By on October 3, 2017

Genesis Boutique Downtown Toronto Canada - Image: Hyundai CanadaHyundai’s Genesis Motors offshoot intends to finalize its transition into an entirely separate U.S. dealer network within the next three years.

The process of building an undetermined number of distinct Genesis outlets has not yet begun, but it’s clear the brand is well aware of the limitations with which it’s currently operating.

“The reality is, many, many luxury customers tell us they love our products, they’re amazing, but I’m not going into a Hyundai store to buy it,” U.S. Genesis boss Erwin Raphael tells Automotive News.

No kidding.

All of Hyundai’s 835 U.S. dealers are currently permitted to sell the Genesis G70, not a surprising fact given the very same car’s preceding status as the second-generation Hyundai Genesis sedan. Roughly 40 percent of Hyundai’s dealers also opted to sell the G90 flagship. Doing so meant building a separate in-showroom boutique for the luxury brand’s two (soon to be three) sedans.

By the end of 2020, those 352 mini-showrooms, which average around one G90 sale per month — will have reached their best before date, forced to house mere Hyundais such as the Veloster N or Santa Fe Limited Ultimate in order to be of use.

For the time being, “It’s really hard to have the two cultures cohabitating,” Raphael says.

From the get-go, it was clear the Genesis Motors leadership wasn’t keen on the quick launch phase that necessitated cohabitation. Only months after selling the first Genesis cars in America, Raphael said that the number of dealers was “too high.” Hyundai Canada’s decision to keep Genesis G80 and G90 customers away from Hyundai dealers worked, but it also had the side effect of, to be frank, keeping G80 and G90 customers away.

One year after launching, as Genesis prepared to unveil the G70 that would (hopefully) produce more meaningful volume, it became clear that the way forward for the brand’s U.S. dealer network did not in any way involve the current formula. “We do in fact have to expedite our process of separating our brands,” Raphael said in August.

Was it all a big mistake? Hyundai Motor America’s launch of the Genesis brand represented “the easiest, least-painful route in the short term,” according to Andrew DiFeo, Hyundai’s National Dealer Council chairman. But with no pain comes little gain. The method “affected the brand negatively in the long-term,” DiFeo said.

Yet after 352 dealers invested heavily in the future of Genesis, choosing the easy way forward “affected the brand negatively in the long term,” DiFeo says.2018 Genesis G70 - Image: GenesisHyundai now sets the stage for a 2018-2020 restructuring of its Genesis network, a process set to be undertaken less than two years after the first copies of the G80 and G90 were sold. Deciding to avoid such a painful process would be a mistake — a fledgling Korean luxury marque can’t be so closely and so permanently linked to Hyundai. Deciding to undergo a radical transformation so early in Genesis’ lifecycle will produce its own difficulties, some of which could create lasting conflict between Hyundai and the dealers responsible for selling its vehicles.

Would it have been so crazy for Genesis Motors to wait for a brand-wide launch designed to coincide with the G70’s arrival and a squadron of committed Genesis-specific dealers? Probably not. Fortunately, Genesis aims to have a six-vehicle fleet by the time its dealer network, v2.0, is ready.

[Images: Hyundai]

Timothy Cain is a contributing analyst at The Truth About Cars and and the founder and former editor of Follow on Twitter @timcaincars and Instagram.

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16 Comments on “Genesis Motors U.S. Dealer Network Will Be Separate From Hyundai by 2020...”

  • avatar
    Kyree S. Williams

    I think the craziest thing they did was launch the current Genesis G80 first as the Hyundai Genesis. Couldn’t they have waited for the brand launch? And, like the first Genesis, not all units had the winged Genesis badge on the back; many of them had Hyundai badge. That’s particularly damning because for the rest of history, there will be identical G80 units wearing Hyundai badges.

    I don’t know why they ever put the Hyundai logo on the Genesis, even the first one. They kind of went out of their way to do so, because regardless of whether or not your first-generation Genesis had the winged badge or the Hyundai H, it had the H on the steering wheel airbag cover and the (optional) sat nav screen. This is not so for the KDM version, which had Genesis badges all around, including the airbag cover.

    And they shouldn’t have named the coupe “Genesis”, either. I know they shared a basic platform and the 3.8-liter, but that’s really it.

    There were a lot of mis-steps here, really. I think Hyundai USA was really proud of the Genesis and wanted people to know it was a Hyundai—and rightfully so; even if the first Genesis was extremely derivative style-wise, fit-and-finish were quite competitive and better than anything Hyundai had built before—but it was damaging in the long run.

    • 0 avatar

      Honestly, I think the idea was to treat the Genesis model (and the Equus) as halos to shine down on the rest of the lineup. Hyundai upper management almost certainly don’t see the muddled way–justified or not–in which their brand is seen outside of Korea. You see it in Korea a lot generally. Lotte pastes the corporate name on the flagship, 123-floor Lotte World Tower in Seoul just as it does the dozens of crappy concrete commieblocks in every 3rd-tier South Korean city. It’s the old farts who run all the chaebol who don’t understand how prestige works, nor the fact that it works differently in every industry.

  • avatar

    How do those “many, many luxury customers love our products” without previously shopping in a Hyundai dealer? Rentals? TV ads? Lies?

  • avatar

    Sweet showroom….IF IT WERE 1998.

  • avatar

    but it has potted plants ….. doesn’t it show quality showroom ???

  • avatar

    As far as I’m concerned, if a G70 costs $33K, drives as good as a 3 Series or A4 costing $48K I’d be glad to go into a Hyundai dealer and buy one. I know that luxury car owners would warn me not to make eye contact with Accent or Elantra owners who’ve come in for service while I’m there, but I don’t think I’ll pick up any strange diseases from sitting down in the Hyundai lounge next to those “lesser” folks.

    • 0 avatar

      Well said Tennessee_Speed. The type of person who thinks themselves just far too superior to sit next to an Accent owner at a Hyundai dealership is EXACTLY the type of person I’d rather not sit next to at a Genesis dealership.

    • 0 avatar

      You realize that well off people buy Hyundai’s for their kids, right? You talk like Hyundai buyers are essentially welfare cases, which hasn’t been the case for quite a while. The dealers still advertise as if this was true, unfortunately.

    • 0 avatar

      Late to this but have become interested in the 2018 G80. Seems like a good buy at current prices and content.

      However all the current dealers are Hyundai dealers. I have no problem with the other customers at the Hyundai dealership but might have with the salesman.

      It seems that at the volume they are moving they cannot have a dedicated salesperson (low pressure, no up selling) for their Genesis customers.

      Tom compete with Lexus, Mercedes and Audi they will need to have a low key approach to prospective customers

  • avatar

    What a bloody waste! Just build decent cars and sell them for decent prices. With as low a middleman rake as possible.

    Next thing you know, they’ll poach De Nysschen from Cadillac, to focus on coffee shops and handbags….

  • avatar

    “Hyundai’s Genesis Motors offshoot intends to finalize its transition into an entirely separate U.S. dealer network within the next three years.”

    I get it but it seems awfully expensive. Why not the Tesla model and offer service at Hyundai dealers?

    • 0 avatar

      that idea.

      They can find excess space at Grade A gallerias. Have the retail stores be corporate-owned in states where that’s allowed.

      If that ideas too radical for Hyundai HQ, then go halfway and open see/touch/sit stores at upscale malls. Then refer leads to the neighborhood dealers.

      Genesis’s toughest hurdle will be getting people through the doors when a decent established lux. lease is just a short drive away.

  • avatar

    Plenty of people have bought Hyundai Genesis and Equus at lowly Hyundai stores over the last several years. Now that they have separated the brands, it is only logical to expect separate showrooms.

  • avatar
    87 Morgan

    Just so I am on the same page as everyone else…Hyundai want its dealer network, who are now selling less cars than Kia, to spend more dough to have a stand alone facility so they can sell 5 cars a month. Which 5 would of course be a huge windfall since, currently the dealer network averages 1 Genesis sale a month.
    Because sales of luxury cars are primed to take off again. Hyundai needs CUVs and SUVs pronto, not 80k sedans.

    Sheesh, it is amazing the blatant stupidity on display, or perhaps it is all ego and hubris on the part of the ‘home office’ to prove they can out Japanese the Japanese who out in turn out germaned zee Germans. Either way, Toyota was doing well when Lexus launched and not shrinking month over month loke Hyundai.

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