Genesis grounded in Louisiana

Genesis has suspended vehicle sales, service and marketing in Louisiana indefinitely, citing word from the state's Motor Vehicle Commission that Hyundai Motor America was not properly licensed to sell the luxury brand's vehicles in the state.The move sets up a battle between Genesis and its Louisiana dealers over whether this amounts to a breach of contract by the automaker. It also could have nationwide implications if other states' licensing requirements trip up Genesis, which Hyundai created in 2015 as a separate luxury company and brand, without setting up a separate U.S. sales channel.At least one dealer involved is concerned that Hyundai Motor America may welcome the news because the result could be advancing Genesis' goal of reducing its dealership count nationwide.The problem arose in June when Genesis General Manager Erwin Raphael told Louisiana dealers during a conference call that Genesis' business model was changing and as a result, just two points in the state — reserved for Baton Rouge and New Orleans — would sell the brand, down from 13.An account of the call was provided to Automotive News by Ryan Navarre, president of Billy Navarre Hyundai of Lake Charles, who was on the call, and Claude Reynaud, Louisiana Automobile Dealers Association general counsel, who was briefed by two other dealers on the call.The move would have given the culled stores 30 days to remove signage, suspend marketing and sales and stop taking service orders from Genesis customers.Dealers on the call balked at the idea, according to Navarre, having spent tens of thousands of dollars to improve sales and service areas to Genesis' standards — and previously to Equus standards to be eligible to sell what was then the Hyundai brand's top-line car — and because of customers who would be left in the lurch.Besides, Reynaud said, the proposal wasn't legal.Genesis could have wiped the slate clean and pulled out of Louisiana altogether, after settling with each affected dealer."The difference here is they're talking about retaining two dealers, so what they're doing is treating the dealers differently, and that is strictly forbidden by our law," Reynaud told Automotive News.Genesis' desire to reduce its 352-dealer count is no secret. "I definitely want to get below 300," Raphael told Automotive News in August 2016. The automaker cites Lexus, which has about 237, as an enviable target.Click on the image to enlarge License issue

Genesis grounded in Louisiana

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