Who’s this one for?

I an a fan of Hyundai‘s innovative marketing and have posted before about their consumer-focused ideas. Their breakthrough program that if you got laid off you could return your car with no further obligation lead to a 28% increase in sales when most brands were suffering lower sales.

Hyundai earlier this month announced their guaranteed trade-in value program. Under this program they are guaranteeing the future value of your car. Kind of like with a lease. In fact they are using the Automotive Lease Guide as their benchmark for trade-in.

The caveat (obviously the car must be in good condition, just like with a leased vehicle) is that the car must be maintained by the dealer according to factory recommended service. Ah, now who is this program really for? I am not sure that uncertainty about the future value of Hyundais is keeping people from buying them … and I may be wrong. What is clear is that this program could drive service business to the dealer.

Turns out Hyundai dealers have much lower service retention rates than do their competitors, and the percentage of dealer overhead absorbed by service is also well below the best brands. So, it would seem this program may be designed more to help the dealers get more service business than to overcome a sales obstacle from customers. That would be too bad if it is true.

As Yogi Berra was alleged to have said, “If people don’t want to come out to the ballpark, nobody is going to stop them.” If Hyundai dealers have a service retention problem, what is its root cause? Trying to get more customers to use the service department for a benefit they don’t find beneficial could backfire. As my friend Ted Steinberg likes to say, “all this will do is give them an opportunity to irritate even more customers.”

Not being an automobile marketer, I may be wrong on this one, but I think Hyundai is suffering from automobile marketing delusion. Why not fix the root cause problem that is keeping its customers from using the dealer’s service department; then you can drive people to the service department with any number of programs, which will result in a positive experience.


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