A Year After Program, Under 100 Hyundais Returned

Hyundai Motor America's president and CEO says fewer than 100 customers availed of a company program that allowed them to return vehicles because of a loss of income. John Krafcik says the company sold 435,064 vehicles, adding the returns were far fewer than expected.

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MELISSA BLOCK, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

MICHELE NORRIS, host:

And I'm Michele Norris. A year ago, well into the economic downturn, the automaker Hyundai started offering worried customers this deal:

(Soundbite of advertisement)

(Soundbite of music)

Unidentified Announcer: Buy any new Hyundai, and if in the next yearyou lose your income, we'll let you return it.

NORRIS: The program was called Hyundai Assurance. At the time, I spoke with John Krafcik about the program. He's president and CEO of Hyundai Motor America.

Mr. JOHN KRAFCIK (President and Chief Executive Officer, Hyundai Motor America): So if you quit your job, we don't cover you for that one, but you know, if you're laid off, if your job causes you to relocate to another country, we cover that as well.

NORRIS: Well, that was a year ago, and we thought we'd check in with John Krafcik again to see how many takers Hyundai had. Welcome back to the program.

Mr. KRAFCIK: Oh, Michele, thanks, it's great to be back.

NORRIS: So in 2009, how many cars returned under that Hyundai Assurance program?

Mr. KRAFCIK: You may be surprised to hear that it was less than 100 customers.

NORRIS: Put that in context for us. Fewer than 100 people returned their cars. How many cars did you sell?

Mr. KRAFCIK: Last year, we sold 435,064. So the fact that only a hundred consumers had to take us up on the offer, we thought was actually pretty good news.

NORRIS: How many people did you think would return their vehicle?

Mr. KRAFCIK: Frankly, it was quite a bit lower than what we had expected, Michele. And of course, in a way, this is - and we treat it almost like a kind of insurance, a kind of social insurance, so we had to make some, you know, financial set-aside for it. And in the end, it ended up being substantially below what our expectations were, thank goodness.

NORRIS: How much did the program cost Hyundai?

Mr. KRAFCIK: We're not sharing the specific costs of the program, but the good news is we have decided to continue to offer the program through 2010.

NORRIS: Did you attribute the strong year you had this year - you had a pretty good year, particularly in comparison to the other automakers. Do you think that that was in part because of this Hyundai Assurance program?

Mr. KRAFCIK: You know, Michele, I do think it played a role, and the interesting thing about this industry, looking backwards, is you'll never know how much.

It's hard to really tease out the specific impact of assurance, but we do think it was one of the most important things we had going for us in 2009, in terms of changing the way Americans think about Hyundai.

It used to be all about, oh, they make a pretty good, inexpensive car. And now, I think we've been able to add some texture. This was something we were doing on our own. You know, it was classic free enterprise working in an innovative way to build a great story and build demand for the brand, and we think it worked.

NORRIS: Do you think it worked in part because of the safety net, or was there some other - almost a kind of advertising psychology going on, that you were acknowledging something that people felt, essentially saying, we feel your pain? With the new ads that you have out now, you're saying, by now we hope we'd be further down the road to recovery, and we're not out of the woods yet. Is that the kind of thing that people were responding to as much as the offer to take the car back?

Mr. KRAFCIK: Exactly. Our program was designed to tackle that root cause of economic insecurity, and the way we said it, this very empathic voice - I don't know if you know this, but we used Jeff Bridges in our commercials, and we think Jeff just did such a fantastic job in getting that empathetic tonality that Americans really seemed to respond to.

NORRIS: Remind us: Whose idea was this?

Mr. KRAFCIK: This came from our in-house marketing genius, a fellow named Joel Ewanick.

He was out, as he often is, in focus groups way back in 2008, in October, essentially bringing potential car buyers together into a room, about 15 at a time, asking the question, why aren't you guys buying cars? and just letting them talk.

And that's where this insight came out of, yes, we understand the deals are good. But don't you understand we're worried about keeping our jobs?

And Joel took those insights from that focus group and then in a discussion with Mike Buckingham, the head of our Hyundai Motor Finance Captive Group, he mentioned this program. And within 37 days, we had the commercials put together, the program approved, and we were on the air on January 2nd.

NORRIS: John Krafcik, thanks so much.

Mr. KRAFCIK: Thanks, Michele.

NORRIS: John Krafcik is president and CEO of Hyundai Motor America.

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