09 May 2021

A few years back, all the industry consultants were predicting a market consolidation in terms of the number of new car brands. While you could argue this has happened with the likes of Stellatis being formed, from a consumer and retailer point of view, there are now a growing number of brands to choose from.

In the past year or so we’ve seen Polestar, Cupra and DS spun off to form separate brands of existing manufacturers. This past week, Genesis, the premium brand from the Hyundai Motor Group, announced its UK and European launch.

While Genesis is claiming a new approach to retailing cars under the ‘never visit a dealer again’ moto (at least in Europe: the US operates a dealer network) there are lots of parallels with both the Hyundai Rockar operation from seven years ago and Daewoo from a decade before that.

The similarity with the way Hyundai worked with Rockar when it was first set up in Bluewater shopping centre in 2014 includes operating from a shopping mall unit, with no-pressure ‘angels’ helping customers using a fully online sales system, plus servicing and aftersales handled remotely.

Interestingly, when Hyundai took back the franchise from Rockar, much of this was dropped.

When you go further back, other parallels could be drawn with Daewoo, which started out in the UK with direct sales, no-haggle pricing, non-commission sales staff and servicing carried out by a third party; in Daewoo’s case, this was Halfords.

When Genesis says ‘never visit a dealer again’, it means it. Servicing work will all be collect-and-deliver and done by an independent third-party, not the existing Hyundai or Kia networks.

That all said, I did have one franchised retailer tell me this week that Genesis had been in touch with them about setting up a store for them. However, this may be before the final ‘no dealers’ decision.

Premium brands that aren’t German have a hard time in the UK market. Audi, BMW and Mercedes currently have just over 20% of the UK market. Jaguar Land Rover comes a close fourth with similar market share; just short of 6%. After that the next biggest premium brand is Volvo with 2.5%. Even Lexus, which retailers love to sell and make good margins on, has less than 1% of the market.

While Genesis is understood to not be worried about volumes for the first few years will ultimately want to be a serious player in the market.

Asked why Genesis thinks it will succeed when Infiniti, Nissan’s premium brand, didn’t, a spokesman for the company said: “Europe is the home of premium brands and we think there is space for Genesis.

“We are confident we can offer products and services which can make a difference, just as we have done elsewhere in the world.

“We aspire to create experiences for our customers, and to always respect the greatest luxury of all – their time.

“Everything about Genesis in Europe will be built around the customer, and is designed to make life easier – whether that’s home delivery, our Genesis Personal Assistant or across our digital touchpoints.”

All we can do now is wait and see if this approach results in significant sales in future.

Premium powerhouses

In the same week Genesis launched, the April new car registration figures came out and showed that some new premium brands are doing better than others.

Polestar, with just two physical showrooms and an online sales system, saw similar registration figures (via an agency model) to Tesla in April.

Cupra, which has until now gone for a traditional approach to sales with franchised retailers, did pretty well with a few hundred cars registered from its single dedicated model and two Seat spin-offs. However, the brand is now considering a move to an agency model.

DS, with a similarly slim line-up, registered just 47 cars across its 33-strong network of retailers.

This is clearly not a sustainable number. Particularly if, as the new DS managing director recently claimed, retailers would be asked to invest in stand-alone showrooms rather than operating from within a Citroen dealership.

A DS spokesman blamed the low number on a change in the way cars are sold: “April was low as we’re moving to a more made-to-order programme and, as a result, our order bank is building well for future months.”

As a part of the Citroen network, DS can make retailers money. Vertu Motors chief executive Robert Forrester said: “The volume aspiration which the DS network was promised a few years ago has yet to come to fruition. However, we’re pleased with the contribution to our Derby Citroen operation.

“The challenge is if investment eats into those profits without an increase in volume.”

The consolidation at manufacturer level may mean it’s more economic for them to launch new brands, giving the consumer more choice than ever before, but for these brands to succeed with retailers, they have to be economic to sell.

Without decent volumes, that just isn’t going to be the case.

Tristan Young

Editorial Director

Auto Retail Network