Hyundai’s desire to resume facilities-upgrade programs is the kind of thing that typically makes us recoil. This one isn’t as bad as some such efforts, but it’s still an unwelcome imposition on retail partners.
The programs for Hyundai and Genesis dealers, respectively called Accelerate and Keystone, are particularly troublesome for two main reasons.
First is that they are coming amid a sharp recession. Discretionary consumer spending is starting to bear undue pressure as unemployment remains high and supplemental support remains limited. The virtual certainty that there will be no further stimulus coming from Washington before next year holds myriad risks for the U.S. economy. Extraordinary spending early in the pandemic kept the economy from falling off a cliff, but the lack of follow-up support is setting up an epic housing catastrophe. A wave of evictions could well be accompanied by a flood of repossessions. And while that might seem like a solution for short inventory, it’s no dealer’s best-case scenario.
The second is that the auto industry’s retail front lines are increasingly moving off the lot and onto screens. Adjustments made during the pandemic have reduced the importance of a retail palace that wows shoppers and puts them in a buying mood. More important is an intuitive online experience that answers questions about vehicles and expedites the financing process. If vehicles can be delivered to the home, buyers don’t need to even step foot on the lot.
To be sure, Hyundai’s reasoning is about as solid as it comes: Dealers are making money despite the recession, and the company has lavished them with a robust crossover lineup, strong support for customers and retailers early in the pandemic, and standout online tools. The factory is doing everything it can to move its image upscale from its bargain-basement beginnings to a top-tier mainstream positioning. In short: Jose Muñoz isn’t bringing Nissan’s playbook to Hyundai Motor America — he’s bringing Toyota’s. And we suspect there are Hyundai stores in need of sprucing up.
But the decision of when and how to invest in stores needs to reside with the dealer who owns the land and whose name often is on the side of the road. Hyundai should continue to work with its dealers to convince — not coerce — them that the future will be better with sharper-looking storefronts.