Spinning off the Genesis brand may not be all good.
One of the biggest difficulties with selling a luxury car is setting up a dealer network to provide excellent service. It is all well and good to sell an expensive car from a "normal" dealership, but some people who spend a lot of money on their car like to know that they will be getting a nicer dealer experience. Hyundai has been trying to separate its Genesis brand from the main Hyundai brand. Like Toyota did with Lexus, Hyundai will give Genesis its own dealerships that will sell the G80, G90 and upcoming G70 3 Series fighter.
Unfortunately the move to open standalone Genesis dealers has not been going smoothly. Automotive News reports that a dealer conference in Dallas turned sour when attendees briefly walked out of a meeting with Hyundai Motor America's newly appointed CEO Kenny Lee and COO Brian Smith. The walkout occurred because of rising frustration among Genesis dealers and conflicting views of their future role within the retail network. Sources close to the incident said that the frustrations began after Hyundai made a decision to open points of sale for Genesis products in key markets to non-Hyundai retailers. Dealers were reportedly angry about the minimal compensation for dealers that can no longer sell Genesis.
Many Hyundai dealerships were hoping to add a Genesis franchise. Dealers already have the ability to sell the G80, but Genesis required that they go through extensive training and facility improvements in order to sell the G90. 352 Hyundai stores are currently allowed to sell the G90, but the company is now looking to cut this number to around 100. "The company's intent has always been that Genesis vehicles will be sold exclusively through a distinct Genesis dealer body that is profitable for dealers and will deliver the luxury experience Genesis buyers expect," Hyundai said. "Both the company and the dealers are in complete agreement that this is critical for the success of the Genesis brand and the dealer body."
The Genesis brand is in the midst of a huge expansion. The brand just recently revealed its rival for the BMW 3 Series, the G70, and has plans to introduce three new SUV models by 2021. We have no doubt that Hyundai needs to separate its Genesis dealerships from the main Hyundai stores, but it may need to find a different strategy so that it doesn't anger its own dealer network.