Only Just Underway, Hyundai's Genesis Motors Boss Already Wants Fewer U.S. Dealers

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.”

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.