By on July 12, 2018

We told you yesterday of the hurdles facing the fledgling Genesis brand, a standalone luxury marque launched two years ago under the umbrella of Hyundai Motor Group. Currently, just two models reside in the Genesis stable —  the midsize G80 and full-size G90, with the 3 Series-fighting G70 bowing later this year.

It’s been a slow, measured start for the brand, but a shifting strategy for its U.S. dealer network means these early days haven’t been easy ones. A Genesis spokesman tells us that the brand’s inventory is being whittled down ahead of the launch of the revamped network alongside fresh, 2019 model year vehicles. Just how many Genesis dealers will exist at that time is unknown.

While the network remains a work in progress, Genesis seems confident that its most recent strategy will ease dealer unrest.

At the beginning of the year, the automaker announced compensation packages for some of the 350 elite-level Hyundai dealers that invested in training and building a dedicated showroom space for Genesis products. The new brand wanted a carefully placed network of 100 standalone dealers to separate the two brands and avoid confusion. After all, Genesis was once a Hyundai model.

In the spring, the game changed again. Instead of members of the previous elite-level group applying to become one of 100 standalone dealers in 48 specific markets, Genesis opened the opportunity up to all Hyundai dealers. It still plans to reduce the number of Genesis stores to improve throughput and profitability, but the numbers are no longer set in stone.

2018-Genesis-G80-610x407

“As [Genesis Motor America] receives its state distributor licenses, state by state, we then reach out to all current [Hyundai] dealers in those states and give them a choice to make: accept a lucrative and very fair Separation Offer to forego the ability to sell Genesis vehicles OR raise their hand and tell us they’d like to sign a new Genesis Dealer Sales & Service Agreement and become a new [Genesis] Dealer,” explained Kevin Smith, the brand’s senior group manager of PR.

“Because this is an ongoing process and we’re giving them the choice, there’s no way at this point to know the total number of dealers we’ll ultimately have late 2018 or early 2019.”

Smith estimates that half of Hyundai’s dealers will likely choose to become Genesis dealers. As for those standalone stores, that’s another work in progress.

“For the next 1-3 years, dependent upon market-by-market situations, Genesis will reside in [Hyundai] stores with visible branding separation,” Smith said. “Standalone facilities will come over time.”

Concurrent with the dealer strategy, Genesis began closing the taps on G80 and G90 production in order to sell down its vehicle stock ahead of the revamped dealer launch. The brand wants “the new network to start with MY19 product and as few MY18 as possible,” Smith explained. As it stands, Genesis Motor America has no stock waiting in port and about a month’s worth of inventory. This is reflected in the automaker’s declining U.S. sales numbers.

“Knowing we wouldn’t have a beginning new network of G dealers with MY19 G90, G80 and G70 inventory until third quarter 2018, we decided to hold the majority of our marketing budget for use in the final four months of the year,” Smith added. Once a “critical mass” of new Genesis dealers exist, and with sufficient amounts of 2019 product, the brand plans to ramp up production and offer “reasonable incentives.”

The 2019 G70, currently entertaining journalists at a first-drive event, is the brand’s last sedan for the foreseeable future. After that, three crossovers wait in the wings — essential product for any automaker.

[Images: Genesis]

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18 Comments on “Genesis Hits the Partial Reset Button As It Awaits 2019 Models...”


  • avatar
    mmreeses

    the reality is that the world doesn’t need yet another mass market luxury car-SUV brand.

    Tesla took the oxygen of whatever room was available in the market for a new luxury brand. Jaguar even with its new lineup is barely making a dent in volume compared to BMW, Merc.

    Good luck though. I always like more choice.

    • 0 avatar
      jkross22

      While more choice is good, I have to agree with you. I don’t see the brand differentiator with Genesis even though I’m definitely going to check into their G70 and G80.

      I don’t see what Genesis does better than competition. I see they’re less expensive and a bit more like a Korean Buick, but someone in Hyundai hq needs to stake out some ground with their brand, because right now, I don’t see them surviving.

    • 0 avatar
      jalop1991

      Acura.

  • avatar
    R Henry

    The Genesis situation is a very illustrative view of what happens when a corporate marketing initiative is poorly conceived and incompetently executed. Hyundai built the wrong product, tried to sell it at the wrong price, from a pathetically ill-prepared, underwhelming dealer network. They deserve all the red ink this debacle is producing.

    • 0 avatar
      tonycd

      Great chance for vulture buyers to get killer deals on lightly used luxury sedans, though. And unlike tomorrow’s Teslas, you’ll still be able to get the parts.

    • 0 avatar
      bd2

      Putting aside that the Genesis/G80 has long outsold the GS, CTS, A6, Q70, XJ, etc. (basically everything not the E Class and 5 Series), it’s way too EARLY to come to any conclusion about the brand, as they are basically just starting off.

      They haven’t built-out the Genesis dealership network yet and still only have 2 (both sedans) of the planned (basic) 7 model lineup (will be more when counting the EV models), including the crucial CUVs.

      Once they get everything in place (in about 3-4 years time), can see them match or maybe even exceeding Acura sales volume (and doing so at a higher price-point across the board).

  • avatar
    geozinger

    I’ll add to the general skepticism on this deal.

    Although, history may repeat itself. I don’t remember what the commentary was upon the launch of the Hyundai brand in the US 30+ years ago, but I’d imagine it would be similar to what we’re saying today. The Koreans play long ball, too. Their mainstream brand is regarded the same way as much older car companies.

    We may have to wait 20 years, but possibly we could see Genesis becoming a top-tier brand.

    • 0 avatar
      thegamper

      Agree, they are doing just fine for the first act. Probably losing money, but I would guess that has more to do with no crossovers being offered than anything else. Not impossible to have a hit right out of the gate, but as a long term strategy, sales today mean very little. More and better model mix, advertising will help build the brand. They certainly couldn’t do worse than Acura or Lincoln.

    • 0 avatar
      bd2

      One of the difference-makers (distinguishing factors) is that Genesis will offer RWD-based CUVs.

    • 0 avatar
      Art Vandelay

      No, I remember the Hyundai launch. It was not the same discussion…everyone marveled at how bad the cars were. I haven’t seen an Excel or S-coupe in 20 years. those first cars were bad.

      Nobody thinks the Genesis line is bad, to the contrary people typically have only good things to say. The focus is simply on the business case. Honestly I’d say it is closer to all the “The Japanese make great small cars, but Lexus…come on man nobody wants a big Japanese car”. They can make a go at it BUT they have to get them out of Hyundai dealers (and I own a Hyundai so it isn’t raw snobbery). The Billy Fucillo style yelling ads dont play in that market.

  • avatar
    PrincipalDan

    I’m surprised they haven’t had more discipline in following Lexus’ strategy, not every Toyota dealer has a Lexus store and they seem to be difficult to get. The local Toyota Dealer is part of a dealer group that owned a Toyota store and a Chevrolet/Cadillac store in very close proximity to each other. GM took the Cadillac franchise away during the bankruptcy.

    I expected the Toyota dealer to make a play for a Lexus franchise (the nearest one is 130 miles away) but so far no dice.

    I also find interesting right now too is when I search for used Genesis cars they are all at Hyundai dealers with no Genesis franchises having a used car operation. I guess they have to only sell new cars until their CPO program gets up and running.

    • 0 avatar
      bd2

      The initial plan was for a hundred strong Genesis dealership network; which, imo, was too small as numerous states/regions (such as South Carolina) would be without a Genesis store.

      But that plan was abandoned as there was major pushback from Hyundai dealerships (of the 100 planned dealerships, about 80 were to be awarded to dealership groups owning a Hyundai franchise and the rest to be awarded to dealership groups w/o a Hyundai connection).

      Higher volume Hyundai dealerships were offered as much as $4 million in compensation to walk away from getting a Genesis franchise, but they refused.

      Due to auto dealer-ship franchise laws (which vary from state to state), the previous plan (which, frankly, wasn’t a good one) Hyundai needs its dealerships to be on board – which is why they have opened the possibility of getting a Genesis store to everyone (as long as they meet the pretty hefty build-out requirements).

      With such strenuous requirements (estimated to be $8 to 10 million), Hyundai is counting on the majority of its dealerships to walk away.

  • avatar
    Sub-600

    The G70 is a handsome car in white.

  • avatar
    zipper69

    The G70 shows any number of styling cues from Jaguar, even a hint of Panamera in it’s sidelines

  • avatar
    Acd

    Maybe 2019 will be when Genesis can outsell Alfa Romeo again.

  • avatar
    Bimmer

    Did I miss that memo? Because I’ve seen G70 driven around Ontario highway last week.

  • avatar
    Jim Trainor

    Clearly, Art, you DON’T remember the launch. Your ridiculous comment…”everyone marveled at how bad the cars were”… is dead wrong. Go back and check the reviews. Oh, btw, the original Genesis was picked as the North American Car of the Year in its first year out of the box. Say what you want about that award, but I’m quite sure it’s NOT decided by how bad a car is.


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