Hyundai changes its mind on Genesis dealers -- again

[dengen]

Genesis changes its mind on retail plans

Genesis will apparently open the doors to its nascent dealership network to all existing Hyundai dealers, reversing its earlier plan to launch a separate, much more limited retail network as a way to distinguish the brand.

The brand's general manager, Erwin Raphael, told Hyundai's dealer council last week that Genesis would allow all Hyundai dealers the opportunity to sell the luxury brand in the U.S. That amounts to a 180 on plans announced in January, when the two-year-old spinoff said it planned to build out a network of about 100 Genesis retailers in around 48 mostly urban luxury markets, with first dibs on the franchises going to high-performing Hyundai dealers. The plan was to have separate branding, with the long-term goal of having them all operating out of standalone facilities after launching in temporary or shared showrooms.

Per Automotive News, Genesis will no longer confine its sales to those 48 markets. All Hyundai dealerships will be able to apply to be licensed as Genesis dealers, though 2019 models will only be shipped to the newly franchised Genesis retailers. About 350 "elite" Hyundai dealerships that already sell the G80 and G90 sedans can continue to sell them, or take previously offered settlement money and move on. Those who become or remain Genesis dealers will have to sign new or separate franchise agreements that were expected to go out this week or next. Genesis will still require separate, standalone stores and service facilities.

The news will likely please Hyundai dealers who have been frustrated or confused by Genesis's rollout strategy and are eager to play a role in the brand's growth. It also could provide a sales lift for Genesis, whose sales during the first four months of 2018 fell 17.5 percent to 5,390. They'll also be hoping for a boost when the compact G70 sedan launches this summer.

 

[lt2211]

See Genesis to be sold at all Hyundai dealers?

for a full discussion

 

[dengen]

This is great news for US buyers, hopefully announcement on date and price to come soon

 

[PMCErnie]

Rosen Hyundai in Algonquin, IL (Chicago metro area) actually has a separate building/showroom for the Genesis cars. They have had since the Equus first hit the scene. The service area is shared between the Hyundai and Genesis but the showrooms are separate. The Genesis showroom is definitely more upscale.

The also have a dedicated Genesis service person who handles all Genesis issues. They are definitely trying to make a distinction between the Hyundai and Genesis owners.

This

Did I say this would meet the requirements for dealerships going forward? At this point in time no one knows exactly what those requirements will be.

Someone posted that there are virtually no separate Genesis dealers at this time. I simply posted that this dealership currently has a completely separate building for their Genesis showroom. I also stated that they have had the separate building since the Equus was first introduced here. I never stated that it would meet any future requirements going forward.

I agree that your description of Rosen's separation of their Hyundai and Genesis operations, yet maintaining a combined service shop, sounds like an intelligent plan going forward for all Genesis dealers. Of course, this assumes that appropriate Genesis standards are maintained for Genesis customer services, sales, warranty procedures and servicing operations.

Of course, my original point was that there are virtually no pure Genesis dealers in the USA (those that have standalone sales and service operations). If there are a few in existence, we really haven't heard much of anything about them here, so the word virtually applies.

 

[GV70GUY]

My dealer did kind of the same thing when they completely rebuilt their Hyundai dealership a few years ago they built a separate show room for Genesis but it's still connected thru a narrow opening to the Hyundai showroom with shared service department. I am treated well but don't feel there is any clear seperation from Genesis owners to Hyundai owners.

 

[Mark_888]

I agree that your description of Rosen's separation of their Hyundai and Genesis operations, yet maintaining a combined service shop, sounds like an intelligent plan going forward for all Genesis dealers. Of course, this assumes that appropriate Genesis standards are maintained for Genesis customer services, sales, warranty procedures and servicing operations.

It "may" be intelligent, but it appears to me that Genesis Motors USA still wants completely separate dealerships for the Genesis brand. My interpretation of what I have read (which may not be accurate) is that the only thing that really changes is that there is no longer a limit of 100 Genesis dealers. So any existing Genesis dealer can get a 2019+ model year Genesis franchise so long as they agree to build a completely separate facility by the required date (something like end of 2021). If they agree to that, they can continue selling and servicing at their Hyundai dealership until the new dealership is built and operational.

 

[PMCErnie]

It "may" be intelligent, but it appears to me that Genesis Motors USA still wants completely separate dealerships for the Genesis brand. My interpretation of what I have read (which may not be accurate) is that the only thing that really changes is that there is no longer a limit of 100 Genesis dealers. So any existing Genesis dealer can get a 2019+ model year Genesis franchise so long as they agree to build a completely separate facility by the required date (something like end of 2021). If they agree to that, they can continue selling and servicing at their Hyundai dealership until the new dealership is built and operational.

That will likely change. You heard it here first. Intelligent businesses are always seeking ways to modify/improve practices. For example, most dealers don't have their own in-house body shops anymore. Likewise, it simply makes no sense to have separate service shops for dealers who own two, or more, brand franchises. Hyundai/Genesis needs to learn this lesson quickly.

Down the road, it will be easy enough for a dual brand dealer to set up an on-site, or off-site, service facility that handles both brands. As reality sets in down the road, Genesis will see the light. We all know that such combo service facilities work well-enough for other luxury brands. Within 8 minutes from me there's a dual Jaguar/Volkswagen dealer, as well as a Lincoln/Ford dealer. Then, there's the Volvo/GMC dealer and the Cadillac/Subaru dealer. I could go on....

 

[joneillnj]

That will likely change. You heard it here first. Intelligent businesses are always seeking ways to modify/improve practices. For example, most dealers don't have their own in-house body shops.

Down the road, it will be easy enough for a dual brand dealer to set up an on-site, or off-site, service facility that handles both brands. As reality sets in down the road, Genesis will see the light. We all know that such combo service facilities work well-enough for other luxury brands. Within 8 minutes from me there's a dual Jaguar/Volkswagen dealer, as well as a Lincoln/Ford dealer. Then, there's the Volvo/GMC dealer and the Cadillac/Subaru dealer. I could go on....

Agreed - but, wow, this rollout does not say much for strategy of Genesis senior leadership! This is pretty obvious stuff that they have totally bungled to date. Seems like a house cleaning is in order...

 

[PMCErnie]

aa

Agreed - but, wow, this rollout does not say much for strategy of Genesis senior leadership! This is pretty obvious stuff that they have totally bungled to date. Seems like a house cleaning is in order...

Some corporate cultures are difficult to steer, not to mention one with roots in Korea and operations worldwide. Hyundai/Genesis execs need to learn how to stop "throwing out the baby with the bath water." Maybe they have now learned that they can't improve the Genesis image by stabbing their long-term dealers in the back. What happens next is anybody's guess. Ideally, some reality will set in.

 

[devellis]

Not sure if this has been posted before. I think we've talked in the past about Hyundai's sales slumping a bit. Turns out, that's true for Genesis, too -- a 26% decline.

See figures here.

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[Mark_888]

That will likely change. You heard it here first. Intelligent businesses are always seeking ways to modify/improve practices. For example, most dealers don't have their own in-house body shops anymore. Likewise, it simply makes no sense to have separate service shops for dealers who own two, or more, brand franchises. Hyundai/Genesis needs to learn this lesson quickly.

Down the road, it will be easy enough for a dual brand dealer to set up an on-site, or off-site, service facility that handles both brands. As reality sets in down the road, Genesis will see the light. We all know that such combo service facilities work well-enough for other luxury brands. Within 8 minutes from me there's a dual Jaguar/Volkswagen dealer, as well as a Lincoln/Ford dealer. Then, there's the Volvo/GMC dealer and the Cadillac/Subaru dealer. I could go on....

I am not going to argue the merits of that one way or the other. I am just saying that based on what has been reported so far, any Genesis dealers who sell the 2019+ models will have to commit to a completely separate dealership by the end of 2021 (or some date like that).

 

[PMCErnie]

This has been posted multiple times.

 

[YEH]

My concern right now and in the next few years, is the convenience of service for my G80. I'm not expecting to purchase another G80 any time soon. When that time comes, I would be willing to go to a "Genesis" dealer to buy one if necessary, but I like the convenience of the Hyundai dealer I bought my G80 from for service. Plus, I am very satisfied with them. I don't need valet service or fancy perks while my car is being serviced. I hope this relationship doesn't get messed up. I just don't believe Hyundai will be forced not to service the cars they sold.

Many Lexus owners take their vehicles to a Toyota dealership for basic maintenance; of course (maybe for convenience, but also cheaper), warranty work would have to be done by a Lexus dealership.

Rosen Hyundai in Algonquin, IL (Chicago metro area) actually has a separate building/showroom for the Genesis cars. They have had since the Equus first hit the scene. The service area is shared between the Hyundai and Genesis but the showrooms are separate. The Genesis showroom is definitely more upscale.

The also have a dedicated Genesis service person who handles all Genesis issues. They are definitely trying to make a distinction between the Hyundai and Genesis owners.

For the smaller markets, think a separate Genesis building (with a showroom, car service drop-off area and lounge/waiting area) is sufficient; don't think actually need a separate building for service work, as owners rarely get to go to the service bays).

In the smaller markets, there probably wouldn't be enough sales volume to support more than 1 stand-alone Genesis dealership - and in such a scenario, would be better if there were 2-3 Genesis-Hyundai dealerships than just 1 standalone.

Proximity to a dealership/traffic patterns is a pretty significant factor when it comes to a new auto purchase.

 

[YEH]

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).

Here's the latest from Auto News which somewhat clarifies the problem...

Is Genesis a make or a "model?"

The question is at the heart of the lingering confusion surrounding Genesis' retail strategy. And the answer is critical in determining how Hyundai's fledgling luxury operation will distribute its vehicles.

Trouble is, the answer varies by state, and it's further complicated by the convoluted history of Genesis, which started as a top-end luxury nameplate in the Hyundai stable, then became a subbrand for Hyundai's luxury products and eventually the foundation for a proposed new retail network.

As retailers decried the move to cut them out, state agencies and dealer groups around the country began scrutinizing the relationship between Hyundai and Genesis, specifically whether the G80 and G90 sedans, now sold by Hyundai dealers, are considered part of the Hyundai brand or nameplates of a separate Genesis marque.

If the G80 and G90 are part of Hyundai, Genesis would have a tough time denying Hyundai dealers the right to sell Genesis products under some state laws. But if they are part of a separate Genesis brand, the marque would be required to get a license to distribute them.

Getting Genesis licensed as a separate brand would clear roadblocks in states such as Texas, which regards Genesis as "a model within the Hyundai Motor America product and not a separate line-make." In a Feb. 28 letter, the state's Department of Motor Vehicles informed Hyundai Motor America that offering Genesis only to certain dealerships was a violation of the state's franchise laws.

By seeking new licenses and offering the franchise widely, "Hyundai appears to be making a business decision which complies with Texas law," the agency told Automotive News.

Under the new plan, the roughly 350 elite-level dealerships that carried the G80 and G90 can continue to sell those products, or take settlement money that had been offered. Those who become or remain Genesis dealers will be required to sign new or separate franchise agreements, though some state laws may complicate this effort.

The California New Car Dealers Association had also protested the Genesis rollout, citing potential clashes with franchise laws. Brian Maas, the association's president, thinks Hyundai and Genesis executives didn't realize how complicated it would be to spin off Genesis while dealing with franchise rules that varied by state.

Course correction for Genesis' 'misguided missile'

Methinks Hyundai USA needs a better corporate counsel and/or outside law firm (which they likely had to advise them on this matter).

 

[PMCErnie]

Yes, FUBAR, or Half-Arsed, applies.

 

[larrymg1]

Another article attempting to explain this morass that Hyundai/Genesis has created centered around the whole dealership and brand/model issues. Of particular note to me is the reference to different laws and regulations in different states that specifically affect whether these cars are to sold and licensed as a Hyundai model or a Genesis brand. What a mess.
Course correction for Genesis' 'misguided missile'

 

[devellis]

This has been posted multiple times.

apologies for repost.

 

[larrymg1]

Another article discussing the ever-evolving changes.
Course correction for Genesis' 'misguided missile'

 

[Beefer]

Another article discussing the ever-evolving changes.
Course correction for Genesis' 'misguided missile'

What...a...nightmare. The laws in the USA are BS. Tesla knows that all too well. I just want a G70.

 

[WPB]

Maybe its time for some Hyundai dealers to start thinking "outside the box". For example, based on recent news - that nearby local Ford dealer may be wanting to sell out before too long. Some paint, a fancy coffee machine, new asphalt cap on the lot, a new sign and "Voila" you've got a new Genesis dealership, service bays and all.