The CarGurus Blog

Ten years ago, Hyundai threw the auto industry for a loop by offering a 10-year, 100,000-mile warranty on its vehicles.

Today, it’s attempting to give the industry another ride by announcing Hyundai Assurance, a program designed to let customers return their cars in case they get laid off.

This is huge… at least in theory. Say you buy a new Hyundai, but then the economy kicks you in the rear end, you lose your job, and you’re stressing about how to make your loan payments.

Never in the history of automobiles has a company let you return a car and walk away from your payments. Then again, until recently, never in the history of automobiles has there been a Hyundai.

The program is basically an insurance policy and includes up to $7,500 in protection against negative equity. If you lose your job within 12 months of buying your vehicle and are current on your loan, you make arrangements with a benefits specialist, then return your car to the dealer and walk away from all financial obligations (hopefully you’ll bring a friend who still has a car, so you won’t have to literally walk away).

I tend to be a harsh critic of sales gimmicks (how about those poor schumcks who got sucked into Chrysler’s $2.99 gas guarantee!) but this one seems, at first glance, brilliant.

I just wonder how many new Hyundais will wind up in the employee parking lots of Ford, GM, and Chrysler.

 Is Hyundai’s Assurance program more than just a sales ploy? Would you consider taking advantage of it?

 -tgriffith

Car Industry News, Car Minded, Foreign Cars, General Chat

Why has Detroit gotten so little sympathy from the public? Maybe because of all the ridiculous sales gimmicks it has tried over the years—discounts, sales pitches, red-tag events, blown-up monsters on the lot, dealer/factory incentives and so on. Maybe because the buying public has gotten fed up with feeling taken to the cleaners in every car purchase. Maybe because the dealer experience is mostly composed of intimidation and jive—and I can say that from having sold cars for a brief period about 10 years ago.

The worst gimmick is the fiction of MSRP, the sticker price. All subsequent gimmicks flow from this. People are sick of being bombarded by phony sales and traditional dealer pitches about invoice pricing and other lies. Because of the abrupt decline in the new-car market, two-for-one sales are popular now, but they aren’t attracting all that many buyers. A dealership in Miami offered zero-percent financing for 72 months and rebates of up to $7,500, but the showrooms still lack customers.

A variation of the 2-for-1 theme is “buy a car for $1.” That is, after you buy your $40K Chrysler Pacifica, for example, at full price in Chicago, you can get a nice used $12K PT Cruiser for a buck. Two dealerships in Hampton Roads, VA, have opened cafés in their showrooms. Reportedly, the food is good even if the car trade is not.

Business also stinks across the pond, where VW dealers have been offering vinyl graphics to put cutesie art on the sides of their New Beetles. But maybe the most imaginative and ludicrous attempt to lure buyers is BMW’s new touchscreen interface in its showrooms. The presumptive buyer can now slide some tiles around a screen and pick out upholstery and wheel trim colors. Check out the video.

So far, most of these attempts to sell cars haven’t sold many cars. One thing that will have to change is the number of dealers, and indeed the whole dealer system is or should be nonfunctional. NADA, the National Automobile Dealers Association, predicts that about 1 in 10 dealers or some 2,000 will be closing in 2008-2009. The dealer’s position as a middleman is pretty hard to defend in what will be a restructured auto industry. This blog had something to say earlier on that score.

Yet the consequences of dumping dealers could be severe. Wages and salaries of the  workforce constitute 13% of the US retail payroll. As independent businesses, they and their communities would be hit hard.

So maybe it’s time for dealers to do some creative thinking about their plight. Instead of concocting more sales gimmicks, how about giving cars and trucks, new and used, away to good causes and taking the charitable deduction in the spirit of Christmas? Do a service for a worthy nonprofit in your community by holding a raffle for a new car. (They are probably hurting more than you are.) Get volunteers to drive people (oldsters, shut-ins, sickies) to their errands and doctor appointments. Offer employee discounts on used cars . . . to everybody.

Build a presence in your community and people will remember when the recession is over.

Tell us about the most effective (or laughable) dealer gimmick you’ve encountered.

—jgoods

Car Industry News, Car Minded, Car Politics, General Chat