Genesis Motors U.S. Dealer Network Will Be Separate From Hyundai by 2020

Hyundai’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.

Hyundai 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 Autofocus.ca and the founder and former editor of GoodCarBadCar.net. Follow on Twitter @timcaincars and Instagram.