Hyundai Found 'Assurance' Campaign in Ruins of October
January 08, 2009

By Dale Buss

The promise made by Hyundai of America's new advertising is so unusual that the Korea-based automaker already is planning a second TV spot to reassure skeptical consumers that "Hyundai Assurance" isn't a joke.

Over the weekend, Hyundai announced with its ad that it would take back a buyer's new vehicle in the event of job loss or income. Hyundai meant the gambit as a dramatic and unique way to shake up the moribund marketplace by appealing directly to consumers' lack of confidence in their own financial future.

While there are a few strings attached, Hyundai is utterly serious about the guarantee.

"But one of the initial responses we've gotten is that this appears too good to be true," said Dave Zuchowski, vice president of sales for Hyundai of America. "People feel, 'It's got to be a gimmick.'"

So Hyundai marketers already are developing a new spot, to break in the next couple of weeks, that is intended to nail down the proposition with consumers.

"We want to make sure they don't really think this is some sort of fly-by-night deal, so we want to spell that out," Zuchowski explained. "In the initial ad, we spent a lot of time building the brand and tying in Assurance; in the second ad, we'll talk more about the [program] itself."

Search for a Solution

Hyundai's program already is the closest thing to a sensation in this young new year of automotive marketing. In fact, Hyundai's share of industry purchase intent on Edmunds.com was up by about 15 percent soon after Hyundai's announcement of the new program.
"That's only taking into account a few days, and there's no telling the long-term impact of Hyundai Assurance, but it's a noteworthy start," said David Tompkins, executive director of industry solutions for Santa Monica, California-based Edmunds.com .

Tompkins said Edmunds.com's analysis shows the biggest hikes in shopping activity, which generally indicates intent to purchase in the next month or so, were for the Genesis, Veracruz and Santa Fe. All Hyundai vehicles registered gains, except Sonata, he said.

But Hyundai Assurance was hatched only because the company last fall was totally at a loss as to how to approach the shattered American car buyer.

"We were looking at some of the outrageously comprehensive incentive programs that some [competitors] had out there," Zuchowski recalls, "and nothing was cutting through. It was just clutter."

CMO Joel Ewanick jump-started Hyundai's response in late October by conducting focus groups of consumers in person rather than through any mediator. "We wanted to do this very quickly," Zuchowski said. "If we had followed normal procedures, the program would have taken 90 to 120 days. We wanted to get it out by around the end of the year."

From Ewanick's focus groups and other research, Hyundai of America executives reached a handful of conclusions about the program that became Hyundai Assurance.

First, they wanted to aim directly at the issue of consumer unease about their own situations. "We didn't want to sit by and be a victim of the difficult economy," Zuchowski said. "We wanted to take a leadership position and be proactive an creative with the biggest issue: the dramatic loss of consumer confidence."

This principle is reflected, among other ways, in the name of the program. The company considered the Hyundai Promise, for example. "But 'Assurance' gave a completely different feel to the consumer," he said.

Few Strings Attached

Second, while linking empathetically with the beleaguered American public, Hyundai wanted to be careful to distance itself from the specific woes of the Detroit Three automakers. "There are a lot of things going on with the domestics right now, and we didn't want to appear panicked," Zuchowski said. "We didn't want to get thrown into that conversation as a result of this program."

Third, Hyundai of America determined that the only way the program could work was with a solid guarantee bereft of too much fine print. So Hyundai Assurance is relatively simple and covers most buyers.

Cash buyers don't qualify. "You still have to qualify for financing and be current on your payments" before any untoward financial event would cause you to rely on Hyundai Assurance, Zuchowski said.

But for any qualified credit buyer, regardless of age or income, included with the purchase of a new Hyundai is the guarantee that you can return your vehicle within the first year of ownership if any of about a half-dozen circumstances befall you, including loss of job, bankruptcy, or debilitating expenses from a medical condition or accident. Hyundai will pay off up to $7,500 in negative equity on your vehicle and you can walk away from it.

Zuchowski maintained that the $7,500 limit on negative equity would cover "pretty much every" purchase of a new Hyundai. For the few buyers who would have more negative equity than that, Hyundai Assurance still represents a better choice than defaulting on a loan. "You can ruin your credit rating," he said, "or work through Assurance and try to come up with" the difference over the company's $7,500 limit.

"There are no negative implications for your credit rating," Zuchowski said, "because it's treated as an early payoff -- Hyundai will cover that. There is no charge to the consumer or dealer. And it's a benefit completely added on top of our other incentive programs."

The Sequel

The Hyundai Assurance campaign also gives the company an opportunity to remind American consumers that it was the import brand that pioneered another significant departure in the incentive game almost exactly a decade ago.

The introduction of the industry's first 10-year/100,000-mile powertrain warranty helped legitimize an importer that was relatively unknown at the time -- and launched the Korean brand onto a strong and sustained growth arc. Competitors generally followed.

With Hyundai Assurance, Zuchowksi reported, Hyundai dealers and some consumers already are perking up. "It has really resonated," he said, "in higher awareness and traffic and sales."

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