Hyundai changes its mind on Genesis dealers -- again

[tissle]

Hyundai changes its mind on Genesis dealers -- again

I'm happy as long as we have separate Genesis dealerships as it will help mainstream brand appeal / perception that Genesis = Hyundai.

 

[Spanky61]

Matters not to me as long as they Hyundai/Genesis full-fill their requirements as contracted.

 

[Zipadeedude]

Personally, I'll be glad to know that a dealership will be close by, so it doesn't trouble me.

 

[leggy]

Genesis May Have Just Shot Itself In the Foot

 

[Mike734]

I think their initial timeline was too ambitious. This new plan will work out fine if they get serious about creating a better Genesis experience at the current dealerships. They have a ways to go.

 

[YEH]

Was inevitable - guess they saw the light that the plan of selling '19MY models only at the planned Genesis stores was a disaster going to happen (esp. when they still haven't decided on everyone who was to get awarded a Genesis franchise).

Even if they had decided on the 100 dealerships earlier in the year, there still would only be a handful of dealerships up and running by the end of the year and even the full complement of dealerships would have left many markets devoid of Genesis.

The initial plan made little sense and the time-table was totally unrealistic - and as I had been saying, were prime conditions for the tanking of Genesis sales (including the G70).

But as awful as that plan/timetable was, this complete 180 is silly as well (if the whole point of setting up a separate Genesis dealership network is to improve the level of service).

The plan should have been to sell '19MY Genesis models at only the 350 or so dealerships which had invested in upgrades to sell the G90; with the condition that they would be obligated to build a separate Genesis dealership (within a certain time-table) or if serving a smaller market, build out a separate Genesis facility (basically a separate building for a showroom and customer lounge) somewhere on Hyundai dealership.

(Don't have a problem with Genesis store sharing a lot with a Hyundai dealership for smaller markets - as many Cadillac and Lincoln dealerships share with another brand - usually Chevy or GMC/Buick in the case of Cadillac and Ford with Lincoln and there are a good many Mini dealerships adjoined to a BMW store and SMART to Mercedes; plus MB sells their commercial vans at the same place they sell their passenger vehicles).

Other Hyundai dealerships (which didn't sell the G90) could apply to sell Genesis, but they would have to build-out a Genesis facility (depending on the criteria), but only certain # of them would be chosen (in order to not over-saturate markets).

I guess under the new plan which requires Hyundai dealerships to build out a Genesis facilities (including service) is a means of culling the #s naturally, as only a certain % would want to invest in such facilities, but doing it this way is so more haphazard.

For these adjoined Genesis/Hyundai dealerships serving smaller markets - don't think there's even a need for separate service facilities (aside from a separate drop off center and customer lounge) as don't it really matters if a Genesis is serviced at a bay next to a Hyundai.

Minis are serviced next to BMWs and SMARTS and commercial vans next to MBs; and there are Lexus and Toyota dealerships which have separate stores, but share a service facility.

 

[Mark_888]

Was inevitable - guess they saw the light that the plan of selling '19MY models only at the planned Genesis stores was a disaster going to happen (esp. when they still haven't decided on everyone who was to get awarded a Genesis franchise).

I suspect the "light" was that the necessary number of dealers would not approve the deal, even though they would have been paid substantial compensation for not getting a Genesis dealership starting with 2019 models.

It appears to me (but not sure) that Hyundai Motor America has recently been taking the stance that the Genesis brand didn't officially exist yet, so they could try and avoid the legal issues of violating the franchise agreements (and state laws) that don't easily allow the manufacturer to take away an existing franchise (from some of the 350 dealers who were selling the G80 since 2017, but not being part of the 100 going forward).

That "may" have been what was behind the fact that Genesis is still being registered as a Hyundai in some states. I doubt that was the plan from the beginning, but almost as if they were trying to turn an initial oversight (in getting the Genesis brand recognized by all legal authorities) into a legal advantage in restricting the number of dealers to 100. But It obviously did not work.

Given the cost of opening a brand new and physically separate dealership (which they will be required to do by some deadline such as by end 2021 or something), probably only some of the 250 dealers (out of 350 selling the Genesis brand previously) who were going to be passed over the initial allocation of 100 dealers, will jump into the new Genesis brand. So "maybe" we will be looking at 150-200 or so Genesis dealers going forward with the right to sell 2019 models, instead of just 100.

 

[pmcjr]

This is consistent with what the Hyundai dealership I bought my G80 from is saying. They will continue to sell and service the G80. I expect no changes that will affect me. Those Hyundai dealers that do go the separate Genesis route will simply move the Genesis service techs and staff to the "new" dealership. The only change might be a better latte machine.

 

[Goaterguy]

Just saw this:

https://jalopnik.com/hyundai-will-no-longer-restrict-genesis-sales-through-s-1825721003

Don't know if it will be a good or bad idea for the brand. Good for all dealers though.

 

[Riley2323]

Just saw this:

https://jalopnik.com/hyundai-will-no-longer-restrict-genesis-sales-through-s-1825721003

Don't know if it will be a good or bad idea for the brand. Good for all dealers though.

It will not be a good idea. Short run they may get a boost, but it will deteriorate the brand cache in the long run.
If they continue going down the road to have separate dealerships, maybe the two plans can dovetail nicely.

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[Gene2]

I think the Hyundai dealerships should be required to have only certified people
work on the Genesis, and that includes service advisors

 

[Franco59]

Not a good development unless steps are required by Hyundai to enhance the dealerships opting in to the genesis line. Bet that new franchise agreement that they will be required to sign will spell out requirements for the Genesis line that some bottom line dealerships will be unable to fulfill.

In other words, seems like Hyundai said ok all dealers can carry the genesis line but certain steps will have to taken by these dealers to meet the criteria of the genesis line. Hyundai has waaaay too much invested into Genesis to turn the brand over to dumpster fire dealerships. Dealerships carrying the Genesis line will have to sign new agreement and up their game. Thats my take from information from several sources.

 

[Mark_888]

Not a good development unless steps are required by Hyundai to enhance the dealerships opting in to the genesis line. Bet that new franchise agreement that they will be required to sign will spell out requirements for the Genesis line that some bottom line dealerships will be unable to fulfill.

In other words, seems like Hyundai said ok all dealers can carry the genesis line but certain steps will have to taken by these dealers to meet the criteria of the genesis line. Hyundai has waaaay too much invested into Genesis to turn the brand over to dumpster fire dealerships. Dealerships carrying the Genesis line will have to sign new agreement and up their game. Thats my take from information from several sources.

My understanding (which may be wrong) is this:

1. Any of the approximately 350 dealers now selling the G80 and G90 can apply for a Genesis Motors dealership (no longer limited to 100). There are over 800 Hyundai dealers.

2. Those Hyundai dealers who get a Genesis franchise can begin selling the 2019 models at their current facility as soon as they arrive, but they must have a separate physical dealership built and operational by some defined date (I think it is end of 2020 or end of 2021, but not sure).

3. A brand new physical dealership is a big investment for the private companies who own them, and one Hyundai dealer estimated it would cost him about $10 million to build a new Genesis dealership facility. Obviously this depends on the cost of real estate and other variables specific to a market. So probably not all of the 250 dealers (350 - 100) who were not going to get a Genesis dealership, are going to apply for one. In the USA (based on state laws), automobile dealerships are generally required to be independent businesses and not owned by the manufacturer.

 

[halveb]

Does anyone know if the distinction between the G80 and G90 will persist, in other words some dealers will not be handling the G90 and only be able to handle the G80 (and when available the G70)?

 

[PMCErnie]

Yes, it was inevitable that the "100 Dealerships" plan would implode. Thankfully, it did just that. The latest general concept is much more workable.

My prediction is that most Hyundai dealers who will be allowed to sell the Genesis will continue to service them in their Hyundai dealerships, even though they establish separate Genesis showrooms. That will be fine as long as they staff their shops with qualified Genesis repair personnel. This would means that boutique showrooms, as they now have in Canada and in Korea, could easily be established to give the Genesis mark it's prestige sales locations without the financial burden of establishing expensive Genesis service facilities.

 

[phil1980]

I expect no changes that will affect me.

"Dealers who sell Genesis will still be required to have a separate facility exclusively for Genesis sales and service, which might complicate things for some dealers but would help separate the brand from the cheap and cheerful image of its parent company. "

 

[Mark_888]

Does anyone know if the distinction between the G80 and G90 will persist, in other words some dealers will not be handling the G90 and only be able to handle the G80 (and when available the G70)?

I don't know what you mean by "handle."

I am pretty sure that starting with the 2019 model year, a dealer is either a Genesis dealer or not a Genesis dealer going forward, and those who are Genesis dealers will sell all models. But those who are not going to be a Genesis dealer going forward will not sell the 2019+ models. For the time being, the permanent Genesis dealers may share facilities with an existing Hyundai dealer, but that must end by some specific date in a couple of years (since it takes time to build a brand new dealership facility).

I also don't know the exact status of the 2017-2018 G80 and G90 servicing, since Hyundai "appears" to have recently claimed that the Genesis brand is not officially launched until 2019 model year. My guess is that any dealer who sold a 2017-2018 G80 or G90 will be able to service them, but that is just a wild guess on my part, and trying to figure out what Genesis Motors management and their lawyers are doing is a hazardous occupation.

 

[lt2211]

This seems like bad news. Every Hyundai dealer gets to sell the Genesis brand (with some qualifications). Seems like a step back to the era of the Hyundai Genesis. A value dropping change, when one looks at how Lexus, Acura, Infinity, Cadillac Etc. are sold. Will the extra Genesis delears pick up the Valet Service, if they are closer to the buyer, regardless of point of purchase etc. Comments?

Genesis changes its mind on retail network -- again

https://jalopnik.com/hyundai-will-no-longer-restrict-genesis-sales-through-s-1825721003

 

[YEH]

I suspect the "light" was that the necessary number of dealers would not approve the deal, even though they would have been paid substantial compensation for not getting a Genesis dealership starting with 2019 models.

That does seem like it (and besides, it would be wise for an auto-maker not to have disgruntled dealerships), but my point of contention is that they should have limited the G70 to the 350 dealerships that sell the G90 (at the very least get a certain level of service/sales - even if the level varies among those 350 dealerships).

But by offering the G70 to all Hyundai dealerships - seems like Hyundai is throwing them a bone and then hoping that the requirements they have laid out (in terms of facility build-out) to actually get a Genesis franchise will naturally cull the nos. (while doing it this way placated the dealerships, it's a roundabout way of doing things w/ the danger of an undeserving Hyundai dealership getting a Genesis store - as long as they are willing to pony up the $$).

Just b/c these dealerships once sold the G80 and/or G90 doesn't mean that they the automaker is beholden to them to continue to do so.

Automakers take away models all the time; Ford is about to get rid of pretty much its entire sedan lineup and Hyundai recently got rid of the Azera for the US market.

Toyota got rid of the Scion brand; FCA took the Ram trucks from Dodge and formed a new brand.

Anyhow, this likely means we'll see G70 sales start sooner than later.

Given the cost of opening a brand new and physically separate dealership (which they will be required to do by some deadline such as by end 2021 or something), probably only some of the 250 dealers (out of 350 selling the Genesis brand previously) who were going to be passed over the initial allocation of 100 dealers, will jump into the new Genesis brand. So "maybe" we will be looking at 150-200 or so Genesis dealers going forward with the right to sell 2019 models, instead of just 100.

In addition to that, think we'll see a # of Hyundai dealerships which don't sell the G90 jump into the game.

It will not be a good idea. Short run they may get a boost, but it will deteriorate the brand cache in the long run. If they continue going down the road to have separate dealerships, maybe the two plans can dovetail nicely.

Seems like a temp fix to do the latter, but this whole mess could have been avoided (the initial plan was faulty, but beyond that, the timetable was not even close to be being feasible w/o tanking Genesis sales).

 

[Mark_888]

Automakers take away models all the time; Ford is about to get rid of pretty much its entire sedan lineup and Hyundai recently got rid of the Azera for the US market.

Toyota got rid of the Scion brand; FCA took the Ram trucks from Dodge and formed a new brand.

I got the impression that there are state laws regarding taking away a franchise from certain dealers. but not all of them. If an automaker stops making a product or drops an entire brand, that doesn't apply.

That also "may" be why HMA, Genesis Finance, etc, has been saying that the 2017-2018 G80 and G90 are a Hyundai model and not a Genesis (according to some forum members who have communicated with them on the matter of brand registration).