Wednesday, August 31, 2016

Genesis: An Unconventional Launch For An Impressive All-New Luxury Brand

Hyundai will introduce its all-new premium Genesis brand without a single stand-alone dealership. It’s a bold — and unconventional — approach when one considers that Honda launched Acura in 1986 with 50 new dealerships, Toyota launched Lexus in 1989 with 81 new dealerships, and Nissan launched Infiniti the following year with 51 new dealerships.

“We wanted to launch our brand in, really, a very short period of time,” says Erwin Raphael, General Manager at Genesis Motors USA. Accomplishing in nine months what took others many years is a challenge, but he is quick to point out that his company didn’t want to delay the launch — building a new dealer network, which includes licensing, dealer agreements, permits, and construction, requires far too much time.

Genesis is, “ready to go now,” says Raphael, understandably alluding to the all-new G90 flagship full-size sedan that it recently allowed automotive media to drive. The six- or eight-cylinder luxury car, with available all-wheel drive, is exceptionally quiet on the road and its list of standard features is impressive — I’m convinced the inaugural product is exceptional. Yet all brands need more than one car to carry a badge. With that in mind, a slightly smaller four-door, coined the G80 (nobody is hiding the fact that it is really a rebadged Hyundai Genesis sedan) will accompany the G90 under the bright lights in Hyundai showrooms.

That’s correct — the Genesis fast-track to put consumers in sumptuous semi-aniline leather upholstered seats employs the existing Hyundai dealer network. There are more than 800 Hyundai dealerships nationwide, which is a strong footprint, but not all will make the cut and be allowed to operate as a hybrid Hyundai-Genesis dealer. “We’ll have less than 350 of those — hopefully even less than that. I’d like to get down below 300 or so,” clarifies Raphael. Each dealer will be qualified on the new product (sales and service), and trained on how to deliver a premium experience to the buyers. “We have the Genesis Institute that we set up and we train them.” The new Genesis product will be featured in special branded areas. Think of them like the “Magnolia area within a Best Buy... like a separate store within a store,” he explains.

Eventually, Genesis does plan on launching a stand-alone dealer network, much in the same manner of Acura, Lexus, and Infiniti, but the company appears content with its expedited, cautious, and much less expensive, wait-and-see approach. One thing is for sure — Hyundai is in no hurry to build out a new dealer network. “It’ll take some number of years… you’ll start seeing some elements of separation in about three or four years, and by five years you should see some level of individual stand-alone stores. It’ll still be sometime after that when we’ll have a fully-separated brand,” adds Raphael.

Stand-alone dealerships offered Acura, Lexus, and Infiniti the ability to deliver a premium shopping, buying, and service experience within a traditional brick-and-mortar building — keeping the new upscale clientele away from mainstream Honda, Toyota, and Nissan customers. To mimic similar separation, Genesis is countering with a concierge program that will not only deliver a loaner vehicle to the owner’s home or place of work when service is required (complimentary maintenance is included for 3-Years/36,000 miles), but allow new customers to sign sales and lease paperwork offsite — in theory, connected consumers with a smartphone app may find no reason to ever visit a Genesis retailer.

Photo courtesy of Genesis.

Launching without a stand-alone dealer network will be a challenge, but it isn’t the only steep hill that Genesis will be climbing.
As a refresher, Acura, Lexus, and Infiniti each launched with premium flagship sedans (the Legend, LS 400, and Q45, respectively), but those headline acts were soon accompanied by a smaller, less expensive, unique volume models to expand the potential audience. Acura rolled-out the Integra, Lexus offered the ES 250, and Infiniti introduced the M30. In contrast, the Genesis G90 and G80 are both large luxury sedans that closely resemble each other — differentiating the two vehicles to consumers is vital — and the cost of entry is $41,400, which isn’t conducive to volume (according to Kelley Blue Book, the average transaction price for a new car in July was $34,264).

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