Automobile

Fla. dealer wins $16 million award against Genesis over open points

LOS ANGELES — Hyundai Motor America must pay $16 million in damages to an Orlando, Fla., dealer who was denied right of first refusal for two Genesis brand open points, a jury ruled in a court case there.

Hyundai said it will appeal the verdict.

The 2018 case, Action Nissan Inc. and William Nero vs. Hyundai Motor America and Genesis Motor America, focused on whether the automaker had reneged on a previous agreement to offer Nero two open points for the Genesis brand in addition to any rights as owner of Universal Hyundai in Orlando.

The jury in U.S. District Court, Orlando Division, found that Hyundai had reached a settlement with Nero in 2009 on a separate matter, and that the agreement included right of first refusal if Hyundai established a luxury brand within a decade.

The jury verdict in early October also found that Hyundai did establish the Genesis luxury brand within that time frame and had breached an agreement with Nero on the open points.

Genesis was formally launched in 2015 but struggled to define a retail model in the U.S. in the years that followed.

Hyundai and its dealers were at odds in the early days of Genesis over who would get to sell the new luxury line. At a dealer council meeting in November 2017, tensions flared between the dealer advisory group and Hyundai Motor America executives.

Automotive News reported at the time that advisory board members briefly walked out of the 2017 meeting after dealers were told of a potential decision by Hyundai to open points of sale for Genesis stores in select locations to non-Hyundai retailers. Hyundai later reversed course and gave all of its dealers the right to sell Genesis vehicles.

In the Nero case, consultant Patrick Anderson, CEO of Anderson Economic Group, testified that Hyundai’s actions had cost the dealer between $13.6 million and $16 million.

“The market ‘blue-sky’ multiples, income and real options methods were used to calculate the loss of franchise value, with the market being primary,” Anderson wrote in an email to Automotive News.

Nero said in an interview Tuesday that he expects the verdict to withstand Hyundai’s appeal.

“I do think we’ll prevail,” Nero said.

Jurors deliberated just 90 minutes before reaching the verdict, which suggests most of that time was spent determining the monetary damages, he added.

Nero also stressed that he has no hard feelings over the dispute and sees a bright future as a Genesis dealer through his Hyundai franchise. “It’s a very strong brand and one that I am proud to represent,” he said.

Hyundai said in a statement that it disagreed with the verdict.

“We were disappointed by and disagree with the judgment and regret that we were unable to come to a mutually satisfactory resolution before the trial,” the automaker said in an email. “Hyundai Motor America will appeal the decision.”

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