By on January 3, 2009

The basic idea behind Hyundai’s new Assurance scheme: if you can’t afford the payments on your new Hyundai-financed Hyundai within the first year of financial servitude, just drop it off and walk away. No debt. No ding to your credit rating. No charge. The devilish details might not keep the Charmed Ones busy, but they’re worth a closer look. For example, you can only boomerang your Hyundai if you’ve experienced “involuntary unemployment, physical disability, loss of driver’s license due to physical impairment, international employment transfer, self-employed personal bankruptcy, accidental death.” One wonders about the importance of credit ratings to someone who’s just shuffled off this mortal coil, but that’s just quibbling. And, of course, there’s a few Hyundai-shaped hoops you have to jump through even if you are dead. 

“2. Your benefit specialist [a.k.a. Hyundai’s take no pensioners insurance adjuster] will determine the value of your vehicle based on the average of your dealer’s appraisal and the values from leading industry guides.”

“3. Provided you have made at least two scheduled payments on your loan or lease, you pay for the amount above the Hyundai Assurance benefit (if anything) and any car payments that were due prior to you filing for the benefit.”

We should be seeing ads for this program soon. Meanwhile, what’s your take? Scam or another coup from the people who brought you America’s Best Warranty™?

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47 Comments on “Here’s Your Bail Out: Hyundai Launches Free Return Policy...”


  • avatar
    Austin Greene

    Hasn’t Saturn already gone down this money-back return road on their cars?

  • avatar
    Lokki

    Of course it’s a scam… but a great one! What marketing!

    Recall that even Hyundai can’t go to their traditional customer base of one-step-above-Buy-Here-Pay-Here folks right now.

    None of them can get the bank-required 10 – 20% down together.

    However, Hyundai’s reputation for quality has improved enough for them to go after the worriers.

    Those are the people who CAN afford a car, but are (irrationally, sometimes) afraid that something bad will happen and are staying out of the market. A lot of women I know have this fear of being penniless in their old age – even though they’re well employed.

    I can see this gimmick appealing to a lot of them. They’re the kind that would never miss a payment too…. Exactly the kind that Hyundai won’t mind making a loan to. Recall that only the people that Hyundai agrees to finance get this gimmick.

    So, I think its genius. Who would you rather buy a car from: “Surprised we make decent cars” or “Don’t worry, missy, we’ll take care of you”?

    “Oh, and we have a wonderful 10 year warranty too!”

    I think that Hyundai could win a lot of long term converts with this gimmick, if the cars treat their owners well over the next 4 or 5 years…. and with their improved quality, odds are that they will.

    Finally,for what it’s worth, I’d rather have my sister (who is one of these worriers) buy a Hyundai than a Pontiac G5.

  • avatar
    TheRealAutoGuy

    Robert,

    Let’s apply the “Farago Fairness Test Question.” That is, what would be your opinion if Chrysler, Ford, or GM were to implement this policy?

  • avatar
    TheRealAutoGuy

    This is a good deal for buyers, and a bad deal for any car maker, IMHO.

  • avatar

    TheRealAutoGuy:

    It’s a good idea IMHO, no matter who offers it.

  • avatar
    Michael Ayoub

    It’s not a scam, and it’s a good idea, actually.

  • avatar
    cmcmail

    My 2009 Toyota Tacoma came with a similar policy, I am not sure whether it was dealer based or Toyota Canada’s offer. Just turn in the keys.

  • avatar
    eric

    It’s not really a scam but it’s not entirely upfront with the risk either. Hyundai’s experience substantial depreciation in the first year (a $20k sonata GLS, wholesales for about $13k after 1 year). If the buyer puts down 30% on the car they have little risk (other than losing their down payment). If they don’t put down a big down payment they get hit with the difference between their loan value and the car value (as determined by Hyundai).

    It’s very clever marketing but this one is set up to be a class action lawsuit in 2010.

  • avatar
    no_slushbox

    It’s free to buyers, and the government isn’t paying for it with our tax money, so it’s hard to call it a scam.

    Hyundais are pretty competitive accross the range, so if this leads a buyer to buy a Huyundai instead of a different brand it isn’t like the buyer is getting screwed.

    The only limitation I found, other that those listed above, is that negative equity is only covered up to $7500.

    Hyundais depreciate quickly, but most are cheap enough that the $7500 should cover all of the negative equity, especially if there was any kind of down payment.

    The Genesis is the only car where the negative equity might be substantially larger than the $7500 coverage cap.

  • avatar
    no_slushbox

    eric:

    That’s the point, buyer is not responsible for the negative equity (i.e. the difference between their loan value and the car value) as long as they meet the criteria and the negative equity is under $7500.

  • avatar
    PeteMoran

    Hyundai performed pretty well in Nov with a 3.9% rise (yes rise) in small car sales, but a drop in heavier vehicles resulting in a 9.3% drop overall. Making Hyundai one of the least worst performers.

    Did they look at their December numbers and think “not bad”, and decide to offer this from a position of relative “strength”? Now is the time to go for market share and this seems like something designed to help. They would know the Bigish3 won’t (can’t?) respond, or shouldn’t with that government secured GMAC underwritten.

    Speaking of market share, with that under utilized, not to be converted Tundra plant, could Toyota go after some juicy Truck sales to drive the knife on a plan like this? Just sayin’ it out aloud. RF, what do you think?

  • avatar
    gogogodzilla

    international employment transfer

    Not a bad deal for military personnel…

  • avatar
    seanx37

    Was watching football tonight, and these ads ran on every break. Was watching over a friends house. His wife is a Chrysler employee(or was, who knows if she is to be called back). His response was “Sh#t, that is great idea. Chrysler might just stay closed”

  • avatar
    TheRealAutoGuy

    Robert Farago :
    January 3rd, 2009 at 10:25 pm

    TheRealAutoGuy:

    It’s a good idea IMHO, no matter who offers it.

    I honestly don’t know on this one. It’s the classic struggle of the industry — move the iron, possibly incurring significant losses, which keeps factories running and avoids really big losses, or stay with selling to the truly credit worthy?

    If I had the answer to this one… :-)

  • avatar
    TheRealAutoGuy

    Slushbox,

    It’s free to buyers, and the government isn’t paying for it with our tax money, so it’s hard to call it a scam.

    What if the Korean government is paying for it by propping up Hyundai in North America. I’m not saying they are, but how would it make you feel?

    For the Big 3, it’s a loan until proven otherwise. If it works out that way, the government will make big $. If it doesn’t work out, well, you’ll be paying a heckuva lot more in covering the unemployment costs.

  • avatar
    NulloModo

    It seems like a decent deal, but the list of requirements is fairly strict. Someone who just bites off more can than they can chew is SOL (which, speaking from the personable responsibility standpoint isn’t such a bad thing), but so are those who lose their licenses for reasons other than medical, those who elect to leave a job which just isn’t paying the bills in these economic times (such as anything comission based) but aren’t fired, and anyone declaring bankruptcy who isn’t self-employed (then again, once you are that far gone your credit is trashed anyway, so no worries if your car gets repoed). Also, it is interesting that they make the distinction for ‘accidental’ death. Does that mean that the spouse and/or estate of someone passing from natural or self-inflicted causes is responsible for the rest of the contract?

    On a side note – Ford/Linc/Merc has had at least that death thing handled for years with the Peace of Mind clause. Though it only applies to seniors, if your spouse passes, no matter who the cars name is in, you can terminate the contract with no questions asked and no fees.

  • avatar
    Acd

    One of the reasons why consumers have cut back spending so much is fear of what will happen in the future and this program tries to address that. In this climate the usual boat load of cash on the hood doesn’t seem to affect consumer behavior the way it used to. For a lot of people it isn’t ‘the deal’ but whether they will be able to afford it in the future even though they can now.

    It certainly stands out among the clutter of toe-tag-athon-clearance events.

  • avatar
    no_slushbox

    TheRealAutoGuy:

    If the South Korean government is assisting Hyundai in dumping then the US should act. It is a bit complicated since Hyundai is a huge conglomerate like GE, which makes it hard to follow the money.

    The US plays tough on trade a lot, but usually more with agriculture.

    That said, unfair competition has never been the Detroit automakers’ problem, and without foreign competition the Detroit automakers would still be making the awful cars they made in the ’70s and ’80s.

    The problem with the bailout is that it does not solve any of the Detroit automakers’ problems; the Detroit automakers still have too many UAW employees that they can’t get rid of, too many dealers and brands, and over a hundred billion in private debt on top of the $50 billion that they are or soon will be in the hole to the federal government for. I would have no problem with the government aiding GM and Ford through Chapter 11, but there is no way they can get their coporate structures viable without bankruptcy. For example, GM needs to kill 6 brands so that they can stop designing and marketing three or four versions of the exact same car under different badges, and so that their overcrowded dealers stop killing eachother on price; there is no way that can be done without BK.

    The government might as well pay unemployment for the excess employees instead of giving money to GM and Chrysler to pay the for the Job Bank and tens of thousands of featherbedded jobs.

  • avatar
    jkross22

    Good on Hyundai for thinking creatively about marketing and appealing to those having a tough time. Didn’t GMAC do the exact opposite of this in a recent story?

  • avatar
    Runfromcheney

    Although there are a few details, I still think that this is a great idea. Whoever thought of this deserves a raise.

    It is like I tell everybody else when talking about cars, there is a good reason why the Asians are in good shape while GM and Chrysler are barely still in business.

  • avatar
    panayoti

    Hey Robert! Based on a couple of posts here, I have a request for a regular feature here, if it doesn’t burden you and your staff too much. How about a quarterly, semi-annual or yearly chart or list of depreciation values for vehicles sold in the USA??
    I feel that you would be providing an invaluable service for your readers and at the same time stoke some of our chief opinion makers here. What do you think?? Would you consider it??

  • avatar
    Stu Sidoti

    Turn in my car and walk away? What an amazing idea.

    Actually nearly everyone has had this option for decades; all you have to do is put down a generous amount for the downpayment, make your BUY payments on time and most car dealerships will gladly accept your turn in.

    A few years ago, I bought a new car and put 50% down with no trade-in and the sales guy started acting like I was J.D. Gotrocks or something.

    With the credit crisis not showing any signs of letting up soon, people may soon be forced to remember what it used to be like to actually have to qualify for a loan.

  • avatar
    John Horner

    Hyundai is putting itself on the hook for up to $7,500 of delta between wholesale value and loan balance during the first year if you loose your job. Many years ago during my short three month career as a car salesman (dad got me the gig as a summer job) we used to sell finance insurance which would make your payment for you under circumstances similar to what Hyundai is talking about. Hyundai can probably afford to take out that kind of insurance, or self-fund it for several hundred dollars per unit. Cut back the cash-on-the-hood by a grand and it should be covered.

    Smart marketing people find a way to package their pitch in the way most persuasive to customers. This sounds like a pretty use of marketing/incentive money by Hyundai. It speaks to the concerns of potential customers and stands out from the zero percent financing crowd, yet will cost Hyundai very little in real terms. The one year limitation, however, really reduces the attractiveness of the proposition. Hyundai should keep the program going throughout the term of the loan and simply reduce the dollar value of the benefit in years 2 and later.

    “there is a good reason why the Asians are in good shape while GM and Chrysler are barely still in business.”

    The Asian automakers are “in good shape” only in comparison to Detroit. The Asian companies are all bleeding pretty hard as well, but they started with a healthier circulatory system.

  • avatar

    No scam. It’s basically a rebadged private label version of the Walkaway Insurance Plan. Hyundai throws-in the premium. Many extended warranties are covered this way. “Good one” to Hyundai’s marketing dept.

  • avatar
    Bancho

    I’ve just started seeing these commercials today. It’s an interesting pitch even if it’s not original. I’d give any manufacturer for touting it, even a domestic to be honest. If nothing else, it helps give people on the fence about buying a bit more confidence and the people most likely to have that sort of concern are probably those more responsible with their finances. I’ll bet Hyundai does pretty well with this promotion.

  • avatar
    shaker

    The restrictions seem to be designed to protect Hyundai from being scammed by customers – so, on the face of it, it’s a good deal for those needing a new car.

    Oddly enough, the big 2.5 should offer the same assurance, but in the opposite sense:

    If we (GM, Chryco, Ford) should go out of business within the next year, we’ll either buy your car back for the market price or offer you a 3rd party warranty good at any remaining dealers or 3rd party repair facility…

  • avatar
    ronin

    >>”,,,What if the Korean government is paying for it by propping up Hyundai in North America. I’m not saying they are, but how would it make you feel?…

    Fine by me. My family benefits and my taxes are not taken from me involuntarily and given to Hyundai. What’s not to like? I only have to pay Hyundai once.

  • avatar
    don1967

    Calling it a “scam” is a bit harsh… it does pretty much what it promises. It’s a positive step for a car company to actually listen to consumer concerns, and get away from $10,000 discounts as the only way to sell a car.

  • avatar
    golden2husky

    “Scam” is a stretch, but the loopholes make it likely that few people will be bringing their Hyundai’s back. Which is probably necessary as many people would try to beat the retailer if they could (recall Costco’s TV return policy of 2 years – people routinely brought back their sets for bigger ones like clockwork).

    That said, don’t underestimate the power of peace of mind to jittery consumers. Two of my female friends purchased Hyundai products just for the warranty. They so despised being ripped of by repair shops…now the dealer does it by pushing wear items and too frequent maintenance service “paks”…

  • avatar
    mikey

    10 year waranty and now this I’d like to see how
    good Hyundai is at paying claims.

    If you live in rust country check the rear quarters around the wheels on late model Sonatas.
    Without extensive bodywork these things will be gone in 10 years.

    With money tight, folks are going to keep thier
    vehicles longer.Watch attitudes change when the repair bills start coming in.

    Honda and Toyota parts are expensive but thier car and trucks are well built and designed.Repairs can be costly but a 6 year old Honda is worth repairing.The same cannot be said for an older high mileage Korean car.

    Oh I know I’m gonn’a get beat up for that statement.Just do a little survey when your on the roads.In my area of the world there is all kinds of older domestics still running and looking
    not bad.In fairness I’m seeing some good looking older Hondas and Toyotas.Not too many Nissans but the Hyundais and the Kias they can outrust a Mercedes.Ask an honest mechanic how he feels about
    Korean cars.A nightmare to repair and super expensive parts.All cars are great when new and shiny.But the worlds changing,folks that allways drove late models,are going to find themseves in
    6 to 10 year old vehicles.Then we will see who really builds the best cars.

    Anyway the response from my comment should be interesting

  • avatar
    saywhat

    I would not call it a scam, but it is another sure sign of desperation on the part of the auto manufacturers. I wonder if Hyundai is buying the insurance to cover this risk from an outside company or if they are covering it internally? This type of risky speculation is what leads to the type of financial problems we are currently facing. I am sure the loop holes are plenty big to enable them to try to avoid most payouts. It will likely be harder to collect on the give your car back deal then it is unemployment benefits.

  • avatar
    menno

    As things get worse in the auto industry, perhaps Hyundai will next “provide” (pre-pay) the cost of scheduled services for the first few years of driving (at the Hyundai dealer), just as BMW and VW are now doing.

    Waaaay back in the day before I could even drive, American Motors (which was a scrappy competitor and underdog) brought out the Buyer Protection Plan.

    The deal was that virtually everyone knew that the new car warrantees weren’t worth the paper they were written, and that most car dealers were total scumbags and would not honor them anyway. AMC needed an edge, so VASTLY simplified their warrantee; put it in their ads; touted it; and said that in “most” AMC dealers, you’d get a free loaner car if you car was in for awhile (yes, this was totally new back then).

    Kudos to Hyundai. (Now I’m 99.9% sure we’re going for a Hyundai in May when our current Sonata lease runs out, instead of 99%).

  • avatar
    Stu Sidoti

    I’m old enough to remember the early days of Hyundai America and just how terrible their first offerings were…they were just awful and became rich fodder for late-night comedians and such.

    Twenty-plus years later, Hyundai is now regarded as one of the most reliable carmakers and with campaigns like this one, they keep winning more and more customers over. No matter what you think of the buy-back campaign, you have to admire the hard work they have done to make better cars, increase their brand’s value and win more customers the good old fashioned way-They Earned It.

    If the Big-3 automakers had worked as hard as Hyundai has over the last 20+ years, they would most likely be a lot better off and wouldn’t be sitting up on Capitol Hill begging for dollars from Uncle Sugar.

  • avatar
    RedStapler

    An innovative use of their marketing dollar.

    Compared to the subsidized fuel for your guzzler deal that Chrysler had earlier this year it should attract a slightly better class of customers.

  • avatar

    excellent marketing, something GM will never learn.

  • avatar
    Blobinski

    I purchased a Hyundai Elantra GT Hatchback, loaded with everything, in 2005. It cost me $14K. It is worth about $7,500 today and I owe $3,800 on it. I will be done making payments in October. I pay $299 per month with 3.9% Hyundai financing. I get 30 mpg. I have 50K miles on it and have taken it back to Hyundai three times – Replacement of rear brakes ($165), fix magazine pocket netting (warranty), and the recalibration of the air bag sensor (recall warranty). They treat me like a king when I go there with very nice staff and simple surroundings.

    I called last week as I was interested in a 2009 Hyundai Tuscon 4WD. They offered me $6500 for my GT, $3K off incentives (including loyal customer discount), 3.9% financing, and free oil changes to 50K miles. I could get a loaded 2009 Tuscon for about $16K, why would I go anywhere else? Hyundai has my business and has been slowly and quietly gaining ground in the automotive industry.

  • avatar
    blowfish

    I guess they have figured out during this trying times their cars had to be moved, is still better than selling at employee , mother in law , cousin discounts that is nothing but cut a big chunk off the list price. Is like wholesale to public.
    Their product is good they stand to reinvest more good will into the consumers.
    Hope they can pull this off.

  • avatar
    psarhjinian

    excellent marketing, something GM will never learn.

    You make an important point, one that GM Marketing needs to learn. GM and Hyundai had (have?) the same perception problem: customers don’t trust their products.

    Hyundai saw the perception gap as their problem to solve. They acknowledged and took ownership of the problem, made better cars and offered a solid warranty program (not just length, but honour) to back it up. No bluster, just “we make good stuff, and we’ll stand behind that stuff”

    GM always saw the perception problem as something the customer and/or the media were responsible for. Their response was to make excuses or harp on about the unfairness of it all. The result was that GM came off sounding hollow, petulant and whiny—even to consumers—while Hyundai is held in generally good regard.

    Compare this to GM’s “Surprised” ad campaign. Hyundai gets its customers, GM spites them.

    How does Mark La Neve still have a job? After watching Hyundai and Kia—the Moe and Larry of the automotive world—pull themselves up to the level where customers see them as on-par or better than the domestics, has he finally figured out what he needs to do. If Kia—Kia!—can be salvaged, what the hell is preventing GM from fixing Buick or Chevy?

  • avatar
    westhighgoalie

    THIS IS BRILLIANT!

  • avatar
    Blobinski

    As I stated before, and as others have stated here. Compare how far Hyundai has come since those days of the very bad Hyundais of the early 1990’s to GM. The Cavalier/Cobalt is a good comparison to make. Look at their new Cobalt XFE offering. A completely stripped Cobalt with roll-up windows. Compare this to a Hyundai Elantra. A few mpg lost, but a much better car for less money. Surprised?

  • avatar

    “involuntary unemployment, physical disability, loss of driver’s license due to physical impairment , international employment transfer, self-employed personal bankruptcy, accidental death.”

    Loss of driver’s license due to physical impairment may mean stroke, or other condition that precludes you from operating a motor vehicle, but I’m pretty sure you could argue that a DUI also would qualify.

    Losing a driver’s license (state revoked), due to physical impairment (hey, you were impaired at the time!), return car with no penalties!

  • avatar
    brettc

    I think this is a great idea, and will probably help Hyundai out long term, just like their warranty has done. Contrast that to GM, where they only think about keeping the lights on month to month and keep offering insane discounts that will keep killing the company.

    This is more of an emotional thing where people that might have been afraid to buy a vehicle will now feel secure and maybe buy that Hyundai they looked at previously.

    As for the DUI thing and physical impairment. People choose to drive when they’re drunk/high. No one forces them to do that. People don’t typically choose to have strokes or other life altering medical events. I think Hyundai probably has a clause about how a DUI charge doesn’t qualify for a vehicle return. Hyundai isn’t stupid. That’s GM’s job.

  • avatar
    cos999

    I agree with Mikey.
    Show me a high mileage Hyundai (> 100,000)and I will bet the repair bills once the car was out of warranty are in the thousands.
    I am old enough to remember that my wife needed a car in early 1987 to get to/from work (that she needed to pay her way through college) and she got a Hyundai Excel. It provided hassle free transportation for four years until the engine blew in 1991 (@ 70,000 miles)…She still owed $1800 on the 60 month loan. Fast forward to 2002…CRV’s back ordered, wife bought Santa Fe. I recall front disk pads/rotors only avail from Hyundai dealer..Very expensive.
    Once it was out of warranty (3 years in) belts started squeeling, radiator went, AC compressor died. Exactly four years later…90,000 miles, engine died, left ME stranded. Two weeks car sat at dealer as a non-powertrain part failed wiping out timing belt destroying engine and Hyundai America did not want to cover it. Finally they agreed…dealer put rebuilt engine in…Took me six months to sell it for $2000….what I owed on the loan.
    FYI our car history in addition:
    1990 Honda Accord 190,000 miles (in 8 years)
    1991 Saturn SL1 dumped in 1994 at 75,000 miles
    due to engine mount warping not covered under warranty rendering car inoperable above 55 MPH due to excessive vibration.
    1994 Toyota Corolla 210,000 miles (in 8 years)
    1999 Nissan Pathfinder dumped in 2004 at 90,000 miles when third set of struts had to be replaced (first one warranty, next two i had to pay for)
    Vehicle used for ZERO offroading and HVAC fan/blower went at 80,000 miles.
    Current:
    2004 Honda Pilot 105,000 miles (brakes,tires)
    2006 Toyota Camry 80,000 miles (tires only)
    Besides commuting miles, we travel long distances to visit family. I will let the faithful figure out which two manufacturers will get our future car business.

  • avatar
    asetech

    I work in the auto repair industry and I see this type of thing all the time. Companies advertise this “great deal” but they have so many limitations on it that it isn’t really that great of a deal. The more I see good deals, the more skeptical I become!

  • avatar
    ken

    So am I dense. Please explain to me what I am missing that makes this a good deal. I go to my Hyundai dealer and trade in my car to buy a new Hyundai. Four months later, I lose my job and return the car. No I have no payment, but I also have no transportation to find a new job. ?????

  • avatar
    prolixblyss

    in reply to cos999
    Obviously there are very few of you that are actually currently in the auto sles industry. The majority of these responses are not only completely unfounded but based off a product opinion formed about an 87 excel?????? You have to be kidding me… it’s funny how quickly the public forgot about Toyota’s moire than rocky beginnings as well as honda. Really an 87 excel.. ahahahahahah. Have any of you researched Hyundai’s product quality, or IQS from J.D. power…. try 1.porche 2.lexus 3.hyundai 4.toyota 5. honda
    And on the depreciation subject….. obviously your toyota has a higher resale because YOU PAYED MORE YOU IDIOTA! I love it when under ionformed everymen think they have a clue…… hahahahahaha


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