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How Badly Does Genesis Need Dealerships?

2019 Genesis G70

When we added the all-new 2019 Genesis G70 to Cars.com’s long-term test fleet in December, parent company Hyundai still sold every car from its new luxury division out of Hyundai dealerships, not stand-alone Genesis facilities. At the time, I deemed it no big deal.

Is that still the case? I think the answer is a qualified yes. Here’s why.

Related: We Bought a Genesis G70: Here’s What We Paid

The Backstory

In late 2015, Hyundai launched Genesis without any stand-alone dealers, a move that put the South Korean automaker in sharp contrast with established Japanese rivals. Consider: Honda launched Acura with 60 U.S. dealerships in early 1986, and Nissan started Infiniti three years later with roughly as many outlets. In 1990, twice as many dealers signed up to sell cars from an upstart Toyota marque called Lexus.

Some three decades later, Hyundai’s dealer rollout for Genesis has come at a glacial pace. The automaker said in early 2018 that it wanted stand-alone dealers for the brand within the year, but officials said 18 months later that all 320 Genesis showrooms across the U.S. remained sections of an existing Hyundai dealership.

Today, the needle has moved little beyond that.

“We currently have 10 retailers that have initiated plans for brand-new, separate Genesis facilities,” spokesman Kevin Smith told me Wednesday. Another 10 to 15 are in the process of moving Genesis into areas that are “not new, but [a] properly separate facility for a better luxury experience,” Smith said, adding that it’s “a start.”

‘As Important as the Product’

How important is a dealership for luxury shoppers? Consumer feedback indicates such facilities can indeed drive higher satisfaction. In J.D. Power’s 32-brand ranking of consumer experience at the dealer, Lexus placed five slots higher than Toyota. Infiniti also outpaced Nissan by five slots; Acura beat Honda by six.

Luxury brands “tend to dominate” in both sales satisfaction and customer service, said Chris Sutton, vice president of U.S. automotive retail practice at J.D. Power.

“All customers value a superior customer experience,” Sutton said. “However, luxury brands may more frequently offer premium services such as loaner vehicles, upgraded amenities, and services such as valet pick up and drop off.”

It appears that importance isn’t lost on Genesis. Erwin Raphael, the brand’s U.S. chief, told me in 2016 that he thought “the experience — the dealer and customer experience — is as important as the product.”

Should You Care?

Our G70 purchase proved that such an experience, at least on the shopping front, remained absent at the time. We bought the sedan at a Hyundai dealership in Chicago’s western suburbs, sold amid Santa Fe SUVs and Elantra compact sedans. Genesis said in 2016 that its showrooms would have specially trained staff, but our experience at three Chicago-area showrooms turned up none of that. All three were Hyundai facilities, where salespeople worked both brands. In purchasing a Genesis instead of a Hyundai, the experience was nothing special.

The brand’s showing in J.D. Power’s dealer-experience rankings appears to reinforce this. Genesis ranked 24th among 32 brands, four spots below Hyundai. If an upscale dealer experience is a perk you look for while shopping for a luxury car, steer clear of Genesis.

But I don’t care. Neither should you.

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Frankly, the brand’s products are good enough to sell out back of a barn. Two model years after the G90 flagship sedan came a stone’s throw from Cars.com’s top annual award, the G70 took our overall prize for 2019. The sedan between them, the G80, ain’t too shabby, either.

We’ve hit our share of ownership bumps, some of them because of the dealership, but one perk outweighs all else: Genesis’ complimentary service valet, which has kept us from setting foot inside the dealership since we bought the G70. Genesis isn’t the only brand to offer the service (Lincoln does, too), but it’s a game changer nonetheless. Valet pickup and drop-off drives customer service scores 26 points higher on a 1,000-point scale, according to Sutton. That’s significant, as the overall gulf between all luxury and non-luxury dealers is just 35 points.

“Usage of valet pickup and drop-off services remains very low,” Sutton added, “but customers respond well.”

Thanks to the program, Genesis owners can largely avoid stepping into the Hyundai dealer once they buy the car. And amid that, sales for the luxury brand have trucked along: They’re up 67 percent from a dreadful 2018 through the first three quarters of 2019, by Automotive News’ tally — remarkable for a brand that sells only sedans in a market gone hog wild on SUVs.

The dealer dilemma remains, to me, a nothingburger. Dealer-experience scores might be higher among certain luxury brands, but it’s far from a correlational certainty. Look no further than J.D. Power’s dealer-experience rankings. The top three brands for 2019? Buick, Mini and Chevrolet.

Cars.com’s Editorial department is your source for automotive news and reviews. In line with Cars.com’s long-standing ethics policy, editors and reviewers don’t accept gifts or free trips from automakers. The Editorial department is independent of Cars.com’s advertising, sales and sponsored content departments.

 
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