Genesis dealer says standalone stores are critical

The young Genesis luxury brand continues to hit growth milestones in the U.S., even though its dealer network has been slow to step up and construct standalone stores.

The automaker just had two more dedicated retail locations open this month. But out of 270 dealers for the brand, which launched in 2016, only four so far have opened standalone stores.

The factory and its retailers acknowledge that the dealership effort is critical.

Without standalone facilities that enable an elevated, luxury experience, Genesis will remain at a disadvantage to established premium makes it aspires to compete against, said Tim Bergstrom, dealer principal of Genesis of Appleton in Wisconsin. His store, which opened this month, is only the brand's third standalone facility and the first in the Midwest. A fourth just opened in Coconut Creek, Fla.

"Genesis has an incredible product, so we're excited to invest, but we know throughput is a challenge, as far as how many dealers they have and how many vehicles they produce," Bergstrom told Automotive News.

Bergstrom, who made a multimillion-dollar investment to build and open Genesis of Appleton, believes the differentiator between a mainstream and premium brand is delivering top-notch service and that Genesis' guests deserve that treatment.

Bergstrom and his father, veteran retailer John Bergstrom, are the dealer principals of the store and owners of Bergstrom Automotive, which operates 30 dealerships in Wisconsin representing mainstream and luxury brands from Ford to Acura to Maserati.

Bergstrom describes his father, who started the company in 1982, as a "serial entrepreneur" as well as "his boss, mentor and best friend." The tightknit father-son relationship is illustrative of the group's family-oriented culture, and caring for their "guests" is central to their business ethos and central to luxury retailing.

"You can send us your daughter, your mother-in-law, any family member knowing that we're going to treat them like family," Bergstrom said.

Only last year, Genesis opened its first two dealerships — one in Lafayette, La., and the other in Greer, S.C. Though there are about 100 more in some phase of development, most dealers have so far opted not to invest in the brand's Keystone program — the retail facility design program that Genesis rolled out in 2020. Most Genesis dealers are instead continuing to sell their luxury vehicles from their Hyundai stores.

"It's not fair to put Genesis up against a BMW, Mercedes or even a Lexus store when it has an amazing product, yet you're selling it out the side door of a Hyundai dealership," Bergstrom said.

"That's not luxury," he said. "The dealers know it, and the manufacturers know it; it's just how do we get from where we are today?"

Things have been changing for Genesis since 2020, and that could make the investment proposition look much sweeter for hesitant dealers.

What once was a three-sedan portfolio offered by a Hyundai spinoff has grown into a lineup of high-design, tech-forward vehicles that includes two top-selling luxury crossovers and three electric vehicles. The brand is now regarded as a bonafide luxury player by U.S. consumers. Genesis sales hit 56,410 vehicles last year, a 14 percent year-over-year increase in a market that declined by 7.9 percent.

Genesis is now intent on taking its product line further upstream and becoming an all-electric luxury line. Genesis CEO Jose Muñoz spoke to the dealer body earlier in the year and exhorted them to invest in stores. He told them that the two dealers who already had invested in standalones were seeing higher profits than they previously had.

Bergstrom believes Genesis will not be able to compete against other luxury makes without standalone stores.

"We're going to suffer trying to sell people a Ritz-Carlton experience at a Motel 6 and ask them to come back a second time," he said of the brand.

"When you're used to the level of luxury treatment provided by top luxury brands, and then you get serviced in a Hyundai store with a value-brand experience, it's not an apples-to-apples fight," he said.

"Genesis has to get its dealers to be able to and want to switch to having all this overhead, all this investment, so guests get a luxury experience," Bergstrom said.

"It's one thing to have a special car. It's another thing to have that guest treated special."