Hyundai’s Genesis luxury brand has halted all sales, service and marketing in the state of Louisiana. The swift action comes amid the revelation the company does not have proper licensing from the state to sell vehicles, according to Automotive News.
The Genesis brand was setup in 2015, but not as a separate sales channel within the Hyundai organization. Instead, Genesis has taken a “store within a store” approach with Hyundai dealerships. This arrangement apparently brought to the attention of state officials after Genesis General Manager Erwin Raphael mentioned during a conference call that the company plans to pare down the number of Genesis stores in Louisiana to two from 13.
Genesis runs the risk of catching the attention of other states going forward for similar reasons. It’s also now running the risk of Louisiana dealerships suing the company for breach of contract.
Hyundai and Genesis are claiming this lack of a state license is the result of rapidly setting up the Genesis brand. Essentially they are saying this is an omission on their part. The license is needed by both the automaker and dealerships to setup a new brand within the state.
Louisiana dealerships are not convinced there was a lack of intent. It is no secret Genesis wishes to reduce its 362 dealership count in the U.S. Dealerships allege that the company perhaps planned this move, which has the potential to allow Genesis to shed dealerships in the state.
Genesis wishes to end up with just two stores in Louisiana; one in Baton Rogue and one in New Orleans.
Dealerships are, of course, upset over the matter. Most of the 13 Genesis stores in the state spent thousands of dollars upgrading their facilities to Genesis standards in order to sell the luxury cars.
Needless to say, the matter is far from over. Genesis says it is working swiftly to resolve the matter with the state, but has not detailed what exactly it plans to do with dealerships. Parent company Hyundai may find itself in further legal problems over this in the coming weeks.