Hyundai dealers grapple with Genesis selection process

LAS VEGAS -- There's a contingent of Hyundai dealers who are upset that they won't be one of the 100 or so operations that get a standalone Genesis store as the fledgling luxury brand charts its path forward.

Most of Hyundai's approximately 840 dealers will lose their right to carry Genesis products, including all of the nearly 500 stores that sell only the Genesis G80, as Genesis trims its network to about 100 stores concentrated in 48 markets. Those locales include Chicago, Los Angeles, New York, Miami, Washington, D.C., and San Francisco

But not all hope is necessarily lost for them, says Brian Smith, COO of Hyundai Motor America. He said it's likely that the brand will expand its store count in the future. Although the Genesis store rollout has been a hot-button issue for Hyundai dealers, Smith said there were only a few questions regarding the brand.

"We're trying to be clear that the first wave of where would Genesis launch as stand-alone facilities is the first wave," Smith said after Hyundai's make meeting Sunday. "There are going to need to be more dealerships added over time to cover geography, to do the right thing for customers. Dealer profitability is a huge, important factor. For any manufacturer, especially luxury manufacturers, the dealers have to be profitable to give great customer service."

Genesis General Manager Erwin Raphael said in January that he expected to begin announcing the franchise recipients in the next few months. Dealers who are awarded franchises will have to build or renovate facilities by the end of 2020. They must be operational on Jan. 1, 2021. A spokesman said stores can renovate a facility, but they have to meet sizing requirements and other parameters. The stand-alone store, according to the spokesman, must "share nothing with any other brands."

The Genesis brand has also faced criticism from some in its dealer body that it's preoccupied with being Lexus. Smith said he'd welcome Lexus-level success, but added that "we're not really doing anything benchmarking Lexus, saying this is what we want it to be."

Smith said, "If we could say five years from now Genesis is performing exactly like Lexus is in the marketplace, it would be a huge win. But we also aren't saying today's market where Genesis is launching is exactly like Lexus' market 30 years ago."

There are "dramatic differences, some are just in the market. There have been [Genesis] products on sale, there are current owners who are a part of the Genesis family. None of that was the same as Lexus. There was tremendous difference. But, at the end of the day, I think it's a great target."

The plate is full for the Hyundai brand as well.

Hyundai has prepared a menu of products to fill out what had been a thin light-truck portfolio. The Kona, the brand's first subcompact crossover, is on the market. The redesigned Santa Fe and its XL variant are on the way along with the freshened Tucson compact crossover that debuts at the New York auto show. And the new hydrogen-powered Nexo crossover, while not a volume player, will be a technological flagship for the brand.

On the car side, Hyundai is reviving its Veloster hatchback for the 2019 model year with a new platform and the brand's first-ever N performance model for the U.S. market, along with a more muscular design akin to a sport coupe.

Smith said launching so many vehicles so close to one another is a challenge.

"We have to build a train on all of it, we have to be able to get all the service processes up and running on all of it, new technology," he said. "Everyone's working it."