Hyundai is no longer guaranteeing trade-in values for most of its mass-market models after its program to remove the perception that its vehicles depreciates faster than competing models ended last month. The program, launched May 1, 2011, dictates that Hyundai has to pay fixed sums to buyers of new company models when they trade in those vehicles three or four years later.
"It was a marketing program and we wanted to bring a spotlight on the strength of our residual values, and it did its job," John Krafcik, CEO of Hyundai Motor America, said. The program, however, remains for Hyundai’s upscale cars like the Equus luxury sedan, Genesis sedan and Genesis Coupe, according to Krafcik. To avail of guaranteed trade-in values, buyers of Hyundai vehicle must service their vehicle at a Hyundai dealership and buy another Hyundai.
The guaranteed trade-in values are based on residual values set by ALG, a consulting firm which specializes in estimating values of used vehicles. Residual value is how much a used vehicle is worth after a certain period, like the end of a three-year lease. Hyundai so far has been continuously improving the residual value of its vehicles in recent years. As proof, Hyundai was No. 14 in ALG's Residual Value Awards in 2007. Five years later, the company jumped 11 places to No. 3 in 2012.
Hyundai’s program was successful, according to Mike DeSilva, general manager of Liberty Hyundai in Mahwah, N.J. DeSilva said that the program was effective "because it gave customers that peace of mind."
Hyundai was following the lead of Toyota and Honda, who were able to keep their customers for a long time, DeSilva noted. Krafcik said the company is hoping that the program would have the same effect of consumers wanting to consider Hyundai's upscale options. Krafcik noted that the premium product segment is where the company wants its message to be heard the most as this is where the brand meets a lot of resistance. [source: Autonews]