A Florida Hyundai and Nissan dealer was awarded $16 million this month by a jury in a U.S. District Court lawsuit in which he claimed Hyundai Motor America reneged on an agreement to give him first right of refusal on two open Genesis points.
Hyundai said in a statement that it disagreed with the verdict and will appeal.
The jury in the 3-year-old case, Action Nissan Inc. and William Nero vs. Hyundai Motor America and Genesis Motor America, found that Hyundai had reached a settlement with Nero on a separate matter in 2009, and that the earlier agreement included right of first refusal if Hyundai established a luxury brand within a decade.
The jury found that Hyundai did establish the Genesis luxury brand within that time frame and had breached an agreement with Nero on the open points. Nero also owns Universal Hyundai in Orlando, Fla.
Genesis was formally launched in 2015 but struggled to define a retail model in the U.S. in the years that followed.
In the early days of Genesis, Hyundai and its dealers were at odds over who would get to sell the new luxury line. At a dealer council meeting in November 2017, tensions flared between the dealer advisory group and Hyundai Motor America executives.
Automotive News reported at the time that advisory board members briefly walked out of the 2017 meeting after dealers were told of a potential decision by Hyundai to open points of sale for Genesis stores in select locations to non-Hyundai retailers. Hyundai later reversed course and gave all of its dealers the right to sell Genesis vehicles.
In the Nero case, consultant Patrick Anderson, CEO of Anderson Economic Group, testified that Hyundai's actions had cost the dealer between $13.6 million and $16 million.
In an email to Automotive News, Anderson wrote that "the market 'blue-sky' multiples, income and real options methods were used to calculate the loss of franchise value, with the market being primary."
Hyundai said in an email to Automotive News that "we were disappointed by and disagree with the judgment and regret that we were unable to come to a mutually satisfactory resolution before the trial.
"Hyundai Motor America will appeal the decision," it said.
Nero told Automotive News last week that he expects the verdict to withstand Hyundai's appeal.
"I do think we'll prevail," Nero said.
Jurors deliberated just 90 minutes before reaching the verdict, which suggests most of that time was spent determining the monetary damages, he added.
But Nero stressed that he has no hard feelings over the dispute and sees a bright future as a Genesis dealer through his Hyundai franchise.
"It's a very strong brand," he said, "and one that I am proud to represent."