Genesis, the premium arm of Hyundai, has suspended sales, service and marketing in Louisiana indefinitely after the state’s Motor Vehicle Commission said that Hyundai wasn’t properly licensed to sell Genesis models in the state.
This move also sparked a battle between Genesis and its Louisiana dealers over whether this counts as a breach of contract by the car maker, AutoNews reports.
It could also mean the beginning of trouble for Genesis nationwide if other states follow the example of Louisiana. Genesis was launched as a separate company and brand from Hyundai in 2015 but they didn’t set up a separate U.S. sales network.
Dealers of the brand are already upset because of Hyundai Motor America’s plans to reduce the Genesis’ dealerships across the nation. Back in June, Genesis General Manager Erwin Raphael told Louisiana dealers that the company’s business model is about to change and as a result only two points in the state will continue selling the brand, down from 13.
The dealers however didn’t like the news as they already had spent tens of thousands of dollars to improve their sales and service areas up to Genesis’ standards. If the company indeed wishes to retain two dealers, it could also face legal challenges as such a move means that the company is treating dealers differently and is forbidden by law.