Saturday, 26 May 2018

Hyundai Shopper Assurance retail plan borrows from '09 playbook

Hyundai hopes the 2018 Kona and Shopper Assurance will build loyalty.

LOS ANGELES — For many automakers, the 2008 recession was a desperate time that called for desperate, brand-sacrificing measures. For Hyundai, it was an opportunity to project a new image built around solidarity with the American consumer rather than boring bargain-priced products.

With the new Shopper Assurance program announced last week, Hyundai is returning to that consumer-focused formula, seeking a fresh way to boost lagging sales, recapture some of the marketing glow that powered its rapid growth in the late 2000s, and distinguish itself from rivals with bigger marketing budgets and better product portfolios.

The individual elements of Shopper Assurance — transparent pricing, flexible test drives, online transaction processing and a three-day money-back guarantee — aren’t new ideas. They are a mix of past marketing gimmicks from other automakers and services offered by dealership groups and startups.

But given its success with similar shopper-friendly initiatives in the past — the first Assurance program in 2009 offered an easy return policy for buyers who lost their jobs — Hyundai saw an opening to be the first manufacturer to roll the four components into a single program.

“I said, why don’t we just put a nice marketing bow on it, call it ‘something assurance’ and get credit for this before any other new car brand does?” Hyundai Motor America Chief Marketing Officer Dean Evans told Automotive News ahead of last week’s announcement.

Critical timing

Hyundai’s timing with Shopper Assurance is critical. While 2017 was a relatively quiet year for the brand, with new product launches concentrated in sagging midsize and hybrid car segments, 2018 will make up for it. Hyundai will launch its new Kona subcompact crossover and is expected to show a redesigned Santa Fe Sport crossover, along with a redesigned Veloster line, including the Veloster N, the first U.S. model from its new performance division.

Evans: Predicts 10% sales gain

With the new vehicles will come crucial opportunities to lure first-time Hyundai shoppers and use the Shopper Assurance retail experience to build loyalty, Hyundai figures.

Evans predicted that the combination could help Hyundai post a 10 percent sales gain over 2017.

“I think it’s going to have a lot more effect in the market than just trying to scream, ‘We have another $149 car like everybody else,'” he said.

It has worked that way before. After gaining an initial toehold in the U.S. market as a low-budget brand, Hyundai began to move toward a more mainstream image in the late 2000s, just as the economy was starting to collapse and value returned to vogue. Hyundai adapted with a package of programs to complement its long warranties and position itself as a friend of the consumer.

The recession-era programs that guaranteed gasoline prices, allowed customers to return their cars if they lost their jobs and locked in the trade-in value of the car helped bring awareness to the Hyundai brand in a way that its products couldn’t.

By the end of 2011, Hyundai’s market share had jumped to 5.1 percent, according to the Automotive News Data Center, from just 2.8 percent in 2006, aided by the new programs and production disruptions that hobbled its Japanese competitors.

Hyundai needs another jolt like that. Even as its quality and designs have improved, Hyundai’s market share has dwindled every year since the 2011 peak — it’s at 3.9 percent this year through September — as consumers have drifted away from cars and toward light trucks and pickups. Sales have dropped 15 percent through September in a market down just 1.7 percent, reflecting declines in fleet sales.

‘Easy for dealers’

While the early Assurance initiatives were made possible by Hyundai’s finance arm, the new program relies heavily on dealer participation, which is a wise move, according to Andrew DiFeo, chairman of the Hyundai National Dealer Council.

“Shopper Assurance is easy for dealers to implement, which means dealers will be more willing to get on board,” said DiFeo, general manager of Hyundai of St. Augustine, Fla. “That’s critical, because dealers are still the most important part of the retail process.”

With Shopper Assurance, Hyundai is promising changes to dealership practices that have long annoyed consumers and opened up opportunities for startups to market services directly to consumers. Hyundai will begin listing fair-market pricing online for each vehicle, emulating TrueCar and Edmunds’ offerings, and will allow consumers to complete more shopping steps and paperwork online before they come into the dealership, as AutoNation and used-car outlets such as Carvana do.

Shopper Assurance also lets customers test-drive vehicles where they choose, a service that’s more typical of high-end luxury dealerships.

“We’ve just been looking for a while at how customer expectations are changing in the industry,” Evans said. “We’re always looking forward and saying ‘How do we change our business to interface with what’s happening around us?'”

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