Also file under “what else do you say when sales drop 52.9 percent?” Automotive News [sub] sifted out a tasty nugget from GM’s latest sales conference call kabuki. “We’ve looked at Hyundai’s (Assurance) program extensively, and we’ve examined some possibilities of what we might do because certainly the consumer is anxious and worried about the future and whether or not they will retain their job,” was how GM’s Mark LaNeve put it. Interesting. But, continues the GM marketing chief, “we’re not crazy about the Hyundai program.” Because it’s made of kimchee? No, “because all it does is protect your credit from being wrecked. You’ve still got to turn in your car. And when you lose your job, you still need a car to find another job.” GM’s answer: build the gimmick that fixes everything. Of course.
But wait. A GM spokesman also tells AN that “we aren’t interested in following Hyundai’s Assurance program exactly because we’re not sure how effective it really is.” Rest assured though, your tax dollars are being spent as we speak, paying GM’s finest minds to figure out whether Hyundai’s sales mojo is based on Assurance or cash on the hood. Deciding, as it were, whether to chase Hyundai’s gimmickry or Chrysler’s incentive frenzy.
“That said,” continues GM’s spokesman, hitting Bushian heights, “we think there’s something there that addresses consumer confidence, and that’s the area we’re looking at: Can we do something that addresses consumer confidence?” After all, GM can only continue already existing Presidents Day sale incentives into March. The big deal? “GM will use the TV time it bought during the NCAA basketball tournament to promote its product message more than a sale.” Because that way you still have a car when you lose your job. Oh wait.
A psychiatrist friend once said to me: “One in 10 is clinically crazy. Some professions have higher rates.”
People get paid good money for this crap? I would do it for free in my spare time and put 10 GM worker’s on the street, maybe I would save the tax payer a few dollars
Feb. 2009 U.S. sales:
GM -52.9%
Hyundai -1.5%
No, the Hyundai program must not be working. Trust GM on this.
Hyundai’s business plan may not be perfect. The customers would fall into two groups:
1. People who wouldn’t have bought Hyundais without the Assurance program — but then ultimately keep the car.
2. People who bought a new Hyundai for any reason, use it, depreciate it, then return it. Hyundai now has to sell this as a used car.
Hyundai is counting on the profit from people in group one outweighing the losses from people in group two.
Most importantly, Hyundai gets SOMETHING back if you lose your job.
Taking the car back when someone can’t make payments isn’t unheard of. I assume if a car is repossessed the car/proceeds from the re-sale go to whoever made the loan – meaning GMAC (of which GM only owns 49%), the Smallsville Credit Union, Chase Auto Loans, or whoever else.
On the other hand, LaNeve’s implication is that it would be better to let someone keep the car if they are unable to make payments. I’m not an business expert (although many would call me a donut expert) but I’m pretty sure that’s not how business works.
So Hyundai comes up with a plan and its brilliant
GM comes up with a plan,and thier crazy?
The Hyundai plan is a good hook. No repo man to pay, cars come back cleaner, and when Joe gets another job maybe he buys another one.
Laneve is just saying “How does joe find another job with no wheels and he only has 90 days.”
I think a picture of George McClellan would be more appropriate.
GA Custer was agressive, took risks and thrust himself into the fray. McCellan was a dithering
whinner, who alway had a reason why it wasn’t his fault.
The Hyundai plan is fine like the subprime mortgage plan was, until people start losing their jobs and huge numbers of returns come back.
Hyundai is more than a gimmick car company. They are where the Japanese builders were thirty years ago. This time they offer better value than both Detroit and Japan and the public is getting to know it. To prove better quality they took the power train warranties up to 10 years and the bumper to bumper to 5. They kept prices low for all their models and unlike Detroit who discounts old technology cars, Hyundais are very modern in looks and underpinnings. Finally, they slowly built a model range to cover about every segement except pickup trucks and large SUV’s. Who is going to tell me this is a gimmick strategy?
The customer has to make the first 2 payments for the Assurance program to kick in. If they lose their job, they have to get pre-approval to to return the car. Once they get that, they bring the car to the dealer who appraises it. The dealer buys the car, and Hyundai pays the difference between the dealer’s number and what is owes – up to $7500. So the dealer owns a used car. You know Hyundai took out some sort of insurance policy to cover any returns, so the actual cost probably isn’t that much in the scheme of things. I don’t think people are buying Hyundai’s just for the Assurance program, but it is another selling point.
“we aren’t interested in following Hyundai’s Assurance program exactly because we’re not sure how effective it really is.”
Hyundai sales down 1.5%. GM sales down over 50%.
GM management doesn’t even know what the word effective means. People wonder why I have been calling those guys idiots?
dwford – thanks for the details on the HAP.
Just curious about the program’s mindshare: How many of your prospective buyers bring up the HAP in the course of the sales conversation?
The Hyundai program addresses those possible buyers who have jobs, but are too worried about their future to buy today. It won’t destroy your credit, and the cars probably come back in better condition too. Also, if you are worried, and are looking to buy a car. Out of everything that’s out their, it is hard to say no to Hyundai at this point. And as some point out, the sales numbers obviously prove that point.
Hyundai Assurance Program is called Walk-A-Way, most dealers offer it inthe “box” or F&I Office, after 2 payments if you lose your job (sorry) inthe first year you can return car for up to $7500 covered by the insurance program, selling dealer puts number on it (trust me it is as low as possible) program pays as much as possible. Asssurance program is a marketing gimmick that helps to sell a few more cars, Hyundai
are selling cars because of price advantage (what is Korean currency exchanging at?). Go shopping, find out that the Koreans have come a long way, quality is getting better (still not quite there), resale is a little worse than domestics on average, but not by much. Ford and some GM’s are going up in value, of course Honda, Toyota silly high. Most dealers offer the lose your job insurance’, it can be expensive if you want to cover your entire loan and loan value. Why KIA fairing so well in February?
I didn’t think GM even had the credit to set up an assurance program? And who would believe that it will still be good in a few years anyway?
“mikey :
March 4th, 2009 at 5:42 am
So Hyundai comes up with a plan and its brilliant
GM comes up with a plan,and thier crazy?”
Exactly, you know why? Here’s the difference:
“zoneofdanger :
March 4th, 2009 at 4:54 am
Feb. 2009 U.S. sales:
GM -52.9%
Hyundai -1.5%”
Of course the result is not all because of this one plan, but an accumulated effect of many plans, made over many years, many of which have been discussed at length in TTAC’s many blog entries.
Bottom line, GM is an embarrassment to the American people.
“because all (HAP) does is protect your credit from being wrecked. You’ve still got to turn in your car. And when you lose your job, you still need a car to find another job.” – This is wonderful! I just know they’re gonna come out and say that a new car buyer will now be able to keep their car – payment free! – when they lose their job because they’ll need it to find a new one. I just know it.
Perhaps GM’s program will also cover gas, insurance, maintenance and depreciation too?
Woohoo!
What GM needs to do is to make the Volt steam powered, then give away free shares of GM stock to Volt owners to use as fuel. ;)
Actually, starting February 23, Hyundai modified the plan to address LaNeve’s concerns.
If you buy a Hyundai before April 30 the assurance program will allow you to keep the car free for three months while you look for a job. Then, if you cannot find a job after three months you can give the car back with no credit hit and no liability on the note.
http://hyundaiassurance.walkawayusa.com/programoverview.aspx
For anyone who thinks Hyundai will be on the hook when these cars come back, you are wrong.
For anyone who thinks this plan is just a repackaging of the walk away protection that many dealerships’ F&I departments offer, you are absolutely right.
Hyundai was simply smart enough to repackage it.
In fact, the Hyundai Assurance program coverage is purchase by Hyundai from a company called WALKAWAY USA, LLC.
WALKAWAY USA, LLC has its policies underwritten by a subsidiary of a company called American Financial Group (AFG on the NASDAQ).
http://www.walkawayusa.com/company.aspx
If the Hyundai Assurance policies go south in a major way:
-Hyundai will be left with a lot of relatively happy customers (who, without wrecked credit, can buy a new Hyundai when they are back on their feet),
-Hyundai Finance will have the underwater amounts of its loans paid down by WALKAWAY USA, and
-AFG will be the new AIG (well, maybe not, but it is holding the bag).
Hyundai is a very smart automobile company.
If GM kept upper management employees based on merit I would strongly advise LaNeve to buy a Hyundai.
mikey :
March 4th, 2009 at 5:42 am
So Hyundai comes up with a plan and its brilliant
GM comes up with a plan,and thier crazy?
What is GM’s plan? Do you mean their plan to continue operations as usual?
….while all the while claiming everything is about to turn around, or not their fault, but could you spare us another multi-billion dollar bridge loan, you know, to tide us over until the next one.
GM can’t afford to underwrite any such plan, which is why they won’t do it. With their 5-month inventory, they really don’t want to see anything returning.
Hyundai intends to stomp the competition, and this plan helps them do that.
Every purchase is a vote…
My vote in 2007, Sonata.
@ Justin Berkowitz:
“On the other hand, LaNeve’s implication is that it would be better to let someone keep the car if they are unable to make payments. I’m not an business expert (although many would call me a donut expert) but I’m pretty sure that’s not how business works.”
I believe it is an upcoming government program called the Housing and Vehicle Entitlement. It states that those who do work shall pay for a free house and car for those who do not.
guyincognito-The “Housing and Vehicle Entitlement” plan will simply be an expansion of the plan FDR instituted in the ’30s.
Bunter
I would be interested in the fine print of the walk-away plan. I suspect that there are enough weasel clauses in there that no one could ever qualify for benefits. Has Consumer Reports or some other consumer watch-dog or state insurance board reviewed this and issued a reality report?
For example, if you work in a specialized field (such as I.T.), does that fact that you turned down a $4/hr job delivering pizzas while you looked for more appropriate work disqualify you from benefits?