By on April 20, 2011

Hyundai has received a lot of attention recently for improvements in its product lineup, but as TTAC has proved, it’s actually the brand’s non-product innovations  that can be most closely tied to its recent success. Hyundai’s biggest sales growth in the US market has come on the heels of its 100k mile warranty and its Assurance buy-back program, rather than the introduction of any new car. And so, although Hyundai has revealed its new Accent (which we already showed you), the big Hyundai news coming out of New York is the brand’s latest Assurance feat: a trade-in value guarantee. The program rolls out in May, and Hyundai USA CEO John Krafcik tells the DetN that

Depreciation is a big unknown. It’s like giving one of the big benefits of leasing, but you’re still owning the car. We’re already one of the highest brands in loyalty, and we think this will help.

It certainly can’t hurt.

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15 Comments on “Hyundai Guarantees Resale Values...”


  • avatar
    Philosophil

    Wow, that is impressive. I’m not sure how they’ll write the fine print for this (condition of vehicle, and so on), but it certainly is an innovative idea that will likely attract a certain kind of buyer. Interesting stuff.

    • 0 avatar
      Secret Hi5

      It’s great marketing, but will I see a few potential caveats for the consumer:
      -Trading in a new Hyundai (or any new car) after 2 to 4 years is not financially wise for most people.
      -The trade-in value is guaranteed only if you trade in to a Hyundai dealer!  This means you’re locked in to Hyundai for the future!!  And when you DO trade in the car at that time, the dealer has the negotiating advantage of knowing you can’t go to another brand.  (Brilliant marketing, like I said!)
      -The usual fine-print stuff.

      • 0 avatar
        Acc azda atch

        Secret Hi5:
         
        I can not agree with you more.
        Hyundai doesnt do anything without some kind of return.
         
        I honestly don’t trust the company enough to buy a car from them on their own merits. Knowing I’d be in the same company of fuckers who get thrilled with their warranty. Yes, I think their engineering in both vehicle design, engine technology management and or crash safety is fantastic. Heck, I’d love to know the crash test roll over data on their vehicles.. if they meet or exceed the 1.5 crash rating.
         
        The cars.. are geared towards fuckers.. who want that warranty. Forget the kind of vehicle ya get, either a hatch, sedan, coupe, suv or cuv.
         
        They did the same ploy with their last bout of marketing. Ya get to hear what ignorant people have to say.. who don’t cross shop or know anthing about cars in general. They want that stupid little deal.. to settle their peace-of-mind.
         
        These fuckers get thrilled about their warranty and mait. the way Stang / Challenger / Camaro owners would feel (who spent 30g) if they got a free intake / exhaust upgrade and 100 more hp.

  • avatar
    segar925

    The “guarantee” probably won’t be worth the paper upon which it is written, thanks to countless lawyer loopholes that will surely be included in the fine print.  Unless something has changed in the last few years, the resale values on Korean cars suck.  Do some research before you buy.

    • 0 avatar
      segfault

      Or buy a used one.  Subaru did the guaranteed trade-in value thing a few years back, and it also had a lot of loopholes.  Too many miles, and you were disqualified.  Any paintwork at all, and you were disqualified.

    • 0 avatar
      gslippy

      I’m sure it will be a true guarantee; it just not be a value high enough to be worth exercising at trade-in time.
       
      Re: that lousy resale value on Korean cars – That’s why I was happy to buy a 1-yr old Sedona for a low price instead of an overpriced Toyota, and it’s also why I’ve bought so many used Chrysler products in the past.  I hope to keep them until the trade-in value is nearly irrelevant.

    • 0 avatar
      bd2

      It’s a pretty safe bet for Hyundai considering their residual values have gone up the most over the past decade.
      ALG has Hyundai’s 2011 residual rankings as being one of the 7 mainstream brands that is above average.

      Mainstream Brand Residual Value Rankings:

      SUBARU
      HONDA
      MAZDA
      VOLKSWAGEN
      NISSAN
      TOYOTA
      HYUNDAI

      https://www.alg.com/ResidualValueAwards

      And since the auto industry uses ALG’s valuations to set lease rates, I’d say it wouldn’t be too much of a risk for Hyundai to offer a guarantee on the residual value of their new lineup.

      Esp. since a big part of the residual value equation is the average purchase price in relation to MSRP w/ the new Hyundai lineup being discounted a lot less than the previous generations.

  • avatar
    ...m...

    …hyundai’s management continues to impress the hell out of me – great business gameplan supporting great products, nice to see the good guys win…

  • avatar
    gslippy

    +1 on Philosophil’s comments.
     
    This is obviously a way for Hyundai to maintain loyalty in their growing customer base.
     
    Next stop will be no-haggle pricing.  Guaranteed trade-in addresses one of the concerns about no-haggle pricing.  But it will also make consumers consider whether they can get a better trade-in deal elsewhere with a dealer that haggles on both sales price and trade-in.

    • 0 avatar
      bd2

      Hyundai already has one of the highest owner loyalty rates in the industry.

      I’d say this is more geared to owners of other brands (mainly Toyota and Honda) who might have given Hyundai a try if not for the better resale values on Toyotas and Hondas.

      The thing is, better resale value means not getting as big of a discount at purchase -  so really, one ends up “paying” for higher residuals upfront.

  • avatar
    Steven02

    Interesting to see how this would work.  GM had huge problems with truck leases when gas prices went through the room and lost lots of money on the depreciation.  Hyundai doesn’t have good resale now, I am wondering what they will price it out in the end and how this program would work.  It is very interesting.

  • avatar
    mike978

    Hyundai continue to impress – like they did with their reassurance program at the height of the recession and fear of job losses.
    I don`t know why GM, Ford and others do not increase their warranties. In Europe they have 3 year/60,000 mile warranties yet here 3 year, 36K – which means if you do any more than 12K in mileage (and lots of people do commuting) then you have less than 3 years of coverage. Since many of their cars are engineered the same on both sides of the Atlantic (Focus, Fiesta, Cruze etc) then I don`t see why they cannot try and compete with Hyundai on warranty.

  • avatar
    don1967

    Guaranteed resale value is nothing new to people familiar with leasing.   And high residuals are nothing new to Hyundai.   My ’08 Santa Fe lease came with a 5-year guaranteed residual of 42%, which not even Toyota or BMW would touch at the time.

  • avatar
    John Horner

    Hyundai keeps pushing the marketing envelope. This is a brilliant move as it encourages brand loyalty over the long haul, will actually cost the company very little and expresses real confidence in the product.
    Hyundai continues to impress not only with the better-every-generation product pipeline, but also with agressive and effective long-term marketing programs. Any idiot can throw temporary cash on the hood, but few companies have had the guts to offer the kind of customer mental pain and anguish reducers Hyundai keeps coming up with. Long warranties addressed the customer’s fear of getting burned by an unreliable vehicle. The Assurance buy back program addressed customer’s fear of loosing their jobs. Now Hyundai is addressing the fear of getting stuck with a bad trade in value. While most companies keep finding ways to exacerbate the fears of consumers, Hyundai keeps finding was to ameliorate them. Hyundai is clearly playing the long game. Most auto companies are stuck playing endless rounds of get-me-through-the-quarter.
     
     

  • avatar
    stevelovescars

    Seems to me that I don’t see any “domestic” brands on the top of that residual value list.  Personally, I’d worry less about resale value for a new Hyundai or Kia than for a Chevy or Ford or certainly a Chrysler.  If this newer engine technology proves as reliable as we expect, then Hyundai has developed an entirely new brand identity over the past year.  They are no longer just cheap cars with good warranties, but highly-styled cars with great fuel-economy and tons of features for a great price. 

    This is why I like to buy 2-year-old cars.  Still under warranty, half the price of a new one. 

    My dad finally followed my advice and bought a 2 year old Buick Lucerne instead of the new one he was eyeing.  It was a CPO car with 21k miles on it from a Buick dealer and he still paid only 50% of the original MSRP.  I’d hazard to guess that he’d be hard pressed to find a 2 year old Sonata with 21k miles in it next year for only $11k. 


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