This was the result of Hyundai Motor America moving quickly to set up the brand, according to Genesis' global head, Manfred Fitzgerald.
"Everything happened at a fast pace," Fitzgerald told Automotive News. "I think it was an oversight."
Yet Hyundai Motor America has known of the situation for at least 10 months, according to a company spokesman. Genesis is looking into other states where it may also be improperly licensed to sell vehicles.
Hyundai Motor America didn't make Raphael or other executives available to comment last week. In a statement, the company said, "Genesis respects the concerns of the Louisiana Motor Vehicle Commission and is taking all necessary steps so Genesis sales can resume in the state."
In the July 20 letter, a copy of which Automotive News obtained, Raphael alerted the dealers that they would hear separately from the Motor Vehicle Commission about the dealerships' lack of an appropriate license. In Louisiana, automakers and dealers need state licenses to add a brand.
The Motor Vehicle Commission's letter went out a day later. It summoned dealers to an informal conference with the commission in September ahead of a formal hearing scheduled for November, and gave them 10 days to file a written reply and avoid a default judgment. The commission didn't respond to multiple requests for comment last week.
In the meantime, many affected Louisiana dealers are considering legal action against Genesis to recoup costs associated with floorplanning interest charges on the vehicles they are prohibited from selling as well as lost service income.
Raphael, in his letter to dealers, pledged to address the problem. "HMA recognizes its responsibilities in that regard and intends to address them," he wrote.
Because Hyundai Motor America had been shipping vehicles to Louisiana and allowing them to be sold by dealers without proper licensing, the fallout could get costlier for the automaker.
If the Motor Vehicle Commission "considers this an egregious action on the part of Hyundai, it could be a large fine in the realm of large fines," Reynaud said, adding that Genesis could be forced to pay from $10,000 to seven figures to the state.
Liability to dealers is another matter.
"Having said they're a manufacturer and not having their license, that's a breach of contract," Reynaud said.
"In addition to everything else, that could be a civil suit, not just an action before the Motor Vehicle Commission."
Navarre, for his part, sees a more sinister motive behind Genesis' actions. With dealers facing potential Motor Vehicle Commission fines and legal costs for challenging the Louisiana ruling and Hyundai Motor America, "my opinion is that dealers will start saying 'These legal bills are so high so I'm just going to back off,' " Navarre said.
"They'll either take some small settlement [from Genesis] and lose money on it or just get tired of fighting it."