We told you yesterday of the hurdles facing the fledgling Genesis brand, a standalone luxury marque launched two years ago under the umbrella of Hyundai Motor Group. Currently, just two models reside in the Genesis stable — the midsize G80 and full-size G90, with the 3 Series-fighting G70 bowing later this year.
It’s been a slow, measured start for the brand, but a shifting strategy for its U.S. dealer network means these early days haven’t been easy ones. A Genesis spokesman tells us that the brand’s inventory is being whittled down ahead of the launch of the revamped network alongside fresh, 2019 model year vehicles. Just how many Genesis dealers will exist at that time is unknown.
While the network remains a work in progress, Genesis seems confident that its most recent strategy will ease dealer unrest.
At the beginning of the year, the automaker announced compensation packages for some of the 350 elite-level Hyundai dealers that invested in training and building a dedicated showroom space for Genesis products. The new brand wanted a carefully placed network of 100 standalone dealers to separate the two brands and avoid confusion. After all, Genesis was once a Hyundai model.
In the spring, the game changed again. Instead of members of the previous elite-level group applying to become one of 100 standalone dealers in 48 specific markets, Genesis opened the opportunity up to all Hyundai dealers. It still plans to reduce the number of Genesis stores to improve throughput and profitability, but the numbers are no longer set in stone.
“As [Genesis Motor America] receives its state distributor licenses, state by state, we then reach out to all current [Hyundai] dealers in those states and give them a choice to make: accept a lucrative and very fair Separation Offer to forego the ability to sell Genesis vehicles OR raise their hand and tell us they’d like to sign a new Genesis Dealer Sales & Service Agreement and become a new [Genesis] Dealer,” explained Kevin Smith, the brand’s senior group manager of PR.
“Because this is an ongoing process and we’re giving them the choice, there’s no way at this point to know the total number of dealers we’ll ultimately have late 2018 or early 2019.”
Smith estimates that half of Hyundai’s dealers will likely choose to become Genesis dealers. As for those standalone stores, that’s another work in progress.
“For the next 1-3 years, dependent upon market-by-market situations, Genesis will reside in [Hyundai] stores with visible branding separation,” Smith said. “Standalone facilities will come over time.”
Concurrent with the dealer strategy, Genesis began closing the taps on G80 and G90 production in order to sell down its vehicle stock ahead of the revamped dealer launch. The brand wants “the new network to start with MY19 product and as few MY18 as possible,” Smith explained. As it stands, Genesis Motor America has no stock waiting in port and about a month’s worth of inventory. This is reflected in the automaker’s declining U.S. sales numbers.
“Knowing we wouldn’t have a beginning new network of G dealers with MY19 G90, G80 and G70 inventory until third quarter 2018, we decided to hold the majority of our marketing budget for use in the final four months of the year,” Smith added. Once a “critical mass” of new Genesis dealers exist, and with sufficient amounts of 2019 product, the brand plans to ramp up production and offer “reasonable incentives.”
The 2019 G70, currently entertaining journalists at a first-drive event, is the brand’s last sedan for the foreseeable future. After that, three crossovers wait in the wings — essential product for any automaker.