In order to make an even bigger step ahead in the following few years, Genesis is currently taking a significant step back in the way it retails its cars. The luxury brand, which is owned by Hyundai, ultimately decided to sell its three models through Hyundai dealers for the time being, but only as part of a plan to open 120 standalone Genesis stores across the country by 2024, stocking them with new models as the brand grows the vehicle segments in which it competes.
The company wants to emulate prominent Japanese automakers Toyota, Honda, and Nissan, who over the past few decades have separately developed independent networks of U.S. Lexus, Acura, and Infiniti dealers.
In the future, as we develop our family of automobiles, Kate Fabian, the marketing director for the Genesis brand in the US, said me, “we’ll look to have separate establishments like Lexus and Toyota.” We want to ensure that important dealers can turn a profit while offering the kind of service that high-end customers desire and expect.
Genesis has traveled an interesting path to get here. It was only a matter of time before Hyundai’s Korean parent, which also owns Kia, separated Genesis into its own luxury marque when it became a full-line supplier for the U.S. market with models ranging from econobox sedans to its original luxury models, Genesis and Equus. After that occurred in 2015, Genesis had three vehicles in its range at the end of the previous year: the full-size G90 and G80, the latter of which is based on the original Hyundai Genesis model, and the G70 sport sedan, which was added the previous year.
The GV80 concept that Genesis unveiled at the New York Auto Show a few years ago will be a component of the 2020 SUV Genesis plans to introduce, as well as a second SUV, an electric vehicle, and a high-performance automobile in the following two years.
But unlike with its selection of vehicles, Genesis hasn’t been as direct and steadfast in determining its distribution system. It is obvious that the Genesis model selection will eventually be sufficient to completely occupy any new showroom. However, for the time being, Hyundai has decided that more than 300 current “elite-level” Hyundai dealerships will also be able to continue selling Genesis vehicles as long as they sign a new franchise agreement calling for separate sales and service facilities for the luxury brand. This decision follows some hesitation on the company’s part regarding the strategy.
The fact that Genesis sold only 10,312 automobiles last year, or half as many as it did in 2017, despite expanding its vehicle selection, indicates that the brand lost some sales momentum while its leadership was working all of this out.
The dealer network has taken longer to organize than we had anticipated and more time to get underway, according to Fabian.
But she emphasized that for the Genesis brand to grow over time, the dealer facility and customer experience must be perfected. Luxury has changed to emphasize the experience and respect for people’s time rather of just the brand or badge, according to Fabian. “We want their time with us to be valuable.” This covers both consumer contacts at a Genesis facility and digital brand engagements. “The experience is equally essential to us as the product,”
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not enough dealerships
The majority of luxury brands have dealerships with opulent showrooms and first-rate amenities, as MotorTrend outlined. Dealerships were significantly more popular hangouts before the coronavirus outbreak than neighborhood mechanics’ shops or quick-service auto repair shops.
Despite being Hyundai’s luxury division, Genesis doesn’t have its own showrooms. The ideal scenario would be to establish independent dealers, as Lexus did with Toyota. Hyundai, however, was hesitant to invest a significant amount of money in these businesses without a guarantee of success.
Numerous states have unsatisfactory franchise laws in place, and Hyundai dealers have already fallen behind other well-known brands in the 2020 J.D. Power Customer Service Index, according to MotorTrend.
The automobile manufacturer had to come up with a practical concierge service to transport cars to consumers for test drives. The rest could then be swiftly and easily handled online if the customer wished to finish the sale. The concierge would supply a loaner automobile and take the vehicle for service if necessary.
Did the service take place at a Hyundai dealership? Yes. However, the client didn’t need to be aware of that.
In the yearly dealership census conducted by Automotive News, Hyundai and Genesis both made changes.
The Genesis brand suffered a decline in the total number of outlets in 2021 even if its eagerly anticipated plan for freestanding dealerships is ready to materialize.
Hyundai Motor America modified the criteria for a Hyundai brand store to be deemed exclusive in January 2021. According to spokesman Michael Stewart, dealerships that don’t divide the two brands into different locations and additionally sell Genesis are no longer referred recognized as exclusive Hyundai dealerships. They are currently categorized as dual stores.
As a result, there were 393 exclusive Hyundai brands as of January 1, down 279 from the previous year. Overall, Hyundai had 827 franchises.
The Genesis franchise, which debuted in 2016, lost 31 locations in 2021, or 9.2% of its network. Genesis had 306 franchises when the year began. According to Genesis spokesman Jarred Pellat, as of last week, its count has decreased to 298. In Lafayette, Louisiana, the first independent dealership for the brand is anticipated to open this week.
However, Genesis’ throughput last year more than tripled to an average of 154 new vehicles sold per franchise. Sales of Genesis tripled in 2021 as well.
840 Hyundai dealerships offered and serviced G80 sedans at the time Genesis made its debut in the United States. 350 of them have the ability to sell and service G90 vehicles.
Genesis selected freestanding outlets instead, hoping to provide a luxurious experience. When Hyundai offered its dealers the chance to sell the Genesis in exchange for their opening of exclusive stores in the spring of 2018, more than half of them accepted settlement payments.
Genesis had 352 franchisees at the start of 2018 and 178 by the end of the same year. On January 1st, 2020, it increased to 352 and then decreased to 337.
According to Pellat, 20 additional freestanding Genesis outlets are being planned and six are now being developed.
The brand’s marketing approach has taken yet another shift.
[UPDATE]: Genesis has gotten in touch with us to explain its new approach. While “independent Genesis retailers will need to develop a standalone facility, per our original announcement, in order to sell MY19 Genesis models and beyond,” the brand is “offering all Hyundai dealers that currently sell Genesis models an offer to stop selling the vehicles, or become a Genesis franchise retailer.”
Genesis made plans to further distinguish itself from Hyundai and Kia by selling cars through its own network of retail dealerships in January of this year. As General Manager Erwin Raphael recently stated, the South Korean premium automaker is now taking yet another strategic shift. Hyundai dealers will be given the chance to sell Genesis vehicles in the United States.
Hyundai is facilitating the sale of Genesis luxury vehicles by American dealers.
Since Genesis was separated from Hyundai to become a separate luxury brand, its fortunes have been rather up and down. The intention was to establish a completely new dealer network for Genesis so that the opulent luxury automobiles wouldn’t have to share showroom space with Elantras until recently. According to a recent article in Automotive News, the original strategy of only allowing freestanding dealers to sell Genesis automobiles has been changed to allow all Hyundai dealers in the United States to offer the upscale brand’s vehicles.
A chain of Genesis shops with roughly 100 stores in 48 markets is what Genesis plans to launch. Although Genesis franchises must still be filed for separately and the dealerships must still set aside unique storefronts and service facilities exclusively for Genesis, it appears that American Hyundai dealers are finding it much simpler to offer luxury vehicles.
A southern U.S. Genesis dealer told Automotive News that by expanding distribution across the country, “you’re going to ease consumer anxieties that they’ll be traveling and not be able to receive service on their vehicle.” “If it works out, it will be fantastic. More sales will increase dealer profitability overall, their dealer network will be strengthened, and all those who wish to sell the product and believe in the Genesis product will be able to sell and service those automobiles. It’s a wise choice, in my opinion.”
How will it operate, then, if a Hyundai dealer does proceed with a Genesis franchise?
It’s possible that there are more Genesis vehicle dealers overall than originally anticipated. The number of dealers currently varies depending on how many Hyundai dealers apply for Genesis franchises and how many of them are accepted, as opposed to the original intention of merely having the 100 or so freestanding dealers. By maintaining some brand exclusivity while being accessible to those who want the cars, Genesis is attempting to strike a balance.
Despite the effort for exclusivity, if you’re in the market for a Genesis and were concerned about how you were going to purchase one, it should be simpler than you initially imagined.
Genesis sales through specific Hyundai dealers will no longer be restricted (Updated)
Hyundai determined that Genesis cars can now be purchased through any Hyundai dealer after initially limiting the luxury brand’s distribution to a small number of dealers. This was done because Hyundai realized that greater distribution increases sales.
Hyundai is reportedly changing its mind about a previous plan to solely sell Genesis cars through a separate retail network of only 100 outlets in 48 markets, the most of which are located in urban locations with a larger market share for premium automobiles. This is according to Automotive News. Only Elite-Level dealers would have been permitted to join the Genesis network, denying many retailers the chance to sell the more expensive models.
Naturally, the majority of the current dealerships opposed the idea since they were unhappy with it. Hyundai is now allowing any business that meets the requirements of the new program to sell Genesis cars. The terms of a new franchise agreement that would be required for stores to become Genesis dealers would depend on state laws, and the facility would need to have exclusive sales and service facilities for Genesis clients.
Potential consumers were worried about having to travel too far to get their car serviced, so it makes sense that Hyundai would want to be more picky about which retailers represent their luxury brand. This issue ought to be resolved through the expansion of the channels of distribution.
However, Hyundai and its sibling brand Kia have not always succeeded in giving that type of customer a luxury brand experience. I’ve tried to negotiate with a number of Hyundai and Genesis dealers as a professional car shopper, and I can say from personal experience that many of these establishments have a long way to go before they can provide the same level of customer service that a prospective buyer would expect from a Lexus, BMW, or Audi store.
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A brand might suffer from the actions of a few dealers that prioritize short-term profit over long-term customer satisfaction, as we witnessed with Kia’s attempt to move upscale with the Stinger.
As Hyundai’s new entry-level sports sedan, the new G70, which shares parts with the Stinger, Genesis dealers must be cautious not to alienate customers of luxury vehicles.
That lesson has hopefully already been learnt the hard way by a sufficient number of Hyundai dealers.
Change: Hyundai clarified the new dealer plan in a reply, saying: “The reality of our retailer network update is as follows: We are extending an invitation to all Hyundai dealers who are currently selling Genesis cars to either discontinue doing so or to apply to become a Genesis franchise retailer. As stated in our initial statement, independent Genesis sellers would need to construct a separate location in order to market Genesis models for MY19 and later.”