Filed under: Car Buying, Hyundai
Hyundai brings down the hammer on 50 dealers
Shape up or ship out seems to be the message that Hyundai is sending to 50 of its worst performing dealers. Automotive News is reporting that Hyundai Motor America COO Steve Wilhite sent a "strongly worded" letter to 50 'chronic underachievers.' Poor sales and customer service is at the heart of Wilhite's threats: "We're giving them six months to correct the mistakes. If they can, we're thrilled to have them. If they can't, we want them to turn in their franchises." As Hyundai is moving towards a reputation that nearly equals that of the Japanese automakers, it is important that its dealer network match the company's commitment to delivering top-notch vehicles. Wilhite hopes the dealers will improve and stay on board, but if they don't, they will be forced out. Sort of. The dealers can still take their cases to the motor vehicle board in their state or even appeal to out-of-state courts before losing their franchise rights. Another 144 problem areas were identified by Wilhite as areas of concern, but no similar threats to drop these dealers were issued.
With products like the new Genesis and Veracruz showing Hyundai's desire to move upmarket, this is an important issue to iron out over the next couple of years. Good product will get people into the dealership, but good customer service will sell the marque and guarantee repeat customers and higher resale values.
[Source: Automotive News – sub. req'd]
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Reader Comments (Page 1 of 2)
Tal 1:03PM (4/02/2007)
Keep improving the quality of quality built Hyundai cars, make customer service your #1 dealer selling point and the sales will grow.Show the auto world that Hyundai cars are durable, quality products
Take my money then s... on me when I have a problem will drive you out of business. So I say to Mr.Steve Wilhite,"Hammer Away". You will quickly equal or better the other Asians.
Those dealers not in business for the long haul need to shut down. There is no place for inferior service in todays maket place.You cannot afford to do business that way.
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Eric L 1:04PM (4/02/2007)
Unitl recently, I would have never given Hyundai a second glance. But after seeing some of these new vehicle coming out I think they mgiht be worth a look. I think that Hyundai dealerships should go above and beyond in the areas of customer service and customer commitment if they wish to sway buyers from Toyota, Honda, Ford, etc... One of their selling points should be the customer service that they cannot get from other comapnies. Kudos to Hyundai's management
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Gale 1:09PM (4/02/2007)
This will only serve to reinforce the Koreans' (and believe me - they make all the decisions, regardless of who delivers the message) cold and condescending treatment of employees and dealers.
Word coming out of their plant in Alabama is not pretty. The only thing that separates North and South Korea is a checkpoint. The personality is basically the smqae among the powerful. They're only tolerating Americans to make their sales quotas.
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felipe 1:30PM (4/02/2007)
Maineiac---- I hope your reading this!!! i agree with your comment on the 'hyundai considering premium...' post. but this attacks the problem.
nice move hyundai. time to clean out the dead wood, toss some of the crummy "auto mall" 's.
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felipe 1:41PM (4/02/2007)
and GALE--
no kidding. you think jdm loves you?
our only a peon with a monthly payment to even the BIG 2.5
As for emploment differences, the only thing is that the 2.5 have a union so the under acheivers can never get canned.
The only ones that 'matter' are the shareholders.
'pop' goes the bubble!
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Andrew 2:01PM (4/02/2007)
Good move. Nissan needs to do the same thing.
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AZMike 2:07PM (4/02/2007)
I think some folks need to take a reality check, especially if you've never been in the car business. ESPECIALLY if you haven't been in the import car business.
what's going on can be a lot more political than it may initially appear. there are many loyal Hyundai dealers out there who have been around since the beginning (1986), and have been 'in the trenches' with Hyundai thru the bad years, as well as the good. now, the factory is ready to throw them under the bus.
many times, the manufacturers will demand that dealers build a new facility, or even move the dealership to a totally new location. in many markets, both could be either cost-prohibitive, or downright impossible.
the manufacturers can punish the dealer in several ways. they can take their time paying warranty claims, or downright refuse them altogether. they might take their time paying you the dealer (incentive) cash you're owed for cars sold. another one of their ploys is to totally overload a dealer with models that are not good sellers, and send none of the ones that are. these type of tactics are far more common with import franchises than domestic ones.
I remember one Toyota dealer in California back in the '80's. Toyota wanted the owner to sell, and he refused. about a week later truckloads of model 8200 (these were the base pickups with bias-ply tires, and didn't even have a cap in the center of the wheel) began arriving. by the time the week was over, there were over 300 of them there, all the same color, maroon. as for cars, they had the largest inventory of diesel Camrys and Corollas in California...and this was a time when no one wanted them.
the manufacturer's object here is to drive the dealer out of business. in most cases, the manufacturer already has another dealership picked out to take over the franschise from the soon-to-be-defunct dealer. of course, buying the franchise from the failing dealer will be really cheap, since the price and "blue sky" are always directly related to the past sales performance.
thankfully, all states have franchise laws to protect independent businesses like automobile dealerships. the franchise laws aren't just for auto dealerships, but any business that is a franchise, be it a Chuck E. Cheese, or a hotel.
for those who think this is "fair", take just one minute and put yourself in the dealer's position. someone is threatening to take your business away, dictating many things that weren't even in your original sales agreement.
think about it.
AZMike
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porker 2:30PM (4/02/2007)
#7 Said what I wanted to say. I have seen the japanese way of doing things, and it's the same. I worked for the most profitable dealer in our area in the late '70's and eary '80's, but nissan did not like us because our volume was lower than the low-margin, high volume delaers around us. We cared about our customers, and tried to fix cars that were screwed up by the factory. Made no difference, we didn't sell as many of the junker-type cars as the rest of them, so we were the bad guys. Our dealer principal won a large out-of-court settlement over his treatment by the japanese, then went back to Chevrolet.
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GOKARTN 2:41PM (4/02/2007)
Some of the American and Japanesse companies need to take this approach with their dealers. One of the reasons I pay extra for a German car is the great customer service from dealer.
With the crap treatment I have recieved from the domestic dealers (except Saturn), when I have bought our company cars. I would never spend premium money at one of those joints.
Good for Hyundai. Cars are expensive and people spend a huge chunk of their money on them. Whether you are buying a Hyundai, or a BMW, customer service should not be reserved for high end customers.
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Richie638 2:41PM (4/02/2007)
The Koreans hate us, why would an American buy their cars?
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DPC car videos 2:44PM (4/02/2007)
I am sure my local Hyundai dealer got the letter. Seriously it looks like a used car lot, very unprofessional, and hard to even locate.
http://www.dpccars.com
DPCCars
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jw 2:55PM (4/02/2007)
THERE IS A HYUNDAI DEALER ON EVERY CORNER..THERE POPING UP LIKE STARBUCKS. SO LIKE ANY OTHER BUSINESS ALOT OF THEM WILL GO BROKE..HYUNDAI DOSEN'T CARE IF THE DEALER IS LOSING HIS ASS...THEY WILL PUT 2 NEW DEALERS IN TO MAKE UP FOR POOR SALES. TOYOTA WON'T DO THAT BECOUSE THEY KNOW WITH A STRONG DEALER BODY AND PROFITS MORE SALES WILL FOLLOW...WAIT TELL THE CHINESE GET HERE!!!!
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Bryan 3:11PM (4/02/2007)
Hyundai is a joke.
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Barney 3:12PM (4/02/2007)
re:10. The Koreans hate us, why would an American buy their cars?"
Americans would be out of business if those who hate them, wouldn't buy their products. Koreans don't have that problem.
As far as Hyundai goes, they need a bigger dealer network. Many dealers sell other makes and Hyundai as a sideline. No good if your stranded.
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riles11 4:39PM (4/02/2007)
State Arbitration Boards are not going to let Korean Manufacturer or any other manufacturer's take out OEM poor sales dealerships if the dealers on Hyundai's list have good customer satisfaction and good customer sales satisfaction. It's more a verbal assault or a threat which is a punishment tactic related to the fear Korean workers have in the Korean culture of dictatorial Executives who always like to blame lower subordinates (someone) for poor sales performance; its usually an American Executive(s) which are blamed/replaced like yesterdays newspaper on a frequent basis. Most Dealer's usually responsed to these tactics by stating, "I'll be here selling vehicles long after the OEM or Korean's or the Executive making the comments are long gone." Korean's can't just terminate 50 dealers nationally, and if they are successful then all dealers should seriously think about not selling there products within the US, who needs them, the profits margins are getting so skinny and the Korean Executive management don't care about auto dealer profitability at all.
mjmr
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EnviroBob 4:43PM (4/02/2007)
#7 As a rule, Hyundai kisses their dealers butts. Ask any manager (sales, service or parts) how they are treated by Hyundai vs their other franchised brand (since very few Hyundai stores are stand alone, for now), and you will find that they are treated quite well by comparison.
#10 That would be the North Korean government that hates us, not the South Korean.
#13 Over the last five years Hyundai has won a whole slew of Strategic Vision and J.D. Power awards, including for 2004 Sonata being the most trouble free car you could buy for its model year (the Mustang was the most trouble free domestic). I wouldn't call that a joke. At least they haven't had 3.5 million cars with oil sludging problems.
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Chuck 6:36PM (4/02/2007)
This is a strageic marketing decision to coincide with the reveal of the Genesis V8 at the New York auto show. They're taking a private backstage playbook of every up and comer, and promoting it to the press and public. This is a function of moving forward faster than any other auromaker in history.
Dismiss them at your own peril. These guys are serious, and I can assure you that no automaker from any continent is undersetimating their progress.
Do you think they care about bloggers talking about look alike styling? Get real. The same blogs level the same accusation at the most profitable makers in the business.
Hyundai has the proven ability to eat at the bottom and middle of the foodchain to gain a foothold. Now that they're ready to attack the premiun sector they'll use every tactic at their disposal to achieve their goals.
And do you think that they haven't taken note of Acura and Infiniti failing to produce a credible flagship with the Q45 and RL? The Genesis is a 2008 tip of the iceberg. When they come up with their luxury brand, and a halo car to represent it, I bet they don't make the same mistakes as Infiniti and Acura, with failed top of the line vehicles.
Talk rice car all you like, but the wind's behind Hyundai's back.
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bruno 6:45PM (4/02/2007)
Interesting comments, yet again showing bizarre levels of bias and unsubstantiated claims on both sides. There really is a culture war going on in the car biz.
As for Hyundai, you'd have to be pretty strange to not admit that their offerings have jumped in quality in the last few years.
As for Hyundai making dealers behave, this is something other brands have failed to do at their own peril. I doubt Lexus, though not perfect, puts up with some of the silliness that goes on at other brands. They get to charge more for their cars in return. Who loses? Nobody. Customers voluntarily pay more, dealers profit more, Lexus profits more.
This is a concept that used to be common sense before the new fast buck economy of the last couple of decades.
Part of a brand's duty to other franchisees is to protect the image by making sure they tow the line on agreements bout quality and customer service. They may be trying some squeeze tactics on dealers, but the poster above provided no specifics, just speculation and innuendo.
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James 7:12PM (4/02/2007)
Southern States VW/Hyundai/Subaru of Raleigh is quite surely on that list.
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Chuck 7:13PM (4/02/2007)
I hardly find Hyundai deciding to make a public statement about dealership responsibilty two days before they present their first luxury vehicle a case of innuendo.
There are puzzle pieces with any large company that you pice together to find the motivation and aims of their marketing decisions.
I doubt I'm off the mark with what Hyundai is doing as they move upstream.
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