Hyundai to Guarantee Trade-in Values

Latest Iteration of Assurance Plan Tackles Depreciation

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Starting May 1, Hyundai Motor Co. will guarantee the future trade-in value of its new vehicles, according to Automotive News.

When a consumer buys a new vehicle from a Hyundai dealership, the company will guarantee what the trade-in value of that vehicle will be after the second full year of ownership through the fourth year.

To qualify for the guaranteed trade-in value, customers must show proof that they have completed all factory-recommended vehicle maintenance at a Hyundai dealership.

The program, called Hyundai Assurance Trade-in Value Guarantee, will base the future trade in values on residual values set by Automotive Lease Guide.

"Depreciation is the single highest cost of car ownership," Hyundai CEO John Krafcik said in a statement. "While Hyundai's depreciation is now among the lowest in the industry, Assurance will remove many of the barriers and concerns about vehicle ownership."

The program's launch comes after Hyundai last month ended the Hyundai Assurance provision that allowed customers to return a new vehicle if they lose their job. The job-loss protection package was used to launch Hyundai Assurance in 2009.

The promotion proved to be a major marketing coup in the industry, and Ford and General Motors quickly copied it.

Through March, Hyundai sales were up 28% from the same period in 2010 to 142,620 vehicles.

For dealers, the requirement that customers prove they've serviced their cars at Hyundai dealerships could help improve service retention, an area in which Hyundai dealers significantly trail top-flight competitors such as Honda, Toyota and Ford.

Dave Zuchowski, Hyundai's U.S. sales boss, said in March that the brand's roughly 50% absorption rate -- the percentage of a dealership's overhead covered by gross profit from service and parts business -- was well behind that of its competitors, which in some cases have absorption rates of more than 80%.

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