Hyundai Dealers Saddle Up

LOS ANGELES — Hyundai Motor America wants many of its dealers to upgrade their facilities, but isn't expecting them to build auto retailing's version of the Taj Mahal.

“We are not going to ask them to build elaborate mausoleums,” David Zuchowski, the import company's vice president-sales, says here at the Automotive Customer Centricity Summit hosted by Thought Leadership Summits.

“We want sufficient facilities that can compete on sales and service,” he says. “But dealers who build extravagant dealerships must offset those costs by charging their customers more.”

Consumers go to dealerships “to buy cars, not lattes,” Zuchowski contends, referring to some automotive sales outlets with upscale amenities such as cappuccino bars.

Selected Hyundai retailers will install “dealerships within dealerships” in preparation for fall's U.S. arrival of the upscale Equus, Hyundai Motor Co. Ltd.'s flagship luxury sedan. It has been sold in the South Korea home market since 1999. A new version built on the Genesis sedan platform came out last year.

“We don't want dealers spending $5 million or $6 million on new facilities for the Equus, but the dealership within a dealership will have a different look, different colors and different textures,” Zuchowski says. “It's a very logical approach.”

The Equus will compete with the likes of the Mercedes-Benz S-Class and BMW 7-Series. The sedan will follow the U.S. introduction two years ago of the Genesis, the first foray into the North American luxury segment for Hyundai, once known only for its low-priced compacts.

With the Equus, Hyundai plans to continue its value-pricing strategy. The car is expected to carry a mid-$50,000 base price, less than its competitors.

Not all of Hyundai's 800 U.S. dealerships will sell the Equus. Those that do must be stand-alone Hyundai stores. They must agree to build the separate Equus display areas within the dealerships.

“They also had to have done a good job with the Genesis,” Zuchowski says.

He expects Equus sales staffers to serve as “product champions” who will work under a different compensation plan. “It takes an hour to thoroughly explain that vehicle to customers, and we realize the need to pay sales people for that time.”

For prospective buyers who want to check out the Equus but skip a trip to the dealership, participating dealers will bring the car to them.

“A sales valet will come out with the car to people's home or business,” Zuchowksi says. “If it works for Equus, we may spread that service across the entire line.”

The Equus valet treatment will extend to service-department customers, too. The dealership would pick up their car and drop off a loaner Equus.

“The service valet has been tried before, and it is simple to implement,” Zuchowski says. “People like the pick-up/drop-off option.

“The sales valet would be more difficult to implement,” he says. “I'm not sure how much demand for it is out there. I don't want to overpromise or it can get screwed up. The sales valet concerns me a bit, the service valet not at all.”

Hyundai of St. Augustine in Florida is a dealership that already brings vehicles to potential buyers.

“We recognize that a lot of customers don't like to come to the dealership, so we bring the dealership to them,” says General Manager Andrew DiFeo. “It is a low-pressure approach. We are interested in treating the customer right.”

Like Lexus and other luxury brands, Hyundai also may offer standard scheduled maintenance, free of charge, for the Equus and Genesis, says Chang-Hwan Han, senior vice president-America Region for Hyundai Motor Co. Ltd.