Genesis’ winged logo was perhaps a sign of things to come. The luxury brand Hyundai Motor Co. launched in November 2015 is about to fly the coop.
The automaker’s global management, now part of the newly formed Genesis Division, moved out of the parent company’s headquarters in South Korea last week. A similar change may be in the works in Fountain Valley, where Genesis shares its North American digs with Hyundai Motor America Inc.
“I think this is very important symbolically as we build our own brand and our own culture here in the U.S.,” said General Manager Erwin Raphael, whose team is getting ready to launch the brand’s third sedan, the G70.
“Right now, I’m not really [excited] about moving anywhere. I have enough on my plate without having moving trucks involved. I don’t see it happening in the next few months, but operationally we are very independent of Hyundai.”
The luxury automaker also shed its maiden name, Genesis Motors USA, and several months ago incorporated as Genesis Motor America. It plans to separate its monthly sales totals from Hyundai’s come spring and report them independently, much like Irvine-based Kia Motors America Inc., which is owned in part by the Hyundai Motor Group conglomerate in Seoul.
“Next year we’ll be operating as a completely separate entity,” Raphael said, “so everything from design and development, manufacturing, and sales and marketing will be independent—as it should be, because we really are a different company with different a soul, so to speak.”
Its Own Space
Genesis also plans to speed up the rollout of its network of dealerships. Next year Hyundai dealers will be required to have a showroom-within-a-showroom for Genesis vehicles at their stores and by Jan. 1, 2021 move them into stand-alone dealerships a full year ahead of schedule.
“Customers, as well as prospective customers in our clinics, have made it clear that the experience they expect while buying a luxury car from Genesis is frankly different than what they believe they could get from a typical mass brand like Hyundai,” Raphael said. “And in order for us to connect with these customers and deliver what they need … we feel that we need to separate the brands even sooner.”
The split will come with a pared-down version of the current sales force. Hyundai’s 835 dealerships, with the exception of about 50 that opted out, sell the Genesis G80 sedan, and 342 of them also carry the larger G90 sedan—the now-discontinued Equus model that was sold under the Hyundai marquee.
Genesis is reviewing dealers’ operations—customer satisfaction, their facilities and location—and will allow just 100 to 150 of them to continue selling its products.
“There’s quite a bit of expense involved in real estate and building facilities and hiring people and systems, and in order to have those dealers successful [and] deliver the type of experience that these customers require, we have to provide a certain level of … sales per outlet, and the luxury market’s only going to sell so many cars,” Raphael said. “We are going to reduce the number of retail outlets. That’s going to be great for the dealers that we select, and they’re going to do very well and provide a great experience for our customers.”
Jim Patterson, owner of the OC Auto Team, which includes Mazda, Hyundai and Genesis dealerships in Tustin and a Mazda shop in Huntington Beach, said Genesis is making a “great move.”
“In order for any dealer to have success with the Genesis brand, there needs to be the right number of dealers,” he said. “Otherwise, they will not be able to sell enough and service enough cars to be a stand-alone brand. I think it will be a lot easier for a dealer to invest in a Genesis facility if they know there are only 100 to 150 Genesis dealers nationally so that they can make a return on the investment.”
Year in Review
Genesis, which has sold 11,563 vehicles this year through July, is off to a good start, Raphael said, calling its first year “amazing.” Its models start at $41,000.
“For example, the G80 is third in sales only to Mercedes-Benz E-Class and the BMW 5 series, but we’re outselling Audi, outselling Lexus, Infinity, Acura,” he said, referring to the models’ national performance.
Still, that’s about 9,000 less than it sold as Genesis and Equus under the Hyundai marquee. But Raphael’s not worried because the brand’s competing head-to-head now with other luxury lines. Its older models didn’t come with the kid-glove perks and advanced safety features that Genesis now offers as a standard.
“Our goal is simply to be considered amongst the other luxury brands, and we believe that if customers are aware of us and they consider us, that we’ll get more than our fair share,” he said.
The automaker’s lineup will also include an SUV within the next two years, which could help boost sales in a market that’s weak except in the SUV category, said Karl Brauer, executive publisher of AutoTrader.com, part of Cox Automotive Inc., which also owns Kelley Blue Book in Irvine.
“A predecessor to this that you can use as a mirror would be Jaguar,” Brauer said. “It made a lot of progress in recent years, but it wasn’t until they launched Jaguar F-PACE SUV—the Porsche Macan competitor—last year that the brand’s total sales volume took off.”
