Genesis is doing great things with its vehicles. The G70 has gained almost universal praise for being a proper sports sedan and the new G80 and GV80 are both gorgeous inside and out. Sales, though, could definitely be better. Last year Genesis moved 21,233 vehicles. Part of the reason for those low sales numbers can be placed on their dealer network, where corporate expectations have made things worse.
Dealers of both brands and Hyundai corporate are on different pages when it comes to what needs to be done for the brand. Depending on where you live, one of three things could be true for Genesis dealers: The location is too far, it’s shared with a Hyundai store (usually always the case), or it’s a stand-alone location. I’ve touched on Genesis and their dealer network problems before back when I wrote on Oppositelock.
Case in point, Automotive News reports that Hyundai is wanting dealers to invest in the brand. The upgrades to the dealers are programs known as “Accelerate” for Hyundai and “Keystone” for Genesis. Depending on the upgrades, they could cost anywhere from hundreds of thousands to millions of dollars depending on the location and the dealer.
But dealers and corporate don’t see eye to eye. Dealers don’t think the investments are worth it and don’t feel new vehicle sales have rebounded enough for them to make costly upgrades to dealer facilities, facilities that many customers are still wary to visit in the first place. Hyundai feels differently; speaking to Automotive News, Hyundai America CEO Jose Muñoz feels sales are at a good enough level for dealerships to make the changes:
“When COVID-19 hit, we were the first to market with robust initiatives, and our dealers showed tremendous leadership. Our efforts paid off. Retail sales are up, we are gaining significant retail market share, and our dealers’ net profits and return on sales are up” he told AN.
Muñoz also pointed out another important reason dealers need to get on board with these programs: the next step in the program involves bringing up sales and service customer scores (something they need to get Kia to work on as well) which are well known to be pretty bad.
Not only do dealers feel rushed since the programs were just only announced back in March, but some dealers are saying that the practices in which Hyundai is enticing dealers to invest in their dealerships are misleading or downright coercive.
A dealership group based out of Florida called Braman Hyundai filed suit against Hyundai in August, alleging that Hyundai is engaging in deceptive practices regarding the dealership upgrades. It seems that this suit specifically has a problem with the Genesis upgrades.
Braman says that the Accelerate and Keystone programs are nothing more than incentive programs that work for dealers that play ball, and raises the prices of the cars for dealers that don’t. This all adds up to infighting and price undercutting between dealers. From the Law360:
“If dealers choose to comply with a new set of standards laid down by Genesis and Hyundai, which include building new facilities worth millions and updating their current ones, then they’re eligible for incentive payments worth up to 8% of the recommended sale price of each car they move, according to the suit. This means that dealers who agree to shell out the dough for new showrooms make more money off the cars they sell or are able to offer them at a cheaper price, undercutting noncompliant dealers.”
The allegations get even dirtier as Breman claims that Hyundai charges a $15,000 survey fee for dealers who want an estimate of how much the costs would be for the upgrades.
Florida state authorities have their own bone to pick with Hyundai/Genesis. The state stopped the company in its tracks when it was being selective about what dealers could sell what Genesis models. Florida’s Department of Highway Safety and Motor Vehicles wouldn’t approve licensing for dealers on behalf of Hyundai until they could offer agreements that treated all dealers equally. Ultimately, Breman Hyundai says that the company is in violation of Federal law. Specifically, the Robinson-Patman Act, which prohibits price discrimination by producers.
This all has the potential to get nasty if it’s drawn out in court. But at the end of the day, it’s a storm of Hyundai’s own making. Debuting a new brand is hard. The pandemic complicated matters and made wary dealers even warier to invest millions in a brand that’s still in its infancy.
Hopefully, everything gets sorted out because the potential for Genesis is there; all you have to do is experience their products.
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