By on November 7, 2016

Genesis store, Round Rock Texas

There’s no denying the strategy behind Hyundai’s Genesis Motors luxury brand is unusual. By its very nature, the contrived launch of a new Korean luxury marque — more than a century after the dawn of America’s favourite luxury brand, Mercedes-Benz — is going to differ in a multitude of ways.

Genesis intends to maximize the possibility for consumers to shop for their cars online, for instance. And Genesis owners won’t need to take cars to dealers for servicing — valets will provide pickup and delivery.

Yet one aspect of a new brand’s U.S. launch is nevertheless set in stone: dealers.

Genesis Motors has 350 dealers inside Hyundai’s U.S. showrooms, Wards Auto reports. Genesis Motors’ general manager Erwin Raphael wants a different number.

A smaller number.

Hyundai only turned its Genesis sedan into the Genesis G80 three months ago, opening up its U.S. Genesis Motors effort with 3,807 G80 sales between August and October. Essentially a second-generation replacement for the Hyundai Equus, the larger Genesis G90 attracted an additional 102 paying customers in the last two months.

Of course, these aren’t the kinds of figures we can expect to see from Genesis Motors as the upstart premium marque further establishes itself and adds more models. A smaller G70, a couple of crossovers, and an indirect replacement for the cancelled Hyundai Genesis Coupe will dramatically alter the Genesis portfolio in the next four to five years.

In the present, however, Genesis Motors’ 350 current dealers are selling fewer than four cars per month.

“We may see that (350) figure go down,” Raphael said at the J.D. Power Automotive Marketing Roundtable late last month in Las Vegas. “I think it is too high. We’ve talked to dealers about it. Throughput is important.”

Hyundai of Brenham

It’s not difficult to follow the circular thinking. Hyundai dealers that have made hay by selling an average of 80 new vehicles per month — dealers that typically sold approximately four Genesis sedans and coupes per month, as well — aren’t going to be keen on investing in high-end showrooms for a limited number of sales. (Lexus stores lead the U.S. premium market in sales-per-franchise with an average of more than 110 new vehicles sales per month.)

Dealers that don’t invest in the showcasing of Genesis vehicles will make it difficult for the Genesis brand to cement a premium image. Without a suitably premium image for Genesis Motors, dealers will be unlikely to sell a particularly high number of G80s and G90s per month. And we’re back to the beginning.

But if Genesis Motors targeted the Hyundai dealers that would best cater to upmarket clientele, rather than allowing nearly half of all Hyundai stores to feature Genesis products, the committed Genesis dealers would perhaps be more likely to see the fruits of their labors. This would enhance the likelihood that Genesis Motors could have stand-alone showrooms sooner rather than later.

In the meantime, because a new dealer network was not deemed possible on timing grounds, Hyundai is left with 350 Genesis showrooms inside Hyundai dealers. Genesis Motors therefore has built-in features — an online emphasis and valet servicing — that keep G80 and G90 buyers away from your neighborhood Hyundai-store-that-also-sells-luxury-cars. Genesis Motors’ Erwin Raphael wants less of that, but he was careful to avoid offending that large dealer base. “We’re proud to have them with us.”

[Images: Genesis & Hyundai]

Timothy Cain is the founder of GoodCarBadCar.net, which obsesses over the free and frequent publication of U.S. and Canadian auto sales figures. Follow on Twitter @goodcarbadcar and on Facebook.

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30 Comments on “Only Just Underway, Hyundai’s Genesis Motors Boss Already Wants Fewer U.S. Dealers...”


  • avatar
    Tstag

    This is a very competitive market now. Not sure i’d want to sell one car in an upmarket dealership.

    • 0 avatar
      duffman13

      I think it’ll be different when they have a crossover or 2 and a 3-series/A4 sized sedan.

      Right now they’re basically selling a discount 5er for 60% of the price with 30% of the brand cache. Not exactly the most appealing proposition unless you’re only shopping a feature list at a price point.

      I could see myself in a Genesis potentially. I’m very happy with my wife’s Santa Fe limited. They need to work a whole lot on branding though first. The only reason we’re in this crossover is because it lost over 25% of its sticker price in value over the first year (used retail, not private party). As long as Hyundai values tank that quickly, they’re a hard sell. If you’re aiming for that $300/month lease payment on your volume model, those kind of numbers don’t support that residual without heavy manufacturer incentives.

      They also need to move the showroom into a separate building. Someone buying a $50k car doesn’t want to be sold to in the same place or have the same experience as the subprime buyer trying to get into a base Accent.

    • 0 avatar
      Sal Collaziano

      They actually have two cars at this point in time – the G80 and the G90. The G70 and two Crossover SUVs are right around the corner…

  • avatar
    CoreyDL

    Do Hyundai dealers typically have concrete floors and look like a warehouse, like the photo above? That’s awful.

    Last week I saw a quite large black car rounding a corner, so naturally I had to determine what it was. It wasn’t a Lexus, but didn’t look German. And I saw that it actually has a hood ornament, and was not a Mercedes.

    Equus! Someone bought one! It did have presence from a distance, just up close is where it all falls down.

    • 0 avatar
      gtemnykh

      The Equus has a more commanding/grand presence than the current S class or 7 series, or current Lexus LS (IMO). Haven’t seen a new Continental in the flesh to see how that stacks up. I think FCA has a massive opportunity to make a stretched+long trunk variant of the 300 (Jack once floated this idea). Call it the Imperial, throw some more money at the interior, consider making it V8 standard (5.7 base, 6.4 upper trim, toned down hellcat motor for top trim?)

    • 0 avatar
      dukeisduke

      I see an Equus about once every 4-6 months, and a Genesis every couple of weeks. They’ve got a ways to go.

      • 0 avatar
        gtemnykh

        2nd gen Genesis sedans look pretty sharp IMO, nice long cars. Interiors and suspension seemingly much improved over gen 1. It’s funny that once they’re 2-3 years old, a used low mileage Equus seems to be priced almost the same as a 2nd gen Genesis sedan. Gonna be keeping an eye on how these hold up, that’s some great bang for the buck for a nice driving commuter and road trip vehicle!

        • 0 avatar
          CoreyDL

          I was just looking at the same thing, since the Equus like you say falls in value so quickly after a couple years. But for the first couple model years, the interior doesn’t quite look right. Questionable materials, leather has a cheap plastic sheen on it, etc. I think in ’14 they upgraded the interior and modernized it a little bit.

          Should be easy to find a low miles one, this seems to be one of those cars which people buy and then not drive. I’d love to test an LS and then hop in an Equus immediately and see the real recognizable differences.

          • 0 avatar
            never_follow

            I hear you on the interior. I had an interview with slanty H (Hyundai, as opposed to big H Honda), and inside their headquarters they had an Equus.

            It was like they had a spec sheet with goals to hit, and while they got to check every box, it had no cohesiveness and it looked like they ran out of money halfway through.

            Contrasted with the D2 A8 I was used to, it looked and felt really half-assed. I’ve torn apart the interior of that Audi (ironically because they half assed the evap tray drainage design), and everything is designed to look and feel good, from the carpet up to the leather wrapped dash. The Equus was designed to make someone say “Wow!”… unfortunately that someone hasn’t been in a well designed luxury car.

          • 0 avatar
            CoreyDL

            Unfortunately, the D2 A8 didn’t have a leather wrapped dash, so you must be thinking of some other car there.

          • 0 avatar
            28-Cars-Later

            “slanty H”

            Did Eminem change his name?

          • 0 avatar
            never_follow

            To clarify, the upper dash pad was not leather. Everything south of it was, however – glovebox, knee pad, the entire door panel (again, south of the wood trim), center console…

            Along with that package was alcantara headliner and pillars. Pretty awesome.

            @28 – I clarified the original post. Slanty H was my nickname for Hyundai, and Big H was Honda.

          • 0 avatar
            28-Cars-Later

            @never_follow

            Thanks, I’ve never heard that one before.

      • 0 avatar
        Sal Collaziano

        They’re all over the place down here in Florida. Everywhere. I’m sure they’ll catch on in your neighborhood eventually…

    • 0 avatar
      mmreeses

      polished concrete flooring is “modern, minimalist luxury” in some circles.

      modernist luxury or a way for builders/designers to pad their profit margins….

      ymmv.

      • 0 avatar
        Kenmore

        “polished concrete flooring is “modern, minimalist luxury” in some circles.”

        The basement of a building I once worked in must’ve been within those circles. Hskpg manager was darned proud of her sealed concrete floor and ramps along with the 2000 rpm burnisher that kept then shiny.

        Every other floor surface in the place was carpeted except bathrooms and behind the cafeteria counter. I think they scrutinized her purchasing a little more closely after the burnisher.

    • 0 avatar
      ponchoman49

      Yes that dealer look terrible and utterly typical of today’s thinking. Cold bland and stark. They don’t want you lingering around in these dealerships for long. It’s a ploy to get you to pay more if your still not into dealing online.

    • 0 avatar
      duffman13

      I just helped my mom get into a Tuscon this spring. I think it’s a dealership by dealership thing, because the one she bought at had a tile floor if my memory serves me right.

  • avatar
    tylanner

    This meddling old Hyundai chestnut seems to be exactly what Subaru is trying to avoid with their recent re-focusing on sustainability.

    Are sales of only four cars a month as bad as it sounds?

  • avatar
    dukeisduke

    According to this article from April:

    http://www.bloomberg.com/news/articles/2016-04-04/lexus-presses-on-with-haggle-free-pricing-as-dealers-push-back

    Lexus had 236 US dealers as of then. I’m guessing Hyundai doesn’t need any more that that, at least to start.

  • avatar
    28-Cars-Later

    They will need at least 933 to achieve Cadillac levels of success.

  • avatar
    shedkept

    Genesis fall under the industry average according to Long Term Quality Index.

    Lexus, Lincoln, Acura are the top 3.
    Jaguar is a “0” with the BMW 7 Series 2nd to last.

    Average to below average isn’t a car in my future.

    • 0 avatar
      ponchoman49

      The new Continental is so gimmicky and tech laden that I’m having doubts in it’s first couple of model years as far as reliability and quality control are concerned. Time will tell

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