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Over Half Of Hyundai’s US Dealerships Will Stop Selling Genesis Cars

Dealership / 6 Comments

Hyundai wants to set up standalone Genesis dealerships in the future.

Genesis launched three years ago as Hyundai's luxury sub-brand and is about to launch its third model, the G70 sedan. However, the Genesis US dealership network is about to have a significant shake-up. According to Wards Auto, Hyundai is introducing new agreements franchise holders must sign to continue selling Genesis cars from the 2019 model year.

The strategy is designed to raise brand awareness, distance Genesis from Hyundai, provide a better ownership experience and improve profit margins. Currently, 850 Hyundai retailers are licensed to sell Genesis, but that number is expected to drop to around 400 within the next six months. Executives even think this number is too high for Genesis to be successful.

"Four hundred is still higher than what is ideal," Genesis Executive Director Erwin Raphael told Wards Auto. "I think (ultimately) that will come down." The executive added that Genesis' expected volumes will not enable Hyundai dealers to operate profitably.

Hyundai will offer dealers new franchise agreements allowing them to either sign a new deal to keep selling Genesis or receive a cash buyout based on their past sales performance.

Hyundai's decision to stop selling Genesis cars in over half of US-based dealerships comes as a result of poor sales this year. Genesis sales plummeted after imports were halted in March as the automaker looked to clear inventories.

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Raphael said there now is a less-than 30-day supply of cars on hand. Genesis only sold 613 units in August, and 8,480 units in the first eight months, representing a 36.4% decrease from the same period in 2017.

Genesis wants dealers that stick with the brand to set up dedicated showrooms, but not all dealerships are expected to make the investment. The first standalone Genesis showrooms are expected to open within a couple of years. In the next few years, Genesis will double its model line-up. Within the next three years, two SUVs, including a flagship model based on the GV80 concept and an entry-level GV70 crossover, and a sports coupe will join the G90, G80, and G70 sedans.