The Exodus of Genesis Dealers: All to Plan?

By: Nick Bader and Kirby Bissell

In the several years since Hyundai’s separation of the Genesis line-make, the number of Genesis dealers has been greatly reduced. This leads one to question why and whether that was always part of Hyundai’s plan?

The timeline here is interesting and perhaps instructive:

• In 2016, Hyundai began branding Genesis vehicles separately. At that time, approximately 350 dealers executed a Genesis Participation Agreement—opting to invest in retailing the brand to a greater degree than previously. 
• Then in early 2018, they announced the creation of a separate dealer network for Genesis. Originally, Hyundai announced the intention to have a small dealer network—approximately 100 dealers in the United States. In March 2018, a list was released of the markets in which they sought dealers, and provided for an application process available to Hyundai dealers.
• Dealers, dealer advocates, state associations, and state regulators pushed back on the limited dealer network, pointing out that it left several hundred Hyundai dealers out who had retailed the Genesis vehicles for years. 
• Later in 2018, HMA/GMA changed its plan and offered the Genesis line to all Hyundai dealers throughout the United States. Those dealers had to choose between: (i) a precalculated monetary payment, based on historical sales, an estimated profit per unit, and a blue sky multiple of 6.4; or (ii) a Genesis Dealer Agreement. 
• Since the 2018 offering, HMA/GMA have not offered monetary payments for voluntary terminations of Genesis franchises to the Genesis network.
• In 2020, HMA and GMA announced two incentive programs—Hyundai Accelerate and Genesis Keystone. The structure of the two programs heavily incentivized the separation of the two line-makes into standalone imaged facilities.
• Pursuant to the terms of the Accelerate program, dealers ceased being able to qualify for those last year, but payments are continuing.  Dealers can still qualify for payments for imaged facilities under the Keystone program, but those payments are presently scheduled to cease in mid-2026. 
• As of this writing, just over 200 Genesis dealers remain—a substantial reduction and much closer to the original 100 dealers sought.

For the scores of dealers that gave up the franchise, we do not know why each reconsidered the decision they made just years prior in lieu of a monetary payment. A reasonable question would be whether the Accelerate and Keystone programs were part of a longstanding agenda—to have a small Genesis dealer network—which HMA/GMA were prevented from realizing in 2018. Even if it was not the intention, it seems as though they are accomplishing the goal they had and certain state motor vehicle franchise laws prevented.

However, even with those programs having ended or ending shortly, we suspect HMA/GMA will remain actively pressing their dealers for facility improvements/separation.  The question now is – how?  We would expect to see some sort of “new” incentive programs for Hyundai and Genesis dealers in 2026 and such programs may raise potential legal questions.   

Importantly, facility requirements and incentive programs are among the two issues most regulated through motor vehicle franchise laws. So, depending on the law in a dealer’s state and that dealer’s situation, state law may provide that dealer relief. These issues are among those we commonly counsel dealers on, including those related to these programs. We will continue to monitor the industry for signs as to HMA/GMA’s next steps.  

But it is likely inevitable that additional programs may lead Genesis dealers to consider anew whether they continue with the line.  And, if dealers find themselves doing so, they should seek legal counsel when evaluating such a significant decision. 

This article is not intended to provide legal advice.  If you have any questions related to this article, please contact Nicholas A. Bader or W. Kirby Bissell for more information.