Joined
·
2,118 Posts
Hyundai could have a tough job ahead of it, educating the public and promoting its new, recession-driven “Hyundai Assurance” offer on finance contracts.
It’s an appealing offer, but requires some explaining. Essentially, the deal is that if the loan or lease customer loses their job within one year, Hyundai takes the car back, and the customer owes nothing. The program comes standard with all loans or leases, on all new Hyundai cars and trucks.
Joel Ewanick, marketing vice president for Hyundai Motor America, said traditional promotions, including rebates, loud advertising, and “louder-loud” advertising, have lost their effectiveness.
In addition, Hyundai’s 10-year limited warranty is not the unique selling point it was a decade ago, when the company first introduced it. Details vary, but other brands now offer 10-year limited warranties, too, including GM and Chrysler.
Therefore, with the U.S. economy in a recession, Hyundai decided it needed to do something different, Ewanick said. “The elephant in the room is that just about everybody is concerned about finances in 2009. There’s not a person who’s not worried. It doesn’t matter what demographic you come from, or how much money you make,” he said.
“If I thought I was going to lose my job, I’m not going to buy something big, like a car. I’m going to wait until it gets safe,” Ewanick said, in a Jan. 7 phone interview.
Having said that, losing your job is a scary topic. It’s risky to bring it up in advertising. It’s safer to create advertising that makes people feel good, and to associate that good feeling with your brand. Nevertheless, Hyundai decided to hit the subject head-on.
Depending on how much the car is worth when the customer gives it up, the customer is almost certainly going to owe additional money on the car, potentially thousands of dollars. Hyundai’s new program, which was announced on Jan. 2, will cover up to $7,500. There are some asterisks and strings attached, but that’s the basic concept.
Ewanick said rather than emphasizing that people are worried about their jobs, the tone of the ads is meant to be, “We’re all in this together.”
He said that in advertising focus groups, Hyundai experimented with other ways of reminding people that they could somehow lose their income, which turned people off. “Other ways of saying it were much more direct, and they did not work,” he said.
Another potential pitfall is that the customer benefit of the Hyundai Assurance program bears explaining. Even though the terms are disclosed in your finance contract, it doesn’t sink in with many people that if you can’t make your car payment, normally you can’t just turn the car in and walk away. You’re still on the hook for the entire amount financed.
The new Hyundai program is basically a form of insurance. Hyundai buys the coverage from a vendor, Walkaway LLC, with pricing based on an estimate of how likely people are to use it, just like insurance. For an additional fee, customers can extend the coverage beyond one year.
Presumably, Hyundai rolls at least part of the price of the coverage into the price of the car. Nevertheless, “it’s an expensive program,” for Hyundai, Ewanick said.
Ewanick acknowledged that Hyundai bears a burden to explain the customer benefit. Hyundai advertising steers shoppers to a web site with in-depth explanations, and Frequently Asked Questions, he said.
”A percentage of people still don’t understand the program, but we’re only in about Day Three (of the ad campaign), here,” Ewanick said. “You can see the lightbulb go on over people’s heads, when they get this.”
Jim Henry has been writing about the auto industry from a business perspective for more than 20 years. He is also a member and past president of the New York-based International Motor Press Association.
It’s an appealing offer, but requires some explaining. Essentially, the deal is that if the loan or lease customer loses their job within one year, Hyundai takes the car back, and the customer owes nothing. The program comes standard with all loans or leases, on all new Hyundai cars and trucks.
Joel Ewanick, marketing vice president for Hyundai Motor America, said traditional promotions, including rebates, loud advertising, and “louder-loud” advertising, have lost their effectiveness.
In addition, Hyundai’s 10-year limited warranty is not the unique selling point it was a decade ago, when the company first introduced it. Details vary, but other brands now offer 10-year limited warranties, too, including GM and Chrysler.
Therefore, with the U.S. economy in a recession, Hyundai decided it needed to do something different, Ewanick said. “The elephant in the room is that just about everybody is concerned about finances in 2009. There’s not a person who’s not worried. It doesn’t matter what demographic you come from, or how much money you make,” he said.
“If I thought I was going to lose my job, I’m not going to buy something big, like a car. I’m going to wait until it gets safe,” Ewanick said, in a Jan. 7 phone interview.
Having said that, losing your job is a scary topic. It’s risky to bring it up in advertising. It’s safer to create advertising that makes people feel good, and to associate that good feeling with your brand. Nevertheless, Hyundai decided to hit the subject head-on.
Depending on how much the car is worth when the customer gives it up, the customer is almost certainly going to owe additional money on the car, potentially thousands of dollars. Hyundai’s new program, which was announced on Jan. 2, will cover up to $7,500. There are some asterisks and strings attached, but that’s the basic concept.
Ewanick said rather than emphasizing that people are worried about their jobs, the tone of the ads is meant to be, “We’re all in this together.”
He said that in advertising focus groups, Hyundai experimented with other ways of reminding people that they could somehow lose their income, which turned people off. “Other ways of saying it were much more direct, and they did not work,” he said.
Another potential pitfall is that the customer benefit of the Hyundai Assurance program bears explaining. Even though the terms are disclosed in your finance contract, it doesn’t sink in with many people that if you can’t make your car payment, normally you can’t just turn the car in and walk away. You’re still on the hook for the entire amount financed.
The new Hyundai program is basically a form of insurance. Hyundai buys the coverage from a vendor, Walkaway LLC, with pricing based on an estimate of how likely people are to use it, just like insurance. For an additional fee, customers can extend the coverage beyond one year.
Presumably, Hyundai rolls at least part of the price of the coverage into the price of the car. Nevertheless, “it’s an expensive program,” for Hyundai, Ewanick said.
Ewanick acknowledged that Hyundai bears a burden to explain the customer benefit. Hyundai advertising steers shoppers to a web site with in-depth explanations, and Frequently Asked Questions, he said.
”A percentage of people still don’t understand the program, but we’re only in about Day Three (of the ad campaign), here,” Ewanick said. “You can see the lightbulb go on over people’s heads, when they get this.”
Jim Henry has been writing about the auto industry from a business perspective for more than 20 years. He is also a member and past president of the New York-based International Motor Press Association.
