Word: hyundai
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...HYUNDAI MOTOR Lend Confidence, Not Cash...
...Hyundai has a reputation for selling cars to the budget-minded. But last year, as U.S. auto sales plunged, incentives such as rebates and fancy financing schemes weren't moving wheels off the lots as they usually did. John Krafcik, chief executive of the American subsidiary of the South Korean carmaker, polled consumers to find out why. The answer: fear. "The root cause was not that the deals weren't good," Krafcik says. "So many of them said, 'I'm afraid of losing...
...late 2008, Hyundai's U.S. management team began searching for ways to drive around this mental block. The solution was as direct as it was unusual: Hyundai would promise to take back vehicles from buyers who got sacked within one year of their purchases. Tossing a marketing campaign together in just five weeks, Krafcik had ads running on TV by early January, in time for the much watched National Football League playoffs. The offer instantly grabbed headlines across the country. "Give them credit, they made some noise," says Gary Dilts, a senior vice president at auto-research firm J.D. Power...
...Hyundai believes it did much more than that. Based on company research, Krafcik figures the program boosted sales by 10% from what they would have been otherwise. That was more than enough for Hyundai to outdistance rivals. True, Hyundai's U.S. sales fell 3.6% overall in the first four months of 2009 from the same period a year earlier. But total auto demand plunged more than 37%, so Hyundai's U.S. market share actually jumped to 4.3% compared with 2.8% the year before. "We're hopeful that [Hyundai's gains] are sustainable," Krafcik says. And the program hasn't backfired...
...bankruptcy, along with Chrysler's, will certainly help drive down the U.S. market share of the Big Three and open the door further to nimble and more well-funded competitors, including Toyota (TM), Honda (HMC), Nissan and Hyundai. It would be surprising if Detroit has only a 30% share of the U.S. car market by the time vehicle sales recover even modestly, probably in 2011. (See pictures of Detroit's decline...