Hyundai is shaking up its Genesis luxury brand in the United States with an overhaul of its dealership network.
Starting from the 2019 model year, Hyundai will introduce new agreements to its current franchise holders, which are expected to slash the number of locations where Genesis models are sold by more than half.
The South Korean automaker hopes to improve brand awareness, offer a better customer experience to Genesis customers, distance the automaker from Hyundai and improve profit margins with these new measures, Wards Auto reports.
To cull the number of dealerships selling Genesis models, Hyundai will offer dealers new franchise agreements that allow them to either sign a new deal to keep selling Genesis or to take a cash buyout based on their past sales performance. The car manufacturer currently has 850 locations in the United States licensed to sell Genesis, but expects that number to drop to roughly 400.
Steering buyers away from BMW and Mercedes isn’t easy.
Hyundai’s decision comes on the back of poor Genesis sales throughout 2018. Deliveries fell drastically when Genesis imports were halted in March to clear inventories. According to Genesis executive director Erwin Raphael, there is now a less-than-30-day supply of models. In the first eight months of the year, Genesis sold 8480 vehicles, or 36.4 per cent less than the same period in 2017.
Ideally, the company wants all of its franchises in the United States to establish dedicated Genesis showrooms separate from their Hyundai sales areas. However, Raphael admits that not all franchises will make the investment.
Despite the recent sales decline, Genesis is remaining committed to the United States and, in the next three years, will introduce two SUVs and a sports coupe to sit alongside the current G70, G80 and G90 sedans.