You may not be able to afford a new car right now, but Hyundai Motor Company is determined to get consumers into the showroom, even if they have to take a bath on the deal.
Starting in 2009 Hyundai announced that it will buy back any of its leased or financed cars from customers who have lost their jobs or sources of income through the Hyundai Assurance Program.
Bottom Line: If you own a Hyundai, and you’re looking to cut expenses, you may be able to eliminate at least one obligation hanging over your head.
“The person who needs a new vehicle no longer has to worry about repossession, for example, and a huge hit to his or her credit rating,” says Jim Trainor, a spokesperson for Hyundai Motors America. “We think that this is a pretty significant way to make people feel comfortable with everything going on in the economy.”
Car Sales Need a Boost
Major US auto manufacturers reported a more than 30 percent decline in auto sales for December 2008. Though not as hard hit as Toyota (Stock Quote: TM), whose 2008 sales fell 37 percent from 2007 or Chrysler, LLC which announced a 53 percent drop in sales for 2008, Hyundai was not spared. The South Korean company experienced a 14 percent drop in US car sales year-to-year.
Hyundai ‘s new gambit is unique, timely and automatic upon the purchase of a car, but there are strings attached.
Here's what you need to know:
- Would-be exchangers must have had at least two, uninterrupted, months of payments behind them.
- Hyundai only pays out if you’ve had continuous, full-time employment for at least 90 days prior to being laid off and provided that you’ve been approved for state unemployment benefits.
- Don’t expect Hyundai to front the money for your new $30,000 Genesis. The buyback caps out at $7,500. You make up the difference.
Despite these caveats, the deal appears to be hitting home with some consumers.
A Buzz-Worthy Deal
“A few of my salesmen went out together,” says Scott Fink, CEO of Hyundai of New Port Richey outside of Dade City, Fla. “And they said that people were talking about it at the bar.”
The auto industry is aware of Hyundai’s new program and while no one outside the Hyundai tent is gushing with praise, some are pleased that the drop in auto sales seems to have more to do with the economy and less to do with the cars themselves.
“People thought that SUV sales were plummeting because of the high cost of gas," says Wade Newton, communications director for the Alliance of Automotive Manufacturers. “But consumers are shying away from purchasing automobiles.”
Hyundai’s Assurance Program won’t help everyone, but as long as there’s a chance to beef up consumer confidence among car buyers, dealers are willing to shell out the cash.
“Will something like this solve the industry’s problems?” asks Fink. “No. But I think that we will see some shoppers.”