Genesis G70 debut nears while retail network sorts itself out

Genesis expects the G70 to draw younger customers, more women and those who are tech-savvy. Photo credit: AUTOMOTIVE NEWS ILLUSTRATION

TAMWORTH, N.H. — Uncertainty has been a common theme around the dapper Genesis G70’s U.S. launch — not because of the product itself, but rather the retail infrastructure surrounding it.

The sedan’s debut was pushed back several times, and as recently as this spring, the brand’s top global exec was saying it was unclear who would sell it when its summer 2018 release date arrived.

But the blurriness appears to be giving way to some clarity as the brand prepares to finally launch its first model that isn’t a carryover from the Hyundai brand into a retail network where it will share some space with Hyundai products for now.

For Genesis, it’s a compromise that will help keep the peace while it makes critical additions to its lineup. After irking dealers last year by announcing it would expedite plans for an exclusive stand-alone retail network, Genesis backed off under the heat of licensing issues that threatened to stall its separation plans. The opportunity to sell the brand was offered to all Hyundai dealers in the U.S. this spring as long as they agreed to open stand-alone Genesis facilities by January 2021.

So now it’s go time for the dealers who had faith that a Korean luxury brand could hold its own against storied German metal and other competitors such as Lexus. The brand wouldn’t say how many dealers will sell the initial batch of G70s, but General Manager Erwin Raphael said he expects announcements to begin in the next few weeks. He hopes to have all of the Genesis franchises identified by the first quarter of next year. About half of Hyundai dealers accepted a compensation package that releases them from the Genesis network and reimburses them for investments in Genesis inventory, training and tools.

Some Hyundai dealers want to move forward with Genesis even though they didn’t sell any units in their markets in 2017.

“It’s challenging for us to understand the logic there, but that’s not our role,” Raphael told Automotive News during a media event here. “Our role is to support the decisions that were made and move forward and, in time, we and the dealers will know if the individual decisions were the right decisions or wrong decisions.”

Raphael: Expects a sales boost from the sporty sedan

Sterling record

Genesis, fresh off a J.D. Power Initial Quality Study win on the strength of the G80 and G90, has a sterling record at its disposal that will come in handy for the G70. The car is also blistering on a track, so it has the performance cred to turn heads.

As journalists zipped a pack of G70s around a winding track here at Club Motorsports, Raphael spoke about what the car will mean to the brand’s future.

He said the sporty sedan will not only add volume — Genesis sales are down about 27 percent through June — but also a diversified mix of buyers. Raphael predicts that the G70 will draw younger customers, more women and the tech-savvy, all demographics that are “a lot of what we need to make the brand what it needs to be.”

He said the G70’s ad campaign, which will feature TV and digital elements, launches in September, in time for the NFL season. Genesis, the luxury automotive partner for the league, will continue to leverage that big-ticket platform.

Still, the vehicle faces a stiff test upon its debut. Tim Fleming, executive analyst at Kelley Blue Book, is forecasting that the G70 will have a “tough job bringing customers into showrooms, as it’s entering a market that is rapidly shying away from sedans and demanding crossovers instead.” He says the entry-level luxury car segment is down 11 percent this year, based on KBB segmentation and sales data, and has lost market share for seven straight years — 2018 would be the eighth.

Sales potential

A dealer in the Nashville market wishes a crossover had come first, rather than a third sedan in the Genesis lineup. He thinks the G70 is a “fabulous product” but says its sales potential will be limited due to the crossover craze.

Gregory Mauro, owner of Gregory Hyundai-Genesis in Highland Park, Ill., expects that the G70 will go toe-to-toe in his market with vehicles such as the BMW 3- and 5-series sedans and Audi A6. He doesn’t think the current showroom-within-a-showroom model that the G70 will be sold under initially will be a hindrance.

The Nashville dealer said he wasn’t a fan of the decision to open the Genesis franchise offer to everyone. If everyone in his market continues with Genesis, he said, there would be three stores within a 50-mile radius. That prospect concerns him, but he hasn’t closed the door on the brand just yet.

“We have a strong interest in it. We just need to make sure it’s best for us,” he said. “The wrench they threw in it was offering it to everybody. It’s like a football game and, all of a sudden, they’ve extended the field another 100 yards. Tough to make a decision on that.”

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