LOS ANGELES — Last year was rough on automakers as they struggled to maintain production and keep up with surprisingly strong demand. It was particularly rough on luxury upstart Genesis, whose U.S. sales plunged 23 percent to just more than 16,000.
The Hyundai Motor Group brand began 2020 with a splashy Miami debut of its GV80 midsize crossover, but then grappled with regulatory challenges to get the GV80 and the redesigned G80 sedan into dealerships. Delays in its planned summer launches for those two dragged into December.
But suddenly, things look different. Just as the U.S. market is emerging from the pandemic with renewed vigor, Genesis is finally spreading its wings. As the industry grapples with semiconductor shortages, Genesis is launching new models and emerging as a growing force in the luxury market.
Sales are up 149 percent this year to just more than 15,000 through May. And June marks a major milestone in the brand’s six-year journey: the launch of its GV70 compact crossover, which is expected to become its top-selling model and help double or triple overall sales this year.
Since its 2015 brand debut, Genesis has been a slow starter. Despite critical acclaim for its three sport sedans, it couldn’t get a crossover to market until the GV80 in late 2020. But it now has two crossovers on sale and its first battery-electric vehicle coming in 2022.
“The combination of entering the SUV segment and entering it with an outstanding product like the GV80 is really what’s catapulted Genesis into the forefront of the luxury-SUV discussion,” Tedros Mengiste, executive director of sales operations at Genesis Motor North America, told Automotive News.
“With the GV70, that model should be the No. 1-selling Genesis model in our lineup. We just keep going from strength to strength,” Mengiste said. The GV80, for example, is outselling the three Genesis sedans combined through the first five months of the year.
Despite its inventory and regulatory setbacks in 2020, Genesis has been less impacted this year than some of its luxury rivals. The Korean brand has not removed any features from its vehicles because of chip shortages, Mengiste said, and supply has been solid.
“Our colleagues in Korea have done an outstanding job of maintaining Genesis production at a very critical moment,” the executive said. “Gaining momentum is critical and we’ve been able to uphold that.”
To be sure, Genesis is not oversupplied, Mengiste said. Inventory is running lean on strong sales more than production constraints.
“The sales velocity has been so much greater than anticipated, we’re running lean,” he said. Genesis dealers are selling vehicles before they arrive on the lot, generating fast turn rates, he added.
“When we look at all of the units in our pipeline, we’re north of 30 percent pre-sold before they get to the store,” he said.
Lean inventories also have an upside, Mengiste pointed out.
“We take a lot of painstaking effort in our planning process to ensure the we protect the brand from distressed merchandising or deep discounting,” he said. “It’s rare that your inventory is balanced, and extremely rare that it’s balanced across all models — and that’s where we are.”
Besides the previous lack of crossovers in its lineup, another persistent hurdle for Genesis has been its lack of a dealership network. It still relies on its Hyundai dealers to take customers through the buying process, with mixed results.
Genesis dealers have been successful with digital buying tools and at-home delivery of vehicles. And the brand has always offered complimentary maintenance with pickup and drop-off.
But some traditional luxury buyers still want to visit an upscale store for vehicle shopping. And some Genesis dealers admit privately that there are weak retailers in the network who don’t deliver a high-level experience.
As an intermediate step, some Hyundai dealers have created exclusive Genesis lounges and separate staff. But many have not, leaving the Genesis sales experience to Hyundai personnel.
But standalone Genesis stores are now on the verge of reality after years of planning.
“We have a number of dealers going through the process to build facilities for us,” Mengiste said. “The number of dealers in the pipeline is quite large. We should be seeing an impact of that next year.”
In the meantime, Genesis will continue to use its suite of valet services that make dealership visits unnecessary.
“We want to be the most convenient luxury brand in the market,” Mengiste said. “It’s about what the customer is more comfortable with, and we’re just opening up more avenues to them to own a Genesis.”
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