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Genesis News: Genesis Plans A Stand-Alone Dealer Network

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Genesis is wanting to distance itself from its Hyundai stablemate by its own dealer network. Currently, if you want to buy or service a Genesis model, you'll need to visit a Hyundai dealership with a discrete Genesis showroom.

According to Automotive News, Genesis is planning to cut down from the 350 dealers eligible to sell Genesis vehicles to just 100 across the U.S.

"The distribution network model where we're selling luxury cars through 840 Hyundai dealerships that are mainstream dealerships just doesn't work. Luxury customers are looking for a different experience. That's really the driving force," said Erwin Raphael, Genesis general manager.

The 100 dealerships will be in 48 markets across the U.S. including Chicago, Los Angeles, New York, and Washington D.C. Dealers in these markets will have the first chance to apply for a franchise. If chosen, dealers will need to have facilities ready by Jan 1, 2021. Dealers who don't apply or not chosen will get a compensation package to reimburse various costs for training, equipment, and inventory.

"Some of these dealers have spent hard costs in the last year. We would reimburse them those costs. If they request us to buy the vehicles back for whatever, we'll buy those back and make them whole. Same with parts and accessories, special tools. We're not going to leave the dealers with any baggage," said Raphael.

Source: Automotive News (Subscription Required)


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This could and I think will be game changing for them. This is what all of Lincoln and Cadillac need to do(obviously there are some already but the rest need to be stand alone as well).

 

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I am not aware of too many Cadillac dealerships that are aligned with something else.  My local Cadillac dealer has been mostly standalone since they opened shop in 1973.  There might be a few, but I suspect not too many Cadillacs are sold in those (small) dealerships.

As for Lincoln, those were paired with Mercury until Ford shut down Mercury in 2009.  Lincoln itself (and Genesis) need to have their own space as separate dealerships.

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The Cadillac dealer in my Phoenix neighborhood was also a Buick/GMC dealer (and Pontiac previously).   But about 2 years ago they moved the Buick and GMC parts across the street to their former used car lot. 

Edited by Cubical-aka-Moltar
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Cadillac has always been a stand alone dealership in Washington, but usually owned by someone or a group that also owned other dealerships.

I totally agree with what they are doing for Genesis. The Luxury buyers do not want to have their high end auto mixed in with lower end products. 

This is where I believe BMW and MB will fail as a high end customer tend to not mix with their lower end cousins.

My big wish is that Cadillac would step up faster with new product and require the existing dealers to invest in remodeling to be 21st century dealerships.

To many are old Cadillac dealerships that have not really remodeled or updated in the last 20-30 years.

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18 minutes ago, dfelt said:

This is where I believe BMW and MB will fail as a high end customer tend to not mix with their lower end cousins.

What?

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I wonder if there are still any single showroom full line GM dealers left.  I remember visiting one specific one as a kid that carried Chevy, Pontiac, Olds, Buick, GMC and Cadillac in one dealer, one showroom in a unique, remote community--Key West. 

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2 hours ago, Cubical-aka-Moltar said:

I wonder if there are still any single showroom full line GM dealers left.  I remember visiting one specific one as a kid that carried Chevy, Pontiac, Olds, Buick, GMC and Cadillac in one dealer, one showroom in a unique, remote community--Key West. 

That might be the only places left like that in the mid west and deep south.

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7 hours ago, ccap41 said:

This could and I think will be game changing for them. This is what all of Lincoln and Cadillac need to do(obviously there are some already but the rest need to be stand alone as well).

 

If the models keep growing, they are going to have to....

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7 hours ago, Cubical-aka-Moltar said:

I wonder if there are still any single showroom full line GM dealers left.  I remember visiting one specific one as a kid that carried Chevy, Pontiac, Olds, Buick, GMC and Cadillac in one dealer, one showroom in a unique, remote community--Key West. 

Key West?  The nearest Cadillac dealer is in Miami close to Homestead, quite a distance from Key West.  I doubt any dealer has been in the Keys in a long time.

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11 minutes ago, riviera74 said:

Key West?  The nearest Cadillac dealer is in Miami close to Homestead, quite a distance from Key West.  I doubt any dealer has been in the Keys in a long time.

There was a full line GM dealer there when I lived in the Keys 30 years ago.  No idea what's there now. 

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Cutting from 350 dealers to 100 doesn't sound like a growth model.  I get that they want their own dealership to make them seem like a stand alone brand and have the separate experience.  But they need more models and better models if they want this to work at all.  They could spend $50 million on a dealership building with a $100k a year salary chef providing gourmet lunches to service customers, but if the G80 is what they are selling it isn't going to make a difference.  

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I think they are going for a slow growth model; Lexus had only 2 models the first several years of it's existence.  They aren't trying to be a high volume luxury brand like M-B or BMW at this point...

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2 hours ago, Cubical-aka-Moltar said:

There was a full line GM dealer there when I lived in the Keys 30 years ago.  No idea what's there now. 

WOW, Key West is bigger than I ever thought in population and business, they have a very nice Cadillac Dealership now there.

http://www.nilescadillac.com/MeetOurDepartments

Took a while but found the current street images and yes it is one massive big GM dealership all under one roof.

https://www.bing.com/maps?q=3500+N+ROOSEVELT+BLVD+KEY+WEST%2c+FL+33040&FORM=HDRSC4

 

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Well, Key West is the Monroe County seat.  The other Keys are too small to support a new car dealer and some are closer to Key West than Miami.  I lived in Marathon in the Middle Keys.  Fascinating place.   A series of little islands connected by bridges. 

Edited by Cubical-aka-Moltar

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They need crossovers in a bad way, crossovers are really the bulk of $30-60k vehicle sales whether they be from a luxury or non luxury brand.   Getting that product mix right is step one, step two is the product.   Their powertrains are dated, the G90's interior is at best on par with a C-class, and they lack any performance vehicles.  

I am not saying they can't do it, but they have to elevate their game and spend more money on product development.  And that is where all these wanna-be luxury brands fall down.  They don't have the volume or profit margins to justify spending $2 billion on developing one car, so they cut corners all over the place and it shows.

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I guess as a household that buys new rather infrequently, I've never gotten the 'dealership experience' thing. Last time my wife bought new, the whole transaction took maybe an hour. I'd rather have a free wheel upgrade than pastries & mood music.

Cadillac dealer by me was an Olds-Cad store on a back street since the '60s. Wife got her Intrigue there, dealer was quite dated, but again, the time spent there was inconsequential. They build a new building on a major highway & moved, but in '08-09 it closed. The local Ford-Linc/ Buick-GMC-Pontiac/ Chevy dealer bought them, and for a few years Cadillac & Chevy were in the same building, but a few years back they built a stand-alone Caddy store/service department. Haven't been in there yet.

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As long as Genesis properly tempers expectations and does a quality control roll out, they should do fine.

Fact is the days of old having thousands of dealers within miles of each other are over. Even the loyalty to the same dealer is pretty gone for most as like rabbits in heat, as long as they get the service satisfaction, the owner will tend to take their auto to where ever is convenient and close to get the work done.

Sad as I hear this all the time that my coworkers do not care which Cadillac, BMW or MB dealer they go to as long as they get the work done and especially if the OEM is covering the work.

I myself love a great dealer experience where they know me, my auto's and take care of me.

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11 hours ago, smk4565 said:

Cutting from 350 dealers to 100 doesn't sound like a growth model.  I get that they want their own dealership to make them seem like a stand alone brand and have the separate experience.  But they need more models and better models if they want this to work at all.  They could spend $50 million on a dealership building with a $100k a year salary chef providing gourmet lunches to service customers, but if the G80 is what they are selling it isn't going to make a difference.  

I have no clue the numbers but what do the other luxury brands have for dealerships? 

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I assume the fewer dealer numbers is because Genesis is setting up separate stores, rather than being glommed onto existing Hyundai stores...makes sense there would be more Hyundai stores....

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15 minutes ago, Cubical-aka-Moltar said:

I assume the fewer dealer numbers is because Genesis is setting up separate stores, rather than being glommed onto existing Hyundai stores...makes sense there would be more Hyundai stores....

Agreed, in Asian minds, remember I am married to one from South Korea and having gone to college in Japan. Asians want exclusivity and that does not mean it is the Toyota, Chevrolet etc. of common auto's. 

In fact I see more asians driving Tesla, Cadillac, Land Rover, etc. the high end brands do not cater to everyone from just starting out college student to the ubber 1%. 

This is why I think BMW and MB will loose out in the asian rim and north america eventually as they are no longer giving that exclusive luxury experience.

Hyundai has seen that they need to keep the Genesis as a luxury level exclusive brand and as such, separate from Hyundai that has cheap efficient marketing dead to rights that people know it for.

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55 minutes ago, ccap41 said:

I have no clue the numbers but what do the other luxury brands have for dealerships? 

According to this story in Detroit News, Cadillac has 928 Dealerships down from 1422 at the Bankruptcy and Cadillacs boss thinks that is way too many. The story goes on to say that as of 2015 Cadillac had 200 stand alone stores, he would like to get that to 300 and reduce the combo stores by half.

http://www.detroitnews.com/story/business/autos/general-motors/2015/01/21/cadillac-considers-boutique-stores-small-dealers/22144177/

We could probably get a clear picture of the 18K dealerships in the US and how it breaks down by brand and stand alone store but it requires a yearly membership fee of $588.

https://www.statista.com/topics/3594/auto-dealers-in-the-us/

 

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19 minutes ago, ccap41 said:

Do you know how many dealerships the German brands have for comparison? 

Here is what I could quickly find:

BMW - 342 Dealerships based on their best awards press release.

https://www.press.bmwgroup.com/usa/article/detail/T0268294EN_US/bmw-of-north-america-announces-best-dealership-awards

Mercedes-benz - 382 Dealerships based on counting them on the MB website. 

https://www.mbusa.com/mercedes/dealers/locator#!layout=/dealers/locator&businessType=DEALERS&radius=25&expandRadius=false&searchType=byZip&zip=&stateCode=WA

Audi - 280 Dealerships based on their find a dealership website.

https://www.audiusa.com/dealers-webapp/map

Porsche - 189 Dealerships based on their find a dealership website.

https://www.porsche.com/usa/dealersearch/

VW - 650 to 750 based on this news story that states 650 as of the end of 2015.

http://www.autonews.com/article/20150112/RETAIL07/150119934/vw-plans-to-add-100-u.s.-dealerships-by-2018

And Cadillac has 928

Lincoln has 3000+ based on them being in every Ford dealership location according to Ford's web site. Taking a look at their locator it truly seems to hold true.

http://content.dealerconnection.com/vfs/brands/us_lincoln_en.html 

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Lexus has about 400 dealers I believe.  Maybe Cadillac can sell some of their buildings to Genesis.

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