Hyundai dealers try to sue Genesis from opening stand-alone facilities.... again

[Backslack]

Yep, Hyundai dealerships are that parasitic.

Hyundai Making Elite Seller Club For Luxury Line, Dealer Says - Law360

Hyundai Making Elite Seller Club For Luxury Line, Dealer Says

By Nadia Dreid


Law360 (August 10, 2020, 7:57 PM EDT) -- Hyundai is skirting Florida law in its bid to showcase its luxury Genesis brand of automobiles completely separately by punishing dealers who don't agree to build new showrooms, according to a new lawsuit.

Miami-based dealer Braman Hyundai told a Florida federal court Friday that after Hyundai spun off the luxury line into its own company called Genesis Motor America, the pair have been "separately and together act[ing] to coerce Braman and other dealers to build stand-alone Genesis facilities."

After state authorities thwarted Hyundai Motor America Corp.'s attempt to create a selective group of dealers who were allowed to sell its luxury line, the suit claims that the auto giant implemented two "radical" incentive programs, the Accelerate Program and the Keystone Program, that make noncompliant dealers pay more for cars.

The programs are "unlawfully designed to accomplish indirectly what [they] were prohibited previously from achieving directly — a smaller, hand-selected Genesis dealer body with stand-alone Genesis facilities," Braman said.

If dealers choose to comply with a new set of standards laid down by Genesis and Hyundai, which include building new facilities worth millions and updating their current ones, then they're eligible for incentive payments worth up to 8% of the recommended sale price of each car they move, according to the suit.

This means that dealers who agree to shell out the dough for new showrooms make more money off the cars they sell or are able to offer them at a cheaper price, undercutting noncompliant dealers, Braman said.

And if a dealer is interested in figuring out how much it would cost to renovate their showrooms in order to be compliant and participate in the program, the suit claims Hyundai charges them $15,000 for a "cost survey."

"The result of the Accelerate Program and the Keystone Program is unlawful and anti-competitive price discrimination, with certain dealers paying thousands of dollars more than others for goods of like grade and quality, i.e. materially identical motor vehicles," the suit claims.

The programs themselves are an attempt to get around what the Florida Department of Highway Safety and Motor Vehicles had already told Genesis and Hyundai they couldn't do: withhold Genesis cars from Hyundai dealers and create a whole new dealer body just for the luxury line, the suit claims.

Florida's issue was with Hyundai's plan to deny its dealers permission to sell Genesis line cars, according to the complaint. The department refused to approve Genesis' distributor license unless the pair of companies agreed to offer terms to Hyundai dealers equally, Braman said.

But the auto companies' fix is in violation of the Robinson-Patman Act, a federal law that makes it illegal for producers to discriminate when it comes to pricing, the dealer argues.

It's asking the court to step in and declare the incentive programs and their associated price discounts unlawful and to award it attorney fees and costs. Although Braman does note that it's open to any "such other relief this court deems just and equitable," the dealer does not specifically ask for damages.

Representatives for the parties did not immediately return a request for comment.

Braman Hyundai is represented by John W. Forehand and R. Craig Spickard of Kurkin Forehand Brandes LLP.

Counsel information for Hyundai and Genesis was not immediately available.

The suit is Braman Hyundai Inc. v. Hyundai Motor America Corp. et al., case number 1:20-cv-23301, in the U.S. District Court for the Southern District of Florida.

--Editing by Jay Jackson Jr.

 

[LandOfConfusion]

Hyundai/Genesis: Let’s devise some incentives to encourage our franchisees to expand and improve their stores, thereby creating a new and compelling sales and service environment for luxury owners. Dealers will sell and service more new vehicles. It will be a win-win!

Dealers: I have such an ugly face! Where is the knife, so that I can cut off my nose in spite?

 

[Backslack]

Hyundai/Genesis: Let’s devise some incentives to encourage our franchisees to expand and improve their stores, thereby creating a new and compelling sales and service environment for luxury owners. Dealers will sell and service more new vehicles. It will be a win-win!

Dealers: I have such an ugly face! Where is the knife, so that I can cut off my nose in spite?

It's all an excuse for the dealers to not have to spend the time and money to upgrade their facilities and services to the level expected of luxury brands. They would rather drag down the whole brand than change their archaic "buy here pay here" practices geared at wooing Elantra buyers with bad credit.

I hope Hyundai actually prevails in court this time because doing so would be a big milestone for establishing Genesis as a legitimate luxury brand, but the dealerships kicked their ass the last time this happened.

 

[TinsleyC]

Maybe I'm dumb but I just don't understand this. Why would a parent company Hyundai sue a Genesis dealership? Don't both companies want both to succeed? Dumbest thing I've ever heard of. Why can't they examine how Honda created Acura, Toyota created Lexus, etc etc, learn from their mistakes, and create a strong, stand-alone Genesis dealership network?

Sometimes I regret buying my new Genesis.

I can't read the article, don't have an account.

 

[Backslack]

Maybe I'm dumb but I just don't understand this. Why would a parent company Hyundai sue a Genesis dealership? Don't both companies want both to succeed? Dumbest thing I've ever heard of. Why can't they examine how Honda created Acura, Toyota created Lexus, etc etc, learn from their mistakes, and create a strong, stand-alone Genesis dealership network?

Sometimes I regret buying my new Genesis.

I can't read the article, don't have an account.

I pasted the entire article in the OP quote.

In short, Hyundai dealerships are suing Hyundai Motor Co. for incentivizing standalone Genesis facilities, which the cheapo dealers don't want to fork out the time and cash to build.

The dealerships are not actually owned by Hyundai, only licensed to sell and work on their cars.

 

[TinsleyC]

Okay, gotcha. I'm doing all this on my cell phone and didn't see that I could expand (and read) the article.

So Hyundai screwed this up from day one. Should have laid down the rules to start with.

 

[Backslack]

So Hyundai screwed this up from day one. Should have laid down the rules to start with.

Sort of, but it goes way back.

The Hyundai and Genesis Brands' Split Is a Little Messy

Basically, the original reason that we're even in this mess is because the old Genesis G80 and G90 were sold at Hyundai dealerships as a placeholder, and Hyundai dealerships revolted against Hyundai Motor when they were told that they could no longer carry these cars as a result of Genesis trying to set up a more exclusive higher quality dealership network of 100 or so. The Hyundai dealerships took Hyundai motor to court years ago because of this and won- that's why we still don't have any real dedicated Genesis standalone dealerships so to speak.

What Hyundai is trying to do is now incentivize the dealerships to upgrade their facilities to Genesis standards, but the dealers don't want to spend the cash to do the work and would rather treat Genesis just like any other Hyundai in their inventory as they always have. And so they take it back to court.


Toyota sold Lexus's at Toyota dealerships for a couple years while the brand was in its infancy, but you didn't see any Toyota dealers try to sue the parent company. That's just the rot of Hyundai dealerships accumulated from their days of selling worthless dirt cheap cars.

 

[Mcc]

Okay, gotcha. I'm doing all this on my cell phone and didn't see that I could expand (and read) the article.

So Hyundai screwed this up from day one. Should have laid down the rules to start with.

If you understood the history you wouldn’t say that. The DID lay down the rules from the beginning and were beaten by the all powerful dealers lobby. What would you have them do?

Does anyone believe that Walmart should not be allow to buy its products at a lower price because that is unfair to other merchandisers?

This lawsuit is pure stupidity. Dealers are playing the short game. Take the money and run.

 

[EdP]

Toyota sold Lexus's at Toyota dealerships for a couple years while the brand was in its infancy, but you didn't see any Toyota dealers try to sue the parent company. That's just the rot of Hyundai dealerships accumulated from their days of selling worthless dirt cheap cars.

Not that simple from everything I've read. It was the difference in how the corporation and brands were structured from the start.

 

[Andyj]

Idiocy. May just sink the brand in the process. Such a shame. Beautiful cars and ugly dealers.

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[Backslack]

Not that simple from everything I've read. It was the difference in how the corporation and brands were structured from the start.

There may have been other factors, as I'm sure 30 years of changing franchising laws take its toll, but what Genesis attempted to do by setting up temporarily in Hyundai dealers is fundamentally no different than what Lexus did. They were following a tried-and-true act.

 

[EdP]

There may have been other factors, as I'm sure 30 years of changing franchising laws take its toll, but what Genesis attempted to do by setting up temporarily in Hyundai dealers is fundamentally no different than what Lexus did. They were following a tried-and-true act.

As you say, "other factors". Unless we have the corporate agreements we cannot say one way or the other. If it was easy, it would have been done by now.

 

[Backslack]

As you say, "other factors". Unless we have the corporate agreements we cannot say one way or the other. If it was easy, it would have been done by now.

You seem to be making an argument against a point that I did not bring up. Nobody said it was "easy".

 

[Mcc]

You seem to be making an argument against a point that I did not bring up. Nobody said it was "easy".

I think it was an observation not an argument.

 

[LandOfConfusion]

Story linked below is from January, so it obviously doesn't address this lawsuit by Braman Hyundai. It does, however, reference the Accelerate at Hyundai and Keystone at Genesis programs for dealerships.

Muñoz tweaks Hyundai dealer pay plan amid mission to boost retail health

 

[Backslack]

Out of curiosity, I looked up how Polestar (as the fledgling luxury EV spinoff of Volvo) is handling things, and they're not rushing to build brick and mortar dealerships yet. Strategy is not much different from Genesis's current one with the focus on showrooms and home delivery/service:

Polestar Set to Open First U.S. Dealerships | TheDetroitBureau.com

Article also makes a good point at how virus fears are preventing people from physically visiting dealerships, so that may work in Genesis's favor as it gives them more time to sort that out with their unruly dealers.

 

[Aquineas]

You seem to be making an argument against a point that I did not bring up. Nobody said it was "easy".

That's called a Strawman fallacy.

 

[EdP]

That's called a Strawman fallacy.

Call it what you want. Bitch about it all you want. Say what they should have done all you want. No one here knows the FACTS of the situation. Everything here is pure conjecture unless you are on the legal team.

What other companies have done or are doing has NOTHING to do with the Genesis situation.

 

[Aquineas]

Call it what you want. Bitch about it all you want. Say what they should have done all you want. No one here knows the FACTS of the situation. Everything here is pure conjecture unless you are on the legal team.

What other companies have done or are doing has NOTHING to do with the Genesis situation.

Whoa. I am not in this debate. I was just giving a formal definition to the practice of arguing against a statement that someone didn't actually say. I didn't even read if you did that or not. Keep me out of this quagmire.

 

[EdP]

Whoa. I am not in this debate. I was just giving a formal definition to the practice of arguing against a statement that someone didn't actually say. I didn't even read if you did that or not. Keep me out of this quagmire.

We should ll be out of it.