Hyundai’s Peculiar Rejections

By: Nicholas A. Bader and Danielle M. Roth

A pattern has emerged lately where Hyundai and Genesis are peculiarly rejecting dealers’ requests. In some cases, Hyundai is refusing to allow a dealer to renovate unless and until that dealer appeases their wishes for a Genesis facility. In other instances, Hyundai is refusing to renew Dealer Agreements until it is assured that its wishes for a Genesis facility are met. We believe Hyundai is dissatisfied with its bungled plans to have a small dealer network, and is grasping at any opportunity it can find to reduce its dealer count to comport with those earlier plans. Unfortunately, automakers occasionally try to manipulate dealers into doing what the automaker wants by threatening nonrenewal or termination of the dealer’s franchise agreement, withholding vehicle allocation, or not paying certain incentive monies. However, rarely if ever is such coercion the result of actions concerning a separate line-make. Refusing to permit a willing Hyundai dealer to renovate its facility based on issues concerning Genesis—now a separate line-make—is unreasonable and unprecedented. Genesis will be the first to remind you that it is no longer part of Hyundai—why then can Hyundai reject facility plans for a Hyundai dealership based on Genesis? This type of behavior by Hyundai/Genesis is contrary to various state franchise laws, which provide protections to dealers.

It is important that all dealers be aware of the tactics taking place by automakers. Franchise laws were put in place to protect dealers from intimidation and coercion. Dealers should use the law to prevent being take advantage of.