LOS ANGELES — Eight state dealer associations are pushing back on Hyundai and Genesis facility programs as costly and coercive at a time when auto retailers are struggling with the coronavirus impact and consumers are increasingly doing their vehicle shopping online and not in showrooms.
In a letter addressed to Hyundai Motor America CEO José Muñoz and Genesis Motor America CEO Mark Del Rosso, the leaders of the dealer associations from states including California, Texas and Florida are seeking changes in Hyundai’s Accelerate and Genesis’ Keystone store-upgrade programs.
The programs, which tie dealer compensation to facility and other targets, were introduced to dealers by Muñoz and Del Rosso in January. The efforts were partially suspended after economic activity in the U.S. plunged as a result of the coronavirus. The automakers plan to eventually reinstate the programs as sales normalize.
“Multiple facets of the Accelerate and Keystone programs seek to regulate independent dealer behaviors and directly tie vehicle pricing to adherence of HMA’s and GMA’s demands,” said the letter, obtained by Automotive News. The letter is dated July 7 but the issues are still pending, according to retailers and Hyundai.
“From a managerial perspective, these unnecessary requirements amount to economic coercion on the part of HMA and GMA and significantly limit the dealers’ ability to innovate on behalf of the Hyundai and/or Genesis brands,” said the letter, also signed by dealer association leaders from Arizona, Illinois, New Jersey, North Carolina and Virginia.
Although the letter touches on several aspects of the automaker’s programs, including sales and customer satisfaction targets, one principle concern is facility upgrades.
In a statement, Hyundai said there are ongoing discussions with dealers about the compensation programs and the company remains flexible in light of the crisis. “We developed these programs in close collaboration with our dealers and [they] were approved by our dealer councils,” said Dana White, chief communications officer for Hyundai Motor North America.
“When COVID-19 hit in March, we mutually agreed to postpone the programs. In the interim, our dealers’ profits went up and Hyundai gained retail market share. … Despite these results, we know COVID remains a concern. Therefore, we will stay flexible and responsive to our dealers’ needs and continue to adapt and refine our programs as necessary,” White said in a written statement to Automotive News.