New Plan: Hyundai Motor America Wants Separate Genesis Showrooms ASAP

The entire launch process of the Genesis brand was questionable. First, Hyundai launched its luxury sedan in late 2008 as a Hyundai, rather than as a separate entity. At the time, Hyundai considered the cost of developing the car ($500 million) and its Tau V8 engine ($250 million) pricey enough — launching a brand was thought to be a $2.5 billion, 13-year effort.

Hyundai followed up the Genesis with an even pricier luxury car, the Equus, but once again marketed the car as a Hyundai. Then, seemingly doubling down on Genesis’ status inside the Hyundai family, Hyundai launched a second-generation of the Genesis sedan for the 2014 model year as a Hyundai.

Then, as if to suggest the earlier decision to avoid the massive cash infusion necessary to launch a new luxury brand was a poor one, Hyundai launched the Genesis brand in America in 2016 without an entry-level vehicle, without an SUV, without separate showrooms, and did so inside Hyundai dealers.

In fact, the picture is even more muddied than that. All 835 of Hyundai’s U.S. dealers are permitted to sell the G80, Automotive News reports, but any of those dealers who wish to sell the further-upscale G90 must build the Genesis showroom inside their Hyundai store.

The lack of prestige is problematic. So too is the fact that being a dealer for a fledgling premium brand means hardly selling any vehicles: fewer than 5 per month for the average Genesis dealer.

Such poor throughput is no recipe for success at the franchise level, and without successful dealers, Genesis will quickly lose ground before it can even fill its product lineup.

“We don’t see a path forward without a good, strong dealer network that’s also profitable. And we sometimes have to make very difficult decisions in the short run,” Genesis boss Raphel says, “in order to ensure that we take care of our dealers in the long run.”

The G80-only dealers — remember, these were dealers who previously sold this very car when it was the second-generation Genesis — were originally intended to be pushed out of the process once the third-gen model rolled around and Hyundai began to separate the two brands with separate spaces. But it’s clearly becoming obvious to Genesis that brand perception, in mid-2017, is not where it needs to be.

Pulling plans forward will be costly. Hyundai Motor America needs its current Genesis dealer agreements to disappear, which will require outside legal counsel to achieve.

Perhaps there are dealers that, outside of wasting money, will be relieved at the loss of Genesis-oriented responsibility. After all, there’s been little return on their investment to date. Genesis brand sales totalled 11,563 units in the first seven months of 2017, or about the number of C-Class sedans, coupes, and convertibles Mercedes-Benz sells every seven or eight weeks. But the Genesis G70, an intended rival for that C-Class, is due at dealers next year, and an SUV is set to follow. Both products are expected to outsell Genesis’ current duo.

Hyundai announced the formation of the Genesis luxury brand less than two years ago and the sales arrangement was quickly formulated for a U.S. launch one year ago. Hyundai’s desire to extricate Genesis products from Hyundai showrooms is the latest rapid-fire decision, one that should produce a proper plan by the summer of 2018.

[Images: Hyundai]

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