Customer Experience in automotive retail, or, How Hyundai blew their chance to crush Lexus in the US auto market.


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I’d like to tell a little bit of a personal story to try to illustrate an important lesson in customer experience as it’s related to the automotive retail business. Specifically, I was in the market to buy a new car in early 2009 and while I’m by no stretch of the imagination a “car guy”, I enjoy learning about them and think of myself as discerning. Having been a licensed driver for 25+ years, most of which spent as a BMW customer, I consider my eye good for quality, workmanship and design.

Here’s where my story begins. 

I had been somewhat disappointed with my last BMW bought and was looking at options from different companies in my search. I looked closely at Lexus, having always heard and read about their quality. The dealership was impecable and felt high end. Sort of the difference between going to Tiffany and a mall jeweler, the showroom appointments were high end and designed to evoke a rich experience. The sales staff was patient with me while I went from car to car and was well informed about each, offering me insight about the cars and how they stood out in the competitive field as well as against each other, even in the same dealership. They seemed well trained in VIP customer handling and some of the finer points of salesmanship. Even the Service Manager came out to meet me, wearing an expensive suit and tie and was as well spoken as the most polished businessman. In short, the buyer experience at Lexus was impecable and felt worthy of the price of the cars which, by the way, were being sold at or above “sticker” with no discounts in sight.

Before deciding for certain I had recalled seeing favorable write-ups, one after the next for what was the latest offering from Hyundai. Yes, THAT Hyundai. The company known for their $12,000 cars. They had just rolled out their “Lexus killer” called the Genesis, their first introduction in that car class, competing with not only Lexus but Infiniti, Mercedes, and my beloved BMW. It was a ton of car with every bell and whistle for 30-40% lower price than the traditional segment entrants. 

I drove to the Hyundai dealership, not much further from home than the other more traditional high end car places, and was immediately frustrated. The customer parking lot was small and crowded making parking hard. Going inside the building meant clawing my way past three overly aggressive salesmen each trying to “get me into a vehicle today”. The place itself was somewhat dirty or at least in need of a good cleaning service with papers on the hard tile floor and coffee stains on the chairs with loose screws in them. 

The Genesis was not in a special dealership the way Toyota did from day-1 with Lexus, Honda did with Acura and Nissan did with Infiniti. Instead it was just one of several different model cars on the floor, in fact, right next to that $12,000 car model that made Hyundai’s brand image that was seared into my mind. There was no cappuccino bar, no plush carpet, no soft lighting, and “Bill the Service Manager” looked like every other grease monkey in any other garage. 

It was clear that Hyundai wanted to play in the high end competitive space but was in my opinion ill equipped. The brand, “Hyundai” meant, and continues to mean “cheap car” to me, no matter how good the Genesis was, the experience at the dealership coupled with the brand image in my mind made a favorable buying decision impossible. I had wanted that car and the company’s apparent lack of regard to creating a differentiated customer experience at the moment-of-truth, when I walked in, checkbook in hand, got in the way.

Now, while I’m not much of a car guy as I said earlier, I have some friends who are, and I asked them if I was being silly about my inability to get past the dealership, the tacky sales techniques, the poor product presentation, and lack of a “high end, sophisticated selling environment” and they broadly agreed with me. The general belief was Hyundai, who publicly is saying to the media and analysts that moving up-market is important to them and since in Korea the company has a full spectrum of product offerings including seemingly exclusive models selling for the equivalent of six-figures, the move was important for them in the US markets. 

It just felt like Hyundai, who by the way acknowledges my concerns about brand in not placing their name anywhere on the Genesis, was seemingly conceding defeat that Hyundai construes a certain brand image created over the years in their corporate communication, customer experience design, and go to market strategy. While the dealership was unremarkable and no befitting the market they were hungry to attract the company is consistent in not seeking to make any knee-jerk changes to their dealerships, which again, I feel is a crucial flaw in their own strategy to move securely into the desired markets. 

Now that the surge of early adopter purchases is behind us it seems that Hyundai’s sales numbers are proving unremarkable for the Genesis. They wanted to sell tens of thousands of them in the US during the first 12 months and I believe have sold under 7,000 units. 

The company can put their money where their mouths are, even if it means seemingly mimicking Lexus, Infiniti and Acura by creating a new brand image and customer experience for these more sophisticated vehicles and I suspect that without it, Hyundai will always be the “cheap car company” to me and many others regardless of the quality of their actual product.

Republished with author's permission from original post.

Marc Mandel
Marc Mandel is a Regional Sales Director at Allegiance, Inc.


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