheaper than building new dealerships. If every Hyundai dealer had this, and every dealer sold Genesis/Equus, that would be ideal for consumers because there would be more competition and more upscale experience. But the basic problem is that Hyundai dealers are used to dealing with customers much less sophisticated than even Honda or Toyota customers, and it shows in their tactics and the kind of "stories" they try and get away with.

I would feel better about getting $5K off the price of a car up front, rather than worrying about if the car loses $5K resale value later. A bird in the hand is worth 2 in the bush. Resale value is based more on the reliability of the car rather than how much one pays for it, especially since a second owner is more likely to have problems with a car that already has some miles on it (and the 100K miles/10 year drive train warranty only applies to original owner).

No I am not associated with Hyundai but I do love my Genesis and I keep track of my resale value very closely and the Genesis is already in the mid 20's for tradein value. Discounts on the front in along with the lack of brand identify is the reason resell it hurt. I believe that the separate showroom along, whether it is for money or for snobbish effect, does a lot towards recognizing brand identity. Leases pay for depreciation and fees, by leasing your are showing how fast you expect your vehicle to lose value. Aggresive lease offers shows more confidence in the vehicle resale and thus better value.

Resale isn't about the second owner to me, it's about to ability to sell my care in three years and get a newer model of it and not be completely overwhelmed with the negative equity that has occured over that time.

 

[YEH]

His rationale was that he was told by regional HMA staff that Hyundai would be creating a Genesis brand within Hyundai within 1 1/2 years that would include the Equus, Genesis, Veracruz, the new BMW 3 equivalent, and one other model. These models under the new brand would only be available to those dealers that committed to Equus.

Do you believe this? Is this contrary to the halo effect that Hyundai has indicated?

Seems in line w/ Hyundai's current plans (could always change tho, depending on the economic environment) to launch a premium brand/dealer network to coincide w/ the debut of the 2G Genesis (the 3 Series fighter will probably launch around the same time).

1.5 yrs seems a bit early - more likely in 2-3 yrs.

No I am not associated with Hyundai but I do love my Genesis and I keep track of my resale value very closely and the Genesis is already in the mid 20's for tradein value.

Resale value (according to KBB) on the Genesis (sedan) is higher than for the Infiniti M (also higher than pretty much every domestic luxury sedan) and just a bit lower than the GS.

 

[Mark_888]

No I am not associated with Hyundai but I do love my Genesis and I keep track of my resale value very closely and the Genesis is already in the mid 20's for tradein value. Discounts on the front in along with the lack of brand identify is the reason resell it hurt. I believe that the separate showroom along, whether it is for money or for snobbish effect, does a lot towards recognizing brand identity. Leases pay for depreciation and fees, by leasing your are showing how fast you expect your vehicle to lose value. Aggresive lease offers shows more confidence in the vehicle resale and thus better value.

Resale isn't about the second owner to me, it's about to ability to sell my care in three years and get a newer model of it and not be completely overwhelmed with the negative equity that has occured over that time.

I still don't get why it is better to spend $5K more up front, just so the resale value is $5K higher on the back end.