Franchise count in flux as Genesis shifts

Realignment at the Genesis luxury brand explains why its franchise count dropped nearly in half last year.

Genesis reported 178 U.S. franchises at the beginning of 2019, down from 352 a year earlier, according to Automotive News' annual dealership census. But the dip was temporary as Genesis, which launched under Hyundai in 2016, remakes its retail network.

The brand's franchise count already is up substantially since Jan. 1, to 250 retailers as of Feb. 22, Genesis spokesman Kevin Smith said. Genesis expects to add up to 75 more within a couple of months.

"We estimate that by the time we have our first Genesis dealer meeting in late April, we'll have a complete new Genesis retail network of approximately 300 to 325 dealers," Smith wrote in an email to Automotive News.

A year ago, Genesis opted to make over its retail network to create more of a luxury sales experience. Previously, 840-plus Hyundai dealerships could sell and service Genesis G80 sedans; about 350 of those stores also could sell and service Genesis G90 sedans.

"Genesis executives realized what the brand needed to better meet or exceed customers' expectations was a smaller, more committed, better trained, separate and more profitable Genesis retail network," Smith said.

The brand initially said it wanted just 100 Genesis dealerships. But last April, all Hyundai dealers were offered the opportunity to sell Genesis if they agreed to open standalone stores by January 2021. More than half of the dealerships bowed out, accepting a settlement payment to release them from the Genesis network.

Sales for Genesis, already with a limited lineup, were hampered last year when the brand for a time stopped vehicle shipments as it repositioned. Sales dropped by nearly 50 percent to 10,312 vehicles, according to the Automotive News Data Center. That meant, even though the brand's franchise count shrunk substantially, sales per franchise also plummeted — down 34 percent to 39 vehicles per outlet in 2018.