ORLANDO, FL – Hyundai North American CEO John Krafcik wins applause from car dealers here by encouraging them to stay the course and not adapt to trendy sales methods.
“It seems like every day someone is bashing the U.S. retail system as being out of touch or inefficient,” he says. “The current system works. It works. And it works really well.”
Krafcik, speaking at the National Automobile Dealer Assn. convention, says auto makers shouldn’t meddle too much in the day-to-day affairs of dealers, criticizing efforts by electric-vehicle maker Tesla to set up “factory stores” and Ford’s recent intervention into dealer management.
“The franchise system works because it’s the concentrated distillation of the American free-enterprise system,” Krafcik says. “At Hyundai, we are big fans of this system and huge supporters of our retail network. Independent dealers make more money and do better with customers.”
His remarks come at a time of somewhat rocky relations between dealers and auto makers over facilities investments. Prior to Krafcik’s keynote, NADA Chairman Bill Underriner highlights a case of a Chevrolet dealer who sold his custom-built, lodge-themed showroom rather than comply with General Motors’ newly imposed blue-and-white motif.
“As entrepreneurs, you’ve made it your business to defy expectations. We’ve got a system that works,” Krafcik says.
During his remarks, Krafcik emphasizes the importance of online connectivity, noting that post-Super Bowl searches for Hyundai increased from last year. Dealers should work to make sure their sites are accessible, user-friendly and aligned with the image Hyundai presents from the corporate level.
He also spends considerable time touting the upmarket approach to Hyundai’s Genesis and Equus models, saying individualized attention to the premium sedans saves dealers from establishing expensive, exclusive outlets for the vehicles.
“You may have heard them called ‘mausoleums,’” Krafcik says about luxury dealerships furnished with excessive amounts of marble and hanging artwork. The Genesis and Equus are displayed in conventional Hyundai showrooms, but offer different protection plans and have unique sales approaches that require additional training.
“While often stunning bits of architecture, we know the reality is most affluent consumers aren’t champing at the bit to visit a dealer,” he says. “We saved our dealer network hundreds of millions of dollars in capital expenses.”
The type of Genesis or Equus customer “wouldn’t mind shopping at Costco,” Krafcik says, but also splurges on exotic vacations. “(The cars are) halo benefits for the entire brand,” he adds.
“From a sales and share perspective, it is working.”
Krafcik adds that a new kind of customer has been visiting dealers inquiring about Hyundai’s Veloster sport sedan, “a car that some automotive journalists have struggled to come to terms with” but that drivers love.