Hyundai’s Genesis luxury brand is aiming to have only 85 to 90 standalone dealerships. That target figure is significantly less than the the number of stores today, but the new luxury brand feels it is imperative to change distribution for Genesis to be profitable.
The situation has created a bit of tension between Hyundai dealerships and the Hyundai mothership. Right now many of the 350 Hyundai stores in the U.S. can sell Genesis vehicles because Genesis was not originally setup as a separate franchise from the Hyundai volume brand.
Hyundai is now setting up Genesis as a separate franchise; one that is similar to other luxury automakers. This means Genesis is commanding standalone showrooms with amenities specific to the luxury brand. In other words, most of those 350 Hyundai dealerships are not going to be selling Genesis products.
Hyundai COO Brian Smith told Automotive News the company will notify dealerships by year’s end as to which markets it wants one of those 85 to 90 Genesis stores. He also cautions the number of stores could grow over time or stay the same; it’s likely dependent on the type of sales volume Genesis carries over the next couple years.
A major pain-point for current Hyundai dealerships has been Hyundai’s willingness to allow non-Hyundai dealers to open new Genesis stores. Once the company lists the markets it wants a distribution point in, anyone can apply for a Genesis franchise.
Current dealers are also waiting on Hyundai’s decision regarding the service of Genesis vehicles. The company has not decided if it will allow Hyundai dealers to service Genesis vehicles; a potential revenue stream from Genesis to dealerships who no longer get to sell them.
Despite the significant matters that are still undecided, Smith says Hyundai wants the Genesis standalone stores going by the time the new G70 sedan launches. The G70 is slated to launch in the spring.