By on September 17, 2018

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Hyundai has a problem to solve. Interest rates are on the rise, car buying is on the decline, and it has a newish luxury division forced to share showrooms with its regular models — most of which are moving out of the bargain bin.

However, rather than continue incentivizing the crap out of its vehicles, the automaker has decided to improve its dealership experience. There’s no official word on the amount of hugs Hyundai plans to dole out to prospective buyers, but the automaker does claim it wants to instill a warm fuzzy feeling in its clientele.*

(I could have used a hug after the high-pressure sales tactics dumped in my lap during a spring Hyundai dealer visit, though a zero-percent APR financing offer was enough to lure me off the street. In the end, no deal. – Ed.)

“I’m trying to walk away from the lowest offer,” Dean Evans, the brand’s chief marketing officer, told Automotive News. “I’m trying to find other value and a better experience in a brand that people love more and want to pay more money for. Then when harder times come and interest rates are higher and floorplan is going up, we’re still hopefully selling cars and our retailers are doing better because we have more throughput and better brand strength through this cycle.”

While that statement comes across as slick marketing talk, there’s a lot of truth in there. Hyundai is not the bargain brand it once was. That’s not a slight, either — Hyundai manufactures increasingly impressive vehicles each year, leaving it with fewer reasons to aim low. It also has its luxury brand, Genesis, occupying space on the same lots as its mainstream vehicles — at least until it finally ushers those models into standalone stores. But, while those premium autos still represent good value for money, they cater to a different sort of customer. They’re expecting something more for their money and Hyundai doesn’t want to leave them wanting.

“You’ve got to have something in front of them besides a big, fat rebate,” Evans said of Hyundai brand customers. “[Customers] remember us because we’re this good brand. They don’t remember us because we have the best warranty and the lowest price.”

We’d argue Hyundai’s competitive pricing, exceptional warranty, and continued efforts to provide its products are all part of its success, recent car-related sales downturn notwithstanding. If it can maintain those elements, while simultaneously ensuring reliability and treating customers like they’re royalty, there’s nothing stopping it from being subject to endless praise.

However, people really seem to like a “big, fat rebate.” If Hyundai moves too far from its bargain roots, there’s a chance many customers won’t accept it. Slow and steady is definitely the way to play the pricing game, letting those who can’t afford more gradually slip into the loving and affordable arms of Kia.

Shopper Assurance plays a big part in this new strategy. By allowing participating Hyundai dealers to post the market price, minus incentives, directly and clearly on the main website, the brand can effectively remove haggling from the equation. That’s great news for younger buyers who are less apt to walk in and play hardball, and even better news for Hyundai, which no longer has to negotiate a final price. Evans said most shops gladly adopted Shopper Assurance, noting that there have some a few holdouts. Currently, the program is in effect at 720 of Hyundai’s 840 U.S. dealerships.

“We have volume dealers that believe in the $69-a-month Elantra, and [customers] walk out with $350 a month,” he said, noting that both parties finalize the transaction amicably most of the time. “[With additional emphasis placed on overall experience] imagine what your satisfaction scores would be like.”

[Image: Hyundai]

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26 Comments on “Hyundai Wants Customers to Return for the Friendship, not Bargains...”

  • avatar

    First-hand experience here with an ultra-reliable 2011 Elantra bought brand new for my grand daughter’s HS graduation gift. It took her through College and beyond without any problems.

    She sold it to her friend after graduating College and her friend still owns it to this day as her DD.

    But would my grand daughter buy another Hyundai product now that she is married and on her own?

    I doubt it.

    I think she and her husband enjoy the old hand-me-down 2012 Jeep Grand Cherokee Overland Summit and SRT8 we gave them in 2015 far too much, even though both of them as daily drivers in the Phoenix, AZ, area, have racked up the miles to well over 150K each.

    • 0 avatar

      Heck if she keeps getting hooked up with new and late-model hand-me-downs, why buying anything at all with her own money?

      • 0 avatar

        Hand-me-down cars were (and are) a tradition in both my family and my wife’s family. My kids continue to pass their cars to their kids. It beats walking. It may be old but it runs and it gets me from point A to point B.

        This tradition goes back to when I first got my driver’s license at age 15 in 1962 and continued with my kids, and in turn my grand kids. Ditto with my wife’s family when she was growing up.

        But eventually needs change, you start buying stuff on your own to suit your goals, needs and expectations.

        My first brand new car was a 1968 Mercury ordered through the Cam Ranh Bay AB, South Viet Nam, BX. Then a 1971 IHC TravelAll, and then a 1972 Olds Custom Cruiser to take to Germany with me.

        Without the hand-me-downs in my life giving me a leg-up when I didn’t have a lot of money, things would have been radically different for me during the early days of my Air Force career, when I was young and destitute.

        No different for youngsters these days.

        I’m fortunate to have been both the giver and the receiver.

  • avatar
    CKNSLS Sierra SLT

    This is the same thing tired by other manufacturers-with other brands. It doesn’t (fixed pricing) seem to work MOST of the time.

    However-one needs to look no further than CarMax (the biggest seller of use cars in the country) to see success using this model.

    I guess only time will tell.

    I bought my wife a 2017 Hyundai Santa Fe XL a year and a half ago. At 17,000 miles-the only issue has been the power lift gate motor that burnt out-and replaced without question under warranty.

  • avatar
    Pete Zaitcev

    Well… Love worked great for Subaru, and hate seems to bring dividends to Mitsubishi, so why not try friendship? Jeep could use a dose of satisfaction, while BMW might go for exhilaration. I suppose Ford would be sadness or despair, and Chevrolet would be marriage (abusive, of course).

  • avatar

    I don’t want a hug from my dealer. In fact I rather like the huge discounts coupled with a 100k mile warranty on a rapidly improving product. So much so there are two Hyundai products in my garage.
    Encourage dealers to act like human beings, be hard on those that don’t but lose sight of the strategy that’s brought you to where you are. Not reason it won’t work with the CUVs everyone has a hard-on for either.

  • avatar

    I buy my cars and do my best to never set foot in a dealer lot again until I need another car. For example, my current Mazda came with free “lifetime” oil changes. I still do it myself since it takes less time than the drive to the dealer and I know the job is done right. So discounts, not hugs for me.

    On the other hand, the rest of my office pays a dealer for everything so they probably would appreciate a friendly dealer with loaners, waiting-room wifi, coffee and kids play area.

  • avatar

    They’ve backed themselves into this corner, and not just Hyundai. Trucks are huge sellers in this country, but you almost have to try to *not* buy one during “Truck Month” with $10k on the hood. My local Mercedes dealer offers discounts on pretty much everything without you even asking. Telling your customers that they should want to pay you more because they like you so much is a) pretty stupid and b) bucking the industry-wide way things are done. If every other dealer on the street is advertising discounts, you better have a superlative product and experience, and I can’t say I’ve ever been to a Hyundai store that offered either one.

  • avatar
    SCE to AUX

    I only visit dealers to test drive, buy, and for warranty work, which means I might spend a few hours there every few years, and maybe never again.

    The only dealer I’ve bought more than one car from (1 new Kia, 1 used Hyundai) sells Kia there, and a bunch of other brands in separate locations. Their Kia store is very good; their Chrysler/Jeep store is terrible.

    There is something to be said for good dealer rapport; for warranty work, I won’t even take my two Kias to the store that’s closer because they’re bozos in both the sales and service departments.

    It’s very easy to conflate the vehicle experience with the dealer experience. For me, Honda was terrible with both; I could forgive the product, but not the dealer. On the other hand, my VW was very troublesome and unreliable, but the dealer sales and service were great.

    For someone like me who changes brands a lot, the dealer has only a few hours to win my affections – an opportunity which could be gone forever afterward. IMO, huge discounts are nice but they make me trust the mfr and dealer less. Dealers who can be trusted probably have more repeat customers.

  • avatar

    lol bull-kake

    people flock to hyundai for the chance to get basically fully loaded car for a steep discount that comes with a long warranty. customers dont have to worry about does it come with android auto, ventilated seats, etc.. it offered throughout the product line.

    if anything they need more shuttle drivers for people that rather drop of their cars and go to work, or do others things instead of waiting service area

  • avatar

    They should start with fixing the miserable buying experience people go through. Why not try the Saturn no haggle experience?

    What you see is what you pay, and no hidden fees to pad profits. Or even better, allow people to make the purchase almost entirely online with their phone or computer and only have to go in to sign a paper or pick up the car.

    Offer the premium cars additional experience of delivering the car right to the their house.

    That’s just a few ideas for the buying experience. We could go on with the after buying service as well.

  • avatar

    I think Hyundais are good cars, but they’re not yet up to Honda/Toyota levels of quality and reliability. If they put some more dollars into R & D, they might (mind you I said “might”) be able to pull it off, but it will take a few years to get there. Perceptions take time to change.

    • 0 avatar

      I understand that even Honda and Toyota aren’t up to Honda/Toyota levels of reliability.

      • 0 avatar

        Unfortunately this increasingly seems to be the case. There just seems to be an overall dip in reliability and quality of vehicles over the last 8-10 years, cost cutting stemming from the recession, widespread adoption of enviro-friendly paints, issues with oil burning from thin synthetics and low tension oil rings and transmissions (overly aggressive TC lockup) as everyone chases CAFE targets. If other manufacturers were climbing from relatively lower reliability rankings, these new aspects were perhaps less noticable as they made up ground in other respects (better interiors in FCA cars thanks to Sergio, etc). Whereas Toyota and Honda really had nowhere to go but down. The Koreans seem to have managed quite well in this environment, have steadily improved their reputation and quality, and have been able to move their pricing upward to match.

  • avatar

    Changing the brand experience will cost money and dealerships with a monthly quota to meet aren’t going to put up with much marketing bullshit from up on high, without some consideration.

  • avatar

    I recently spoke to the owner of an indie seafood restaurant. He says younger people hate being told where to shop or eat and are insulted by the “come here get x percent off your purchase” ad campaigns. They want to be invited by people who want them there, their meal a “shared” experience, food created by caring hands. Most millenials haven’t even tried a Big Mac.

    I would imagine the average dealership experience would not be pleasant for a young person, and Hyundai’s correct in wanting to change this. Perhaps they should dig up the dusty old Saturn dealer blueprint.

  • avatar

    I must tell you a funny fact, in Israel, a country of 9 million people, the best selling brand is Hyundai, the second one is Kia and Toyota is #3, Honda is not even in the first 10.
    An Elantra with the most basic engine start at about 38K $, a Kia Sorento in it’s most basic form, cost about 56K $ so buying a car in general is not cheap at all!
    They must be doing something right if they can beat Toyota (:-)

  • avatar

    I’m impressed with the quality of newer Hyundais. I am going to look at the new Santa Fe, but I’m surprised at the rapid upmarket moves of the price. Its still going to take a significant (10%) discount to sell me an SUV. I’ll buy my own coffee and Danish thanks.

  • avatar

    I gave Hyundai fourteen years of loyal patronage in the form of two Santa Fes and one Elantra from 2004 to this year. What drove me to Mazda was not the dealership experience (my dealer was fantastic) but rather the still subpar suspension tuning. The suspension seems to be where Hyundai always cuts the costs and when a car rides like it has 300,000 miles on the original shocks when it has 20,000 miles on it, that says something. I was willing to overlook the 2010 Santa Fe being a total lemon and the 2012 Elantra going through rear brake calipers with nauseating regularity because the cars offered a great value and impressive interior materials. But in the end, it wasn’t enough to keep me around. Maybe I’ll return sometime in the future….

  • avatar
    Lee in MD

    I don’t need hugs from my local Hyundai dealer but I do need them to quit blasting Tejano music all over their lot 24x7x365 before I’ll ever consider darkening their showroom. I don’t know whether they’re trying to attract a specific clientele or conduct psychological warfare against the FCA dealer next door, but whatever the reason it’s quite maddening. Considering the location, Clarksville MD, I’d guess it’s more likely the latter but perhaps I’m not up on the latest demographic trends?

  • avatar

    The problem with Hyundai dealers is they assume every customer who walks in the door has a 540 credit score.

  • avatar

    Hyundai, you might want to start by making engines that last for more than 5 minutes, just sayin’.

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