Hyundai will reduce its retail partners by almost a third but increase the number of franchise points to 173 over the next four years.

Speaking exclusively to Auto Retail Agenda, the brand’s business transformation director, Nick Tunnell, said the manufacturer planned to reduce the number of retail groups it deals with from 75 to 54 while increasing the number of sites from 165 to 173 by 2028.

Hyundai was already due to issue new franchise contracts from the start of April and has used the opportunity to carry out a full restructuring. Tunnell added the manufacturer would stick with the franchise model for the foreseeable future, rather than switch to agency, as retailers were the best people to sell cars and handle the varied paths customers require.

The OEM, which set new dealer standards over a year ago, has categorised the network into three groups. Group A are those that are already performing well and at the required standard; these will be kept with no need to change. Group B will be retained but may need improvements. And group C will not be renewed.

Tunnell said the aim of the change was to both improve customer experience of the brand as it transitions to BEVs and also to improve retailer profitability through greater efficiency. He said Hyundai was aiming to lift the network average return on sales from 1.1% in 2023 to 2.0%. He added the upper quartile was currently at 2.4%.

* Read the full interview with Tunnell in the April issue of Auto Retail Bulletin: subscribe here