As Australia’s new-car market becomes more crowded and margins tighten, Hyundai Australia is placing renewed emphasis on an often-overlooked differentiator: dealer capability.
At a vehicle launch in late 2025, Hyundai executives were unusually direct about the pressures facing dealer networks — and why the brands that invest in stronger dealer systems, profitability and processes are more likely to earn the confidence of fleet buyers.
The discussion made one point clear: in a market awash with new entrants, how vehicles are supplied, supported and serviced is becoming just as important as the vehicles themselves.
Dealer profitability under pressure
Hyundai Australia Chief Executive Officer Don Romano acknowledged that the economics of retailing vehicles in Australia have deteriorated sharply over the past five years.
“Over the past five years, dealer profitability has gone straight down… dealers that used to make three to four per cent are making zero to one per cent right now.”
For fleet buyers, this matters more than it might first appear. Thin dealer margins often translate into discount-driven behaviour, reduced service investment, and inconsistent fleet support outcomes.
Fixing the push-model problem
One of the most relevant insights for fleet buyers was Hyundai’s shift away from production-driven supply models that force excess stock into dealerships.
Romano pointed to a structural change implemented locally, crediting the initiative to Hyundai Australia’s leadership team:
“One of the things that Gavin (Donaldson) put together in the last six months is a system where the dealers actually order what they need, not what we produce.”
This marks a move away from the traditional push model, where vehicles are allocated regardless of local demand. Instead, dealers are now able to order stock based on what they can realistically sell.
For fleets, the implications are significant. Forced stock often leads to:
- Aggressive discounting to clear inventory
- Unstable pricing signals
- Downward pressure on residual values
A demand-driven ordering system helps stabilise transaction prices, which in turn supports more reliable residual value assumptions — a critical input for fleet whole-of-life cost modelling.
Removing incentives that distort behaviour
Hyundai also confirmed it has removed policies that previously encouraged dealers to take unwanted stock simply to qualify for bonuses.
As Romano explained:
“We had another policy where dealers had to buy so many cars in order to get a retail bonus… we eliminated that to try to make it much more friendly for the dealer.”
For fleet programs, this reduces the likelihood that pricing is being skewed by short-term stock pressure rather than genuine market demand.
Capability goes beyond sales
Dealer capability, Hyundai stressed, is not just about stock flow. It also extends to service execution, technician training and responsiveness — areas that directly affect fleet uptime.
Hyundai Australia Chief Operating Officer Gavin Donaldson pointed to early operational improvements:
“Our NPS scores for service are starting to improve. Our fix-it-right-the-first-time are starting to improve.”
Hyundai described increased investment in technical training, hybrid and EV capability, and state-based technical specialists who work directly with dealers to resolve issues faster.
Why this matters more as competition increases
With multiple new brands entering the Australian market — many with limited dealer histories — Hyundai believes experience and process discipline are becoming strategic assets.
Romano framed it bluntly:
“When you make a promise to a customer, can you deliver on that promise?”
For fleet buyers, the answer to that question often determines whether a brand is shortlisted — or quietly removed — from consideration.
The fleet takeaway
For Fleet Managers and procurement teams, Hyundai’s comments highlight a shift worth watching closely:
- Dealer health directly influences fleet outcomes
- Demand-driven ordering supports pricing discipline and residual values
- Reduced stock pressure limits discount volatility
- Stronger dealer capability underpins service confidence and uptime
In an increasingly fragmented market, dealer capability is no longer just a retail issue. It is becoming a competitive advantage — and one that fleet buyers ignore at their peril.
