Luxury car buyers aren't interested in walking into a Hyundai dealership.
Creating and defining a new car brand, be it luxury or mainstream, is not easy – especially when competition is fierce. This is currently the dilemma Genesis, Hyundai’s semi-new luxury division is facing right now. According to Automotive News, Genesis brand management wants an immediate separation from Hyundai, instead of the originally planned several years, in order to pursue a new sales strategy. Later this month, Genesis will supposedly reveal a new retail strategy specifically for the US market that will see it further separated from Hyundai.
What does that mean, exactly? Basically, only a certain number of Hyundai dealerships are even allowed to sell the Genesis G80 and G90 right now, and that figure will be further reduced in an effort to enhance exclusivity. Remember, both Genesis sedans compete directly with the likes of the BMW 5 and 7 Series and the upcoming G70 will take on the 3 Series. Genesis crossovers are also currently in the works. But this pending divorce from many Hyundai dealerships could create some problems, mainly because those dealers are losing models to sell. Also, which dealers will be dumped?
No doubt this separation will damage some dealer-automaker relationships. Hyundai’s outgoing strategy for the Genesis brand hasn’t worked very well. For example, right now any of Hyundai’s 835 US dealers can sell the G80, which was formerly the Hyundai Genesis. A total of 352 of those dealers also opted to sell the larger G90, but doing so requires each of them to build a "showroom-within-a-showroom." The next phase of the Genesis brand rollout would have seen its own separate dealerships in two to three years, but the new plan will expedite this by one to two years. Genesis executives seem to clearly understand the urgent need for exclusivity.
If luxury buyers are being targeted then chances are they don’t want to be seen walking into a Hyundai dealership as they cross-shop BMWs and Mercedes’. Also, a smaller and more exclusive Genesis dealer network will allow parent company Hyundai to maximize profits. But at the same time many Hyundai dealers may not be so willing to give up Genesis, and that’s where this divorce could get messy.