Hyundai and Genesis are warning U.S. dealers against aggressive pricing strategies that are damaging brand image, including markups that push transaction prices “way above” sticker price, according to letters sent to retailers and obtained by Automotive News.
The automakers, part of Hyundai Motor Group, also warn of potential actions they can take against offending dealers, such as reductions in future allocations, advertising benefits and other incentives. But they acknowledge that retailers can set their own prices.
According to the letters, one of the aggressive practices that is hurting the image of the Korean brands involves “advertising one price online and then marking up that price when the customer comes into the dealership.”
The letters include mostly the same language for the two brands.
The Hyundai letter is signed by Randy Parker, senior vice president of national sales at Hyundai Motor America. The Genesis letter is signed by Claudia Marquez, COO of Genesis Motor North America.
“We are writing now because with great regularity our customers around the country are voicing displeasure with certain pricing practices which, if left unchecked, will have a negative impact on the health of our brand,” the letters said.
The automakers cited “affixing side stickers with price markups to our vehicles” and the practice of advertising one price online but raising it later.
“All of these practices result in the sale of vehicles for above-MSRP prices, in some cases way above-MSRP prices, damaging our brands’ long-term ability to capture new customers and retain loyal ones,” the letters said.
