"Depreciation is a big unknown," said Hyundai CEO John Krafcik during a NY Auto Show event.
Buying a new car has always involved financial risks, especially trying to determine the cost of ownership – which cover not only what you’ll spend on things like gas and insurance but what you can expect when you don’t want to own the vehicle anymore.
Hyundai now plans to resolve the latter matter with a new “Trade-in Value Guarantee,” the latest in a series of creative “assurance” programs that, at one point allowed buyers who lost their job to return a Hyundai vehicle without penalty.
“We’re going to tell our customers what their Hyundai will be worth when they trade it in – and we’re going to guarantee it,” announced John Krafcik, the Korean maker’s U.S. CEO, during an appearance at the New York Auto Show.
Typically, Krafcik notes, “depreciation is a big unknown,” but the maker has been watching as its residual values – industry-speak for what a car is worth after a set time – steadily climb. According to some industry metrics, a used Hyundai is now worth more than a comparable Toyota, the executive claimed.
The Trade-in guarantee will officially launch in May, and it will cover a Hyundai product of anywhere from two to four years in service. The maker wasn’t ready to launch specific details, and it’s unclear what would happen if actual market prices for a specific model were to exceed what Hyundai initially projected – or how the maker might handle damaged vehicles.
The program, however, only covers a Hyundai product traded in at an authorized dealer for a new Hyundai – which turns the guarantee into a creative way to boost owner loyalty. Bringing back an existing customer typically is a lot less expensive than “conquesting” an owner of a competing brand, which means some of those savings can be used as incentives like a used car trade-in guarantee.
Krafcik told TheDetroitBureau.com that the maker could not forecast how much it anticipated the Guarantee would do for Hyundai, but “directionally, we know it will improve loyalty.”
The program is the latest in a series of creative marketing strategies that have helped expand the appeal of the Hyundai brand, in recent years, including one program that effectively let buyers off the hook for car payments if they lost their job.
Hyundai announced it was hiring a new marketing chief, former General Motors exec Steve Shannon, earlier this month. The trade-in guarantee will be the first big program launched during his tenure.