Genesis changes its mind on retail plans
05-04-18, 11:03 AM
#1
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 strategyand 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.
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 strategyand 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.
05-05-18, 10:20 AM
#2
05-05-18, 10:53 AM
#3
Makes sense. With 5500 sales for the first 4 months of 2018, that does not warrant spending hundreds of millions on brick and mortar. Their 'GV' SUVs can't come soon enough. Even then, Genesis to me will be similar to Infiniti where they are always there but often overlooked. Benz and BMW will always be that 1 2 punch. Everyone else is fighting for 3rd or worse.
05-05-18, 11:44 AM
#6
Lexus Fanatic
Makes sense. With 5500 sales for the first 4 months of 2018, that does not warrant spending hundreds of millions on brick and mortar. Their 'GV' SUVs can't come soon enough. Even then, Genesis to me will be similar to Infiniti where they are always there but often overlooked. Benz and BMW will always be that 1 2 punch. Everyone else is fighting for 3rd or worse.
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05-05-18, 11:56 AM
#8
That G70 is really handsome. It's too bad the interior design is a big "meh."
Anyhow, this decision wasn't ideal but based on the lack of sales growth thus far, it's a move they had to make. Hopefully once the brand's sales grow they can establish its own dealership network.
Call me shallow but I'll echo Genesis' own statement about not wanting to visit a Hyundai dealership to buy a luxury car. The entire experience feels low-rent: from the locations of the dealers, to the facilities and sub-prime customers around you. For people used to buying Lexus and BMW it's a hard pill to swallow going to one of those joints.
Anyhow, this decision wasn't ideal but based on the lack of sales growth thus far, it's a move they had to make. Hopefully once the brand's sales grow they can establish its own dealership network.
Call me shallow but I'll echo Genesis' own statement about not wanting to visit a Hyundai dealership to buy a luxury car. The entire experience feels low-rent: from the locations of the dealers, to the facilities and sub-prime customers around you. For people used to buying Lexus and BMW it's a hard pill to swallow going to one of those joints.
Last edited by BrownPride; 05-05-18 at 12:02 PM.
05-05-18, 11:56 AM
#9
05-05-18, 01:07 PM
#11
Makes sense. With 5500 sales for the first 4 months of 2018, that does not warrant spending hundreds of millions on brick and mortar. Their 'GV' SUVs can't come soon enough. Even then, Genesis to me will be similar to Infiniti where they are always there but often overlooked. Benz and BMW will always be that 1 2 punch. Everyone else is fighting for 3rd or worse.
05-05-18, 01:17 PM
#12
Hoovey, they're still requiring spending on brick and mortar, they're just allowing all Hyundai dealers the opportunity to do so. Previously they had culled it down to only ~100 or so dealers in specific key geographies. So Hyundai dealers will be asked to put their money where their mouths are. If they truly want to sell Genesis, they need to commit to separate facilities. Not sure what the time phasing will be on those requirements, I would hope the dealers have some runway, since, as you note, the volume of a single brand with 2, soon to be 3, sedans is likely difficult in this market to have the economics to be truly independent of a volume franchise store.
05-05-18, 01:22 PM
#13
Lexus Fanatic
) Lexus only succeeds IMO because Toyota is one of the top 10 brands in the world along side Apple, Microsoft, Coca-Cola and others.
05-05-18, 01:32 PM
#14
I have said repeatedly that Genesis is not going to succeed. IMO, they will only go as far as the Hyundai/KIA will go. If Hyundai and KIA cannot command Toyota or Honda type prices (and they are not) then no matter how hard Genesis tries, they will fail (no matter the solidness of the dashboard is) Lexus only succeeds IMO because Toyota is one of the top 10 brands in the world along side Apple, Microsoft, Coca-Cola and others.
) Lexus only succeeds IMO because Toyota is one of the top 10 brands in the world along side Apple, Microsoft, Coca-Cola and others.
05-05-18, 01:49 PM
#15
Sorry, but as appealing as these new Genesis models may appear, I would not dare step foot on a Hyundai dealership only to be greeted by some sales kid who just sold a Hyundai Accent to a subprime barrower. Not to mention the poor service departments. Luxury buyers in this class expect a Lexus-like dealership experience or something more inline with the German dealerships, and they should get more if expected to part with $50K-$80K in coin.
Call me a snob if you will but most buyers in this class will agree.
You dropped the ball Genesis! Your cars will forever be linked to low cost family sedans as long as they share the same dealerships and salesmen. I guess the Hyundai dealership owners threatened lawsuits so they go their way.
Call me a snob if you will but most buyers in this class will agree.
You dropped the ball Genesis! Your cars will forever be linked to low cost family sedans as long as they share the same dealerships and salesmen. I guess the Hyundai dealership owners threatened lawsuits so they go their way.