Elite-level Hyundai dealers get 1st crack at Genesis stores

[YEH]

http://www.autonews.com/article/201...5/hyundai-outlines-process-genesis-separation

January 26, 2018
Vince Bond Jr.

Hyundai plans to give some of its 350 elite-level dealers the first chance to apply for stand-alone Genesis franchises and is preparing compensation packages for dealers that have carried Genesis products but are being cut off from the luxury brand.

The compensation packages are intended to take care of those Hyundai dealers who invested in inventory, training and equipment to service the products and helped put the brand on the map, said Erwin Raphael, Genesis general manager.

Raphael said the stand-alone Genesis network would have around 100 stores in 48 markets across the U.S. The locations include Chicago, Los Angeles, New York, Miami, Washington, D.C., and San Francisco. Thirty of the markets will have just a single point.

This greatly reduced point of sales network will have an impact on sales.

Raphael expects to begin announcing the franchise recipients in the next few months. Dealers who are awarded franchises will have to build their facilities by the end of 2020. They must be operational on Jan. 1, 2021.

Some stores, he said, will be prepared to open this year.

Only the new dealerships will get the 2019 model year products, which are expected to include the G70 sport sedan. Raphael said 2019 models will be serviced exclusively by those stores.

As expected, only the new Genesis franchises will be getting the G70 (which means G70 sales will be severely impacted until the majority of Genesis dealerships are up and running).

 

[Mark_888]

January 26, 2018
Vince Bond Jr.

Hyundai plans to give some of its 350 elite-level dealers the first chance to apply for stand-alone Genesis franchises and is preparing compensation packages for dealers that have carried Genesis products but are being cut off from the luxury brand.

The compensation packages are intended to take care of those Hyundai dealers who invested in inventory, training and equipment to service the products and helped put the brand on the map, said Erwin Raphael, Genesis general manager.

They are probably getting a few coffee mugs and ball point pens.

 

[PMCErnie]

This is really going to peace off current G80, or G90, owners who suddenly have to deal with a far away dealer for their service. For example, my current dealer is 5 minutes from home. Will the new dealer require a drive 50 miles, or more? Thanks, Genesis.

 

[EdP]

This is really going to peace off current G80, or G90, owners who suddenly have to deal with a far away dealer for their service. For example, my current dealer is 5 minutes from home. Will the new dealer require a drive 50 miles, or more? Thanks, Genesis.

But you don't own a Genesis brand, you have a Hyundai Genesis so it may still be your original dealer. We'll see. If you get a new one, concierge service makes the drive for you.

- - - Updated - - -

This greatly reduced point of sales network will have an impact on sales.
As expected, only the new Genesis franchises will be getting the G70 (which means G70 sales will be severely impacted until the majority of Genesis dealerships are up and running).

Remains to be seen. There have been posts here that indicate some Genesis owners don't like the idea of sharing space with owners of Elantras. It will give the brand a bit more exclusivity and if you are thinking of trading your BMW you won't be seen walking into a Hyundai dealership. There are good points on both side but it will take a couple of years to see how it works out. How many Lexus sales have been lost because Toyota dealers don't sell them?

 

[PMCErnie]

But you don't own a Genesis brand, you have a Hyundai Genesis so it may still be your original dealer. We'll see. If you get a new one, concierge service makes the drive for you.

- - - Updated - - -

I can see that you have severe problems with hypothetical thinking. It seems you are more interested in chastising me for owning a Hyundai Genesis.

My remarks were clearly directed at current G80/G90 owners like you who will surely be upset if they suddenly have to deal with a service location that is perhaps 50 + miles from home. Also, many car owners don't care for the idea of having somebody else driving their precious car. Further, there are limitations on the concierge service. It does expire. Correct?

Returning to the premise of my initial remarks, there will be no joy in Mudville if Genesis implements this plan.

 

[EdP]

I can see that you have severe problems with hypothetical thinking. It seems you are more interested in chastising me for owning a Hyundai Genesis.

My remarks were clearly directed at current G80/G90 owners like you who will surely be upset if they suddenly have to deal with a service location that is perhaps 50 + miles from home. Also, many car owners don't care for the idea of having somebody else driving their precious car. Further, there are limitations on the concierge service. It does expire. Correct?

Returning to the premise of my initial remarks, there will be no joy in Mudville if Genesis implements this plan.

I did not chastise anyone for what they drive but if you want criticize my lack of hypothetical thinking go right ahead, make ad hominen comments. Don't know if my dealer will be a Genesis dealer but he is 50 miles away so I can deal with it. The free concierge service does expire in three years but my guess is they independently will offer some sort of service later. Some other dealers do it already.

 

[GarnetTy1473]

All dealers, whether they will be Genesis or not, are grandfathered in to service those vehicle that they sold previously. So, if you bought your G80 or G90 from a dealer that will no longer be able to sell them, you can still get it serviced there. But all Genesis sales from here on out will only be able to be serviced from Genesis dealers. At least that's what I've been told. But, those dealers will not have any Genesis loaners to give out, that's the only problem I see.

 

[YEH]

^ This.

Anyone with a G80 or G90 will still be able to service their vehicles at the dealership from which they purchased (or basically any Hyundai dealership for the G80 and any of the 350 or so dealerships that currently sells the G90).

Remains to be seen. There have been posts here that indicate some Genesis owners don't like the idea of sharing space with owners of Elantras. It will give the brand a bit more exclusivity and if you are thinking of trading your BMW you won't be seen walking into a Hyundai dealership. There are good points on both side but it will take a couple of years to see how it works out. How many Lexus sales have been lost because Toyota dealers don't sell them?

Sure, but as I have stated, much of that concern is mitigated by the higher prices (already seen G80 sales drop some compared to what the 1G Genesis was selling) and reducing the # of dealerships will have an impact.

Going from around 900 or so Hyundai dealerships to less than 100 will undoubtedly impact G80 sales.

And at the start, we're probably talking about 10, 15 or maybe 30 Genesis dealerships up and running - so wouldn't be surprised if we saw a major drop in G80 sales at the start (just like what we are seeing in Canada).

Even if these are in the largest markets for Genesis, such a dwindling of point-of-sale/service locations will reduce sales (esp. at the start).

As for Lexus, they have around 240 dealerships - that 2.5x more than what Genesis had planned.

In the smaller cities, Genesis is planning for just 1 dealership, so a person living at the opposite end may decide to cut Genesis from the options just on the basis of distance.

Now, don't disagree that going with a separate brand and dealer network is the way to go, but at the same time, there will likely be significant growing pains.

 

[EdP]

Sure, but as I have stated, much of that concern is mitigated by the higher prices (already seen G80 sales drop some compared to what the 1G Genesis was selling) and reducing the # of dealerships will have an impact.

Going from around 900 or so Hyundai dealerships to less than 100 will undoubtedly impact G80 sales.

As for Lexus, they have around 240 dealerships - that 2.5x more than what Genesis had planned.

Now, don't disagree that going with a separate brand and dealer network is the way to go, but at the same time, there will likely be significant growing pains.

I wonder how many Lexis dealerships there were when first launched. Right now I don't think sales can support 245 dealerships. Once the G70 and an SUV is in the lineup the potential will increase. While the announcement will be made soon, it will be some time before the stand alones are up and running. They may make the announcement soon, but I doubt they will cut the Hyundai dealers out the next day. Overlap may be a long time, depending on region. We can speculate, but I'm sure Hyundai has a master plan and the finances to support it.

 

[PMCErnie]

It would seem that Genesis Motors has been playing a shell game in recent years, particularly with G80 and G90 buyers. "Now you see a dealership, now you don't. Oh, yeah, sorry about no concierge pickup, or Genesis loaner."

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[EdP]

It would seem that Genesis Motors has been playing a shell game in recent years, particularly with G80 and G90 buyers. "Now you see a dealership, now you don't. Oh, yeah, sorry about no concierge pickup, or Genesis loaner."

So far, better than what GM. Ford, Chrysler did a few years back. Probably hard to find a dealer for service on your Plymouth or Pontiac too. Our small town area lost Buick/Pontiac and Ford dealers, The Olds/Caddy dealer of course lost the Olds, the Chrysler dealer lost the Plymouth. The Buick dealer though, did offer limited concierge service and the Chevy dealer will give you a ride to work and pick you up.

 

[YEH]

I wonder how many Lexis dealerships there were when first launched. Right now I don't think sales can support 245 dealerships. Once the G70 and an SUV is in the lineup the potential will increase. While the announcement will be made soon, it will be some time before the stand alones are up and running. They may make the announcement soon, but I doubt they will cut the Hyundai dealers out the next day. Overlap may be a long time, depending on region. We can speculate, but I'm sure Hyundai has a master plan and the finances to support it.

Not necessarily disagreeing w/ the strategy (either here or in Canada), but such a drastic reduction in dealerships where the G80 will be offered will have a material impact on G80 sales for a couple of years (as the Canadian market has already been showing).

Been hearing that some dealerships (that get awarded a Genesis franchise) within a locale may share certain temporary facilities as the new standalone dealerships go up.

Of course, sales right now can't support 245 dealerships; heck, can't support the 90-95 planned dealerships until the launch of a few more models, esp. the CUVs.

However, once Genesis gets its full basic lineup out and running for a few years, think they can support something like 120-125 dealerships.

By then, their sales should be approaching to akin to what Acura did last year and Acura has around 250 dealerships.

It would seem that Genesis Motors has been playing a shell game in recent years, particularly with G80 and G90 buyers. "Now you see a dealership, now you don't. Oh, yeah, sorry about no concierge pickup, or Genesis loaner."

There has been nothing to suggest that any current G80 or G90 owner wouldn't be able to continue servicing their vehicle at the same dealership as they are doing now or that they wouldn't continue to get loaners or any other amenities they currently are getting.

It's just that future G80 and G90 buyers (as well as G70, etc.) will only be able to purchase from the new Genesis dealerships and service their vehicles at those dealerships (tho, suppose for basic maintenance, can always go to a Hyundai dealership; just like how some FWD Lexus owners do oil changes and such at a Toyota dealership).

 

[PMCErnie]

It's a delusion to think that Hyundai dealers are going to provide the same level of services that stand-alone Genesis dealers will presumably be providing. For example, a 2018 G80 owner isn't going to be happy dealing with a (sign out front) Hyundai dealer in, say, '19, '20 and '21. They will be longing for the dream that was promised and not provided.

 

[Mark_888]

It's a delusion to think that Hyundai dealers are going to provide the same level of services that stand-alone Genesis dealers will presumably be providing. For example, a 2018 G80 owner isn't going to be happy dealing with a (sign out front) Hyundai dealer in, say, '19, '20 and '21. They will be longing for the dream that was promised and not provided.

The question is whether potential customers are going to be happy to pay more for a Genesis at a dedicated Genesis dealer than at a Hyundai dealer. I think it is inevitable that fewer discounts are going to be available for Genesis Motors vehicles for the following reasons:

1. Dedicated Genesis dealers will not have the same total sales volume as a Hyundai dealer, and there will be less economy of scale in running the dealership.

2. Dedicated Genesis dealers will have to pay their employees more to improve the level of service, meaning they will have to charge more.

3. Due to only having about 100 Genesis dealers in foreseeable future (after they split off from existing Hyundai dealerships), there will be less competition between dealers, and in most cases almost no competition in a given market.

 

[EdP]

The question is whether potential customers are going to be happy to pay more for a Genesis at a dedicated Genesis dealer than at a Hyundai dealer. I think it is inevitable that fewer discounts are going to be available for Genesis Motors vehicles for the following reasons:

1. Dedicated Genesis dealers will not have the same total sales volume as a Hyundai dealer, and there will be less economy of scale in running the dealership.

Correct.
I think that is part of the master plan. Genesis has a nice price competitive edge over the competition. Once the brand is well established I think the edge will shrink. I don't know how long, but probably in the 5 to 10 year range, subtle increases.

 

[Mark_888]

Correct.
I think that is part of the master plan. Genesis has a nice price competitive edge over the competition. Once the brand is well established I think the edge will shrink. I don't know how long, but probably in the 5 to 10 year range, subtle increases.

I suspect that the price difference will be made by dealers, with dedicated Genesis dealers doing less discounting from MSRP than Hyundai dealers are doing today. I don't think Genesis Motors USA will necessarily be raising prices (other than normal price increases). The dealers will not be able to discount from MSRP as much, because the cost of running a Genesis dealership will be higher, due to better employees, and less economy of scale of the dealership as a whole (fewer vehicles sold means more fixed overhead per vehicle).

Back in 1992 I looked at Toyota Camry V6 XLE vs a Lexus ES300. Back then there was little difference between the two, and drivetrains were identical. But I decided that the approximately $4,000 MSRP premium for the Lexus was worth it, for leather seats, better soundproofing, better stereo, etc. But when I priced them at multiple Toyota and Lexus dealers, the real difference was closer to $6,000 because the Lexus dealers were not giving much off MSRP, unlike Toyota dealers did. So I bought the Camry.

 

[PMCErnie]

It's a delusion to think that Hyundai dealers are going to provide the same level of services that stand-alone Genesis dealers will presumably be providing. For example, a 2018 G80 owner isn't going to be happy dealing with a (sign out front) Hyundai dealer in, say, '19, '20 and '21. They will be longing for the dream that was promised and not provided.

I rest my case. With concierge service like this, who is going to risk buying a new Genesis from a (sign outside) Hyundai dealer.

https://genesisowners.com/hyundai-genesis-forum/showthread.php?22263-G80-Sport-Problems

 

[YEH]

Follow-up to the article.

Elite Hyundai dealers ready to vie for Genesis

February 5, 2018
Vince Bond Jr.

Genesis is prepared to compensate Hyundai dealers who will be left out of its limited network of stand-alone stores.

But some dealers don't want the compensation. They want Genesis.

And they're eager to try their luck at snagging one of the 100 franchises up for grabs in 48 markets across the U.S.

Keyes Hyundai in Van Nuys, Calif., is one of those dealerships. Based on a Genesis webcast that detailed compensation terms, the dealership estimates it could get a reimbursement package worth around $5 million if ownership decided to get out of the Genesis business.

But Keyes is one of the 350 elite-level Hyundai stores that were eligible to sell the Genesis G80 and G90 under the Genesis Participation Agreement. And it's in Los Angeles, one of the key markets Genesis has targeted for its new stores.

That means it's among the dealerships that get the first chance to apply for the stand-alone locations.

Keyes leaders believe that in the right environment, the upstart luxury brand has profit potential, so General Manager Brian Sobel says they'll make a push to win one of the franchises.

The odds would appear to be in Keyes' favor: It was the No. 2 Genesis retailer in the western region in 2017, selling 101 G80s and 39 G90s, it says.

Far more Hyundai dealers will lose the right to sell Genesis products than keep it under the process Hyundai Motor America and Genesis brand officials rolled out Jan. 26. Genesis said its stand-alone dealership network would have around 100 stores in places such as Chicago, Los Angeles, New York, Miami, Washington, D.C., and San Francisco. Thirty of the markets will have just a single point.

Nearly 500 other Hyundai stores carrying just the G80 alongside their Hyundai-branded products will be phased out of the Genesis network. (The G80 was formerly sold as the Hyundai Genesis.)

Only those dealers awarded the franchise will get 2019 model year products, which are expected to include the G70 sport sedan. Raphael said 2019 models will be serviced exclusively by those stores.

http://www.autonews.com/article/201...lite-hyundai-dealers-ready-to-vie-for-genesis


Seems like the larger Hyundai (and Genesis) dealerships think that it's a good business investment ($4-5 mil+) to invest in Genesis rather than partake in what seems to be a pretty healthy compensation package (esp. for the larger volume dealerships).

 

[Mcc]

Follow-up to the article.


http://www.autonews.com/article/201...lite-hyundai-dealers-ready-to-vie-for-genesis


Seems like the larger Hyundai (and Genesis) dealerships think that it's a good business investment ($4-5 mil+) to invest in Genesis rather than partake in what seems to be a pretty healthy compensation package (esp. for the larger volume dealerships).

I am in LA and Keyes is the dealer that provided an outstanding experience when I bought my G90 and did great with my first valet service. They are about 15 miles away (but in LA that can be more than 40 min!). There actually is a dealer only 5 miles away but I didn’t think they showed enough Genesis knowledge and general ability to work with me for me to buy there. Interestingly the closer dealer is a stand alone Genesis dealer while Keyes also does Hyundai.

I certainly hope Keyes gets the Genesis franchise but we will see. It’s going to be tough with a stand-alone dealer within 10 miles of them. That’s the LA market.

 

[lt2211]

Correct.
I think that is part of the master plan. Genesis has a nice price competitive edge over the competition. Once the brand is well established I think the edge will shrink. I don't know how long, but probably in the 5 to 10 year range, subtle increases.

I doubt it will take 5-10 years. I think we will see lower discounts off sticker price, over the next 6 months to a year.