Genesis forced to stop sales in Louisiana

A licensing issue has forced Genesis to halt operations in Louisiana.

Genesis, the newly-formed luxury division of Hyundai, has suspended all activities in Louisiana due to a licensing issue.

On July 20 Genesis informed its Louisiana dealer body that it would be suspending all sales, service and marketing activities in the state because it failed to obtain proper licensing. Per Louisiana law, automakers, along with dealers, must be granted a state-issued license to establish a new automotive brand; Genesis parent Hyundai failed to attain that license. It's reported that the dealers didn't obtain proper licensing, either.

"Everything happened at a fast pace," Genesis head Manfred Fitzgerald told Automotive News. "I think it was an oversight.”

In a separate statement Genesis said that it is "taking all necessary steps so Genesis sales can resume in the state.”

Dealers in the state are currently considering legal action against Hyundai to recoup money already spent on things like floor planning for the new luxury brand. The dealer network may also sue for lost income from the inability to sell or service Genesis vehicles.

"Having said they're a manufacturer and not having their license, that's a breach of contract,” said Claude Reynaud, Louisiana Automobile Dealers Association general counsel.

But some dealers think there is something more nefarious going on than just a licensing snafu. In June Genesis told Louisiana dealers that the brand was changing its business model and would pare down its dealer count in the state from 13 to just two. Genesis has publicly stated that it wants to reduce the number of dealers selling its vehicles. However, Genesis says there was wasn't "any intent” behind its failure to secure the correct license.

Hyundai reportedly wants to establish a separate dealer network for the Genesis brand, but no concrete plans have been announced.

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