By on November 27, 2017

2018 Genesis G80 - Image: Genesis Motors

You would think you’d be happy when a peer succeeds and goes on to greater things, but the reality is often a little grimier and less magnanimous. Genesis has been a sore subject around Hyundai Motor Company ever since the automaker spun it off into its own brand. However, this has less to do with its role as an elite nameplate and more about how to manage it as part of the greater whole.

Earlier this month, dealers expressed their dismay by walking out of a meeting with Hyundai Motor America’s executives — which included CEO Kenny Lee and COO Brian Smith. The incident didn’t last particularly long and the conference eventually got back on track, but it proves there’s unresolved issues as to how the Genesis brand should be handled.

According to Automotive News, dealers were upset at a proposal made by Hyundai that would see Genesis’ luxury vehicles sold at non-Hyundai retailers. Sources claimed they also weren’t particularly pleased with the amount the company planned to compensate stores that would no longer be eligible to host the upmarket brand.

Dealers exited the meeting suddenly to talk amongst themselves. Currently, stores have to undergo an approvals process to sell certain Genesis products. But Hyundai wants to create standalone retailers over the next few years to increase overall volume for the brand. It now appears concerned that the existing dealer network won’t be sufficient — especially if Genesis is going to maintain a prestigious image.

“One of the best things about this closed process is the candid approach taken by the dealers and company personnel allowing us to speak openly and freely and reach mutually agreed upon decisions,” Hyundai of America said in a statement to Automotive News. “At this particular meeting, during a conversation on the Genesis brand, the dealers asked to have further discussions on the topic, which already are taking place.”

At present, around 352 Hyundai stores are eligible to sell the Genesis G90. Ideally, Hyundai would limit the luxury sedan to a smaller number of exceptionally nice retailers with Genesis-specific showrooms in regions where the vehicle is most likely to sell. The company announced its goals in August but hasn’t yet come up with a plan that appeases its existing retail network. It hopes to have something everyone can agree on by April.

“The company’s intent has always been that Genesis vehicles will be sold exclusively through a distinct Genesis dealer body that is profitable for dealers and will deliver the luxury experience Genesis buyers expect,” Hyundai said. “Both the company and the dealers are in complete agreement that this is critical for the success of the Genesis brand and the dealer body.”

[Image: Hyundai]

 

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20 Comments on “Genesis of a Dealer Dispute With Hyundai Motor America...”


  • avatar

    Standalone dealers is the way to go if you want to create a serious image for your brand, and not end up with the Lincoln-Mercury issue as progress with the Genesis brand goes forward.

    What I’m seeing:
    G70 looks good
    G80 looks fine
    G90 looks pretty good
    Nice materials, real metal, quilted leather
    RWD and optional V8s
    Simple styling lacking in flim-flam, even if derivative

    The sorts of things Lexus and Infiniti are presently stripping from their lineups (ancient non-competitive Q70, and an LS with no V8 – both of them ugly).

  • avatar
    volvo

    If existing dealers are going to sell a car that goes toe to toe with the LS then I believe those dealers need to be carefully vetted and provide at least the following.

    1. Sales personnel that know the features of and sell only Genesis cars.
    2. No up-selling pressure on the consumer.
    3. No trade-in or financing games.
    4. Service support that is competitive with Lexus. That would include appointments that are honored. Individual transportation to/from the dealer or provide a clean loaner.

    • 0 avatar
      Rick T.

      I’ll be in the market soon for my mid-level or so “luxury” retirement car in a cash transaction. While theoretically willing to explore the Kia and Hyundai offerings, I dread the thought of walking into a dealership only to be met by a salesperson mostly experienced in rolling over underwater equity into an 84-month Rio car loan.

      • 0 avatar
        jalop1991

        “I dread the thought of walking into a dealership only to be met by a salesperson mostly experienced in rolling over underwater equity into an 84-month Rio car loan.”

        This. 100% this.

        I don’t see how a dealer network that built itself up doing that kind of work, can suddenly compete with Lexus.

        It’s almost like they need to find new dealers, with ZERO experience in that Hyundai/Kia “but we’re cheaper!” world, and train them up and set the tone for their new dealerships.

        I know from experience–either you know how to do the high end thing, or you don’t. And no amount of hanging a shingle and declaring yourself there because you have a product will change a low end mindset to a high end delivering dealership.

    • 0 avatar
      ClutchCarGo

      Having been car shopping in a Hyundai dealership this spring I fully agree that a separate sales staff is necessary, and probably a separate showroom. The setting, personnel and clientele in the Hyundai dealership did not impress me enough to give the Tucson a second look. A luxury shopper willing to give Genesis a once over is going to be put off by having that Hyundai experience in the same space. Any smart dealer would realize that and figure out how to segment the space.

    • 0 avatar
      dwford

      Currently Hyundai salesmen would rather stab themselves than deal with a Genesis “customer,” who is essentially a person who can afford an S-Class but is especially cheap. The added ass kissing and other responsibilities are not worth the minimum commission sale (because the Genesis customer expects a huge discount as well as an ass kissing). And dealers, while recognizing the long term (20 year) profit potential, aren’t willing to cough up the money to build stand alone dealerships for Genesis yet. Heck, most wouldn’t cough up the $60k or so it took to buy the tooling and training to get the Equus a few years ago. And why would they for 1-2 sales a month?

      • 0 avatar
        jalop1991

        “Currently Hyundai salesmen would rather stab themselves than deal with a Genesis “customer,” who is essentially a person who can afford an S-Class but is especially cheap.”

        I disagree. Frugal is not cheap. If in fact the Genesis car fulfills the mission, and does so without the brand name tax that M-B or Audi or Lexus requires, then the frugal man will buy it.

        If Genesis customers expect Kia-level desperation sales with Scrooge McDuck-level bundles of cash on the hood, there’s only one way to handle that: make it clear right up front that that’s not how it works. It’s not unlike the old saw about going to prison and immediately setting your reputation by beating the snot out of the biggest guy there. Right away, make it clear and set the expectation, and don’t back off.

        The cheap guys will leave. The frugal guys will give you a chance to show them that the car delivers the same experience as the Benz but without the Benz price.

        Of course, then the dealership has to deliver. And like I said above, that means staffing it with people who have never done it before, who are trained to do it the right way.

        Maybe Genesis needs to hire from the high end hospitality business. Cars, you can train them on. Hospitality and dealing with frugal bazillionaires, that can’t be trained. Either you have it, or you don’t.

  • avatar
    conundrum

    Genesis left the UK in July. I like the headline: “Hyundai U.K. Kills The Genesis After Only Selling 50 Of Them In Two Years – Jalopnik”

    No doubt some people can be lined up to buy these things by dint of cheapo lease deals here in North America. Second-hand ones around here command all the pricing respect of a Chrysler 200. Of course, apologists will say yes but those were Hyundai Genesis cars, not Genesis Genesis vehicles. There’s a big quality difference?

    Hyundai/Kia are in advanced sales decline world wide, and having driven a new Sonata I’m not surprised. Blah with a rough motor.

    C/D has just wrung out a ringer Stinger GT, and it was crazy fast but not a handler by any means and interior materials were price competitive but not premium. The G70 may or may not use the same underpinnings on a shorter wheelbase, because the Stinger may actually be closer to a G80. Who knows but the company? Yet again one is led to wonder, will the one you buy from your dealer be a rocketship like C/D’s or be like the roaring neutered tiger the turbo Sonata has been. Don’t really trust the outfit.

    It’s been two decades since people began to say, hey, Hyundais aren’t too bad these days. And there the matter has rested with little change. Not too bad, almost fully competitive, as every road test review begins because it’s an easy lazy intro paragraph. But now priced like the big boys and with stupid cheap sales every weekend to advertise the innate quality, I suppose. The company needs to get on with delivering real value, not the almost-there quality that has to be flogged off cheap to move the metal.

    Arguing over dealerships for a brand that is unlikely to bother about its residuals after a lease, by being inured to flogging off excess production cheap on a whim, strikes me as not being in a customer’s best interest. YMMV may vary, but hopefully not enough to require a refund on excessive mileage claims. My friend’s 2011 Sonata, a dull old bus, now has 14 recalls to its credit. Way to generate customer loyalty. I don’t believe Genesis can keep up the facade of quality long enough to be taken as a serious quality brand. South Korean companies are aggressive and impatient.

    • 0 avatar
      SC5door

      Genesis won’t generate customer loyalty with the p*ss poor customer service that Hyundai has. They don’t listen, they can’t follow directions, and some people have mailboxes that they never empty but tell you to “call them back”.

      By looking at the glass door reviews they have for the California HQ, it seems to be in chaos.

    • 0 avatar
      bd2

      The Genesis sedan left the UK, the Genesis brand never started there and is slated to launch in Europe in a few years when they actually have a couple of models/powertrains suited for the European market.

      The Genesis sedan (too large for non corporate buyers) with its petrol guzzling TTV6 or V8 was never going to sell in the UK or Europe.

      The G70 and GV70 will be the first 2 models appropriate for the European market (with both diesel and hybrid powertrains) and the planned crossover smaller than the GV70 and the dedicated EV are being developed in large part due to the Euro market (not that Hyundai expects Euro sales to be of any significance any time soon).

      As for the Stinger, yeah, C&D has the most critical review, but they still liked it overall.

      Australia has been the 1st test case for the Stinger outside Korea and its been doing well.

      Basically a 4-5 month wait for buyers to get their Stinger (pretty much everyone opting for the GT model and not the 4-pot) and Kia could probably sell double what they have slated for the Australian market.

  • avatar
    mjrmjr

    I have a 2016 Hyundai Genesis sedan. The dealership experience where I bought it from and take it in for maintenance is ok. But it’s not comparable to Lexus or any of the Germans. To put it simply, there’s no way the Genesis brand is going to become what they want it to be if they’re tied to the existing Hyundai dealership network. They’re going to have to go with separate dealers. The End.

  • avatar
    Carrera

    Genesis deserves its own classy dealership. I’ve just attended the local small-time autoshow and the only cars that impressed me were the G80 and G90. They were quite a distance away on the floor from their mother Hyundai. They are very nice cars.

  • avatar
    mmreeses

    Sounds like Hyundai HQ/Hyundai USA did everything wrong when it came to rolling out the infrastructure to support Genesis.

    Good luck Genesis.

  • avatar
    CKNSLS Sierra SLT

    I have a friend who is a professional businessman. He went to the dealership to buy a Genesis and he said it was like stepping back to the 70’s or 80’s in the games they were playing to sell an upmarket car.

    Let’s face it-if Hyundai was happy with the job the dealers were doing-they wouldn’t be looking elsewhere.

    The dealers brought it upon themselves because they didn’t know-or didn’t car about selling an upmarket vehicle.

    I’m sure they didn’t go in to their “own meeting” stating-“we could have been better? OR-maybe some of this is our fault”!

  • avatar
    Importamation

    I have two local Hyundai dealers within 25 minutes of my house. Neither is a Genesis approved store, but they both keep ultra low mile (500 or less) G80’s and G90’s on hand. They also advertise with giant inflatable bulls (NO BULL!, they paradoxically scream on TV) and toothless customers bragging about “ABC Hyundai got me financed when no one else could”. I love toothless, salt of the earth types as much as anyone, but this all tells me that I am NOT their target customer. And that makes me feel uncomfortable and unwelcome in their showrooms. I drove over an hour away and bought a Lexus eight weeks ago, though honestly I like the G90 as much or better.

    • 0 avatar
      CKNSLS Sierra SLT

      Importamation

      EXACTLY-And now Hyundai Corporate has this mess on their hands-that they largely created, and they don’t know how to fix it!

      They have a great product-and for the most parts-sleazy dealers.

      I bought a 2017 Santa Fe XL for my wife 6 months or so ago. I walk in to the finance office-and two item “magically appear” on the finance contract $500.00 for Nitrogen (that’s right-air) and $400.00 for “key FOB insurance”.

      And I could have bought just about any SUV for my wife. They are sleazy.

  • avatar
    pmirp1

    Hyundai dealers are right to be upset. This past weekend I walked the Nissan lot. They have that old but respectable Frontier. They have the big truck Titan and it’s XD version. They have the really beautiful Armada or whatever that big SUV is. Compare that to Hyundai. They have zero trucks. They have no body on frame SUVs. In a country in love with trucks and big SUVs they are focusing on luxury cars. And they even want to take that away from Hyundai dealers. What do Hyundai dealers have to fight back with?

    Problem are all the Germans Hyundai has hired at executive ranks that keep trying to make the next BMW and BMW franchise. Look at Nissan model (forget Toyota they are at another higher level that is unattainable). Cheap cars and competent trucks are the route to salvation and let your dealers sell the Genesis because you have deprived them from product in the meantime.

  • avatar
    jthorner

    A few year old off-lease low mileage Genesis is a screaming bargain. That said, Genesis can never compete with the real luxury makes unless it has dedicated high-end dealerships. But the question is: Will Genesis ever do the kind of volume and attract the kind of big spending customer that Lexus, MBZ and BMW do? Personally I doubt it. Look how much trouble Acura, Cadillac and Lincoln are having trying to compete.

  • avatar
    mrmk1

    Most of you are on point. I recently decided to move up (relative term) from a ‘15 Genesis to the new ~$72k G90. Despite the new Genesis dealer within a dealer concept… this time the buying experience was much worse than when the Genesis was Hyundai. The process took almost a month due to internal haggling on the lease terms between the dealer and Hyundai/Genesis. I had to physically go into the dealership everytime they needed to change a number. The whole thing was a complete cluster. With Genesis, don’t listen to any of the grandiose hype about a “luxury brand or a luxury experience” from company executives or the (paid) automotive press. Just go in and negotiate as if you are trying to get a deal on a $15k Hyundai Accent… because that’s how it is going to go down. If you are willing to put up with a little bs, you can get a comfortable and reliable product at a very good price. Luxury is nonexistent because you get what you pay for…

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