Genesis plug-in hybrid, high-performance line on wish list

Genesis has several electric vehicles on the market, but the brand's dealer council chairman said he believes a plug-in hybrid option is needed for those who aren't ready to make the jump to full electrification.

Peter Lanzavecchia, chairman of the Genesis National Dealer Advisory Council, knows of consumers who are intrigued by electricity powering shorter trips. Lanzavecchia owns Genesis of Cherry Hill in New Jersey.

Genesis is aiming to move to an all-EV lineup by 2030, but Lanzavecchia said he believes the brand may tweak that timeline.

Lanzavecchia, 68, spoke with Staff Reporter Vince Bond Jr. about the brand's EV goals, his opening of the first Genesis standalone store on the East Coast and what models in the future product pipeline have him excited. Here are edited excerpts.

Q: How do you feel about the brand's approach to EVs? Is it moving too fast, or is the timing just right?

A: That's a great question for many brands right now. Genesis has announced they're looking to potentially update their conversion strategy as far as the timing and some of the specifics. Obviously, Genesis and Hyundai continue to be all in on EVs, especially in light of the investment underway in Savannah, with the EV and battery plant, but I think the market has spoken. I think the total conversion that Genesis initially announced, which I believe from memory was no ICE model intros after 2025 and no ICE production after 2030, is probably being questioned right now and being updated.

The [dealer council] has also brought to light consumer interest in hybrids. Initially, the Genesis strategy was no hybrids, all battery electric, but I think that is being reassessed. While the product plans and their specifics haven't been released, we have received indication that there are some potential updates being done. Some of that's going to be driven by the technology.

There's a lot of press about range anxiety. The range is often highlighted in new EV entries, but what customers often express as a bigger concern than range is charging time. Most of our EV customers, and Genesis does a reasonable job in the luxury segment with EV sales, but most of my customers continue to have an ICE vehicle in the garage. It's not as if, "Oh, my goodness, we're driving to Washington, D.C., will we be able to get there on one charge? And if not, what are we going to do?," or to Cape Cod or wherever they might be traveling long distance. It's more about the ability to recharge the battery when it's not an overnight charging event at home. That would involve certainly public charging infrastructure, which here in the Northeast is not very well developed. And it would also involve charging at work, which is also not very well developed.

Our new battery architecture does allow for charging from 20 percent to 80 percent in 18 minutes, but that requires what's termed in the industry an ultra fast charger, which are very, very limited in their deployment. We've run the wiring and the conduits for an ultra fast charger at our Genesis dealership. But because that technology is also developing very rapidly, we haven't yet installed one. I guess that's a long way of saying the government can try to make mandates, but, at some point, we have to build cars and sell cars that our customers want to purchase. That's where I think there's somewhat of a disconnect that's hopefully being addressed by our industry in collaboration with the legislators.

Do you feel Genesis should offer plug-in hybrids?

One hundred percent. Often my customers, who are currently in a nice vehicle, that are thinking about when their lease matures, or what their trading cycles are going to be in the next year or two — most of them are not ready to go 100 percent battery electric, but they're intrigued by the idea of a plug-in hybrid that might have 20 or 30 miles of electric-only range, which kind of covers it for many of them, their either daily commute or their daily use. Then if they do need to go on a longer trip, well, the vehicle will just convert into internal combustion propulsion and continue on their way.

Now, we have discussed with [Genesis Motor America] leadership that the complaint about some plug-in hybrids on the market today is lackluster performance when operating under internal combustion propulsion, and we can't let Genesis even consider a plug-in hybrid that doesn't have a high level of performance while driving as an internal combustion engine vehicle, so I don't know if they can thread that needle, or if the economics are going to be such that it'll be attractive. I think Genesis can because of their design and technology and production expertise at the parent company. But it remains to be seen what that model might look like.

Looking at your future product pipeline, what are some upcoming vehicles that you're really excited about?

First and foremost, I'd say the GV80 coupe, which we'll see introduced next year. It'll be in the dealerships next year. Because I think one of the few gaps that exists in the Genesis lineup of our sedans, SUVs and EVs is kind of a high-performance subline; BMW has the M brand. We think that the GV80 coupe should be that first move we have into a really premium, high-performance luxury SUV. We're excited about that.

The X convertible concept gets a lot of attention from the luxury car shoppers and owners and the Genesis retailers. We think that would be a tremendous addition to our showroom, a true halo vehicle. That would really continue to put Genesis on the luxury brand map as a legitimate Tier 1 luxury brand entry right there with the Japanese and the Europeans and the domestics for that matter. That's something we'd love to see. Obviously, it's a very limited production; maybe kind of a semicustom build for our clients and will be very well received. We hear through the rumor mill that Bentley might be also looking at a similar EV convertible concept like ours, and we think that would be great company to be in.

We're also excited about the GV90. If you think about our portfolio, on the sedan side: obviously G70, G80 and G90. Other than that high-performance subline, or subbrand, we're well represented in the volume segments in sedans. Moving over to SUVs, same thing: GV70, GV80. They compete in those large luxury SUV segments, but we think a GV90, and that would be in our minds an ICE vehicle, would be a great addition kind of shoulder to shoulder with the BMW X7.

Then our electric vehicles are well represented: GV60, the electrified GV70 and the electrified G80 sedan. They're great products and are very well received when a consumer has the chance to discover them and climb through them and take them out on the road for a ride. The high-performance version and then that GV90, the GV80 coupe, would really give us, in the near term, a couple more entries that would really round out our portfolio.

The GV90 would be a three-row crossover?

Correct. We do have a model within GV80 that has a third row; it's not for adults and we tell our clients that. But for those clients that might have younger kids or grandkids, it's a good option. But the GV90 would be a true three-row SUV.

How would having that full third row expand the customer base for you?

It's going to open us up to those families that have a need for more than five passengers and some cargo, some duffel bags, some sports duffels, some equipment for the kids or instruments. It certainly doesn't compete in a segment as big as the GV70 or GV80 segment. But I think as we are viewed as a full-line luxury brand, we're going to have more and more shoppers that are going to be looking for that GV90, and we hope it's not too far off on the horizon.

There was a lot of confusion about Genesis' retail model in 2018 and 2019, and whether you were going to have standalone stores or just sell out of the Hyundai stores. Is there clarity now about what the brand wants to do with its dealerships?

Yes, that is crystal clear at this point that the concept of long-term cohabitation, which is the description of Genesis and Hyundai in the same facility, that concept is dead. The only model, the only path forward will be brand exclusivity for both Hyundai and Genesis.

In order for a Genesis retailer to be eligible for all the benefits of the Keystone dealer support program, they will need to be in an exclusive facility.

Genesis did agree, based on dealer input, to have two options for the exclusive facility. You can select what's called an adaptive exclusive, which is completely exclusive sales and service write-up and EV service in that exclusive facility, but still have the ability to service your Genesis ICE vehicles back at the Hyundai facility.

The alternative to that is completely exclusive, which is what we built in Cherry Hill. And the take rate on adaptive has been much lower than originally forecasted because I think with the confidence that retailers now have in the brand, and with the tremendous growth of the Hyundai brand, I think retailers were concerned that continuing to burden the Hyundai facility with Genesis service vehicles was probably not a good idea, except in maybe a very small market. Most dealers are opting for the exclusive design to do all sales and service out of the exclusive Genesis facility.

You opened the first standalone Genesis store on the East Coast. Are you seeing the sales to support that investment?

Actually, yes. I think that my team did what I would say is the impossible in 2022. We sold and delivered 1,500 Hyundais and 1,010 Genesis out of the Hyundai facility. Part of that was due to our digital retailing initiatives, where we can really support the shopping experience of our customers well in advance of them ever visiting the dealership, and in some cases, they never visited the dealership.

We would bring a vehicle for them to evaluate to their home or office, and then consummate the deal digitally, prepare all the delivery paperwork and bring the vehicle and the paperwork to their location.

Now, of course, we're much more proud to have them come to the Genesis facility. Although we haven't had our public grand opening, we're seeing a lot of interest in coming to the dealership. The verbatims that I see in all the customer surveys is, "Yeah, we've been waiting a couple of years for this and turns out the wait was worth it," on those that have come in and spent a little time evaluating the vehicles, or actually coming in for a service visit.

How is the communication with Genesis executives and dealers?

Communication is extremely strong. We have several live meetings per year. We have interim digital meetings. I know that I have frequent calls with the Genesis executive leadership team, Claudia Marquez, Tedros Mengiste; I've spoken to each of them in the last two days. Wendy Orthman, the executive director of marketing, Peter Donnellan, the executive director of aftersales, as well as our partners over at Genesis Finance. It's a very approachable group. It's a very lean group.

You can talk to the decision makers without trying to figure out what the layers are and the hierarchy in the organization. We have also a very strong field with regional management that also is the voice of the dealer and communicated out to headquarters.

For the last several years, we've communicated several required, in our opinion, updates to the support programs. And to be quite frank, it was somewhat difficult to get some of our requests approved because it was tough to ask for additional support when in 2021 and 2022, dealership financial statements were at record levels. Now, there were a couple of reasons for that: Certainly the industry conditions as well as operating out of a shared facility with Hyundai with limited incremental expenses.

But we have been identifying retailer profitability as the No. 1 priority of the retailer advisory board for two or three years now. In hindsight, I don't think they took me quite seriously enough because of the way the financial statements looked for the network.

Now, fast-forward to 2023. And throughout 2023, there's been a material shift in the economics of dealerships and Genesis dealerships, and now we seem to have their attention. So at the October live meeting, I made some opening comments with a presentation of a very serious concern about the trend in retailer profitability that had been developing. There was some tension in that meeting.

And since then, we've received ongoing communication and updates about the support needed to continue to see Genesis retailers commit to exclusive facilities, complete their exclusive facilities and invest in the staff and the processes to provide a superior customer experience in those facilities. It's like Warren Buffett said one time: It's not 'til the tide goes out that you can tell who's been swimming naked. The tide has kind of gone out in 2023 in our industry, and it has now exposed some inadequacies in some of the Genesis support policies with regard to loaner cars, with regard to certified pre-owned, and with regard to just the incentives required to be competitive in new-vehicle sales.

And to their credit, leadership has responded to every one of the issues that we raised in October.

What is your outlook for 2024 for Genesis?

There's always two parts to that answer. One is the luxury industry, and the other is our market share.

The initial read from the economists is that our luxury industry should grow in 2024. We certainly have the confidence that our share of market will grow. If the Genesis brand didn't grow nationally by at least 20 percent [in 2024], I would be very, very surprised. Now there'll be pluses and minuses in that by location. Some locations will grow at a much higher rate than 20 percent, and some might grow less than 20 percent. But I think, overall, even with the declining number of Genesis dealerships, which is the strategy to reduce the number of Genesis retail outlets, we'll see a growth in the 20 percent range in 2024.