The "cash for clunkers" program spurred a jump in auto sales in August and the biggest winner may well be Hyundai. August auto sales were the highest in a year, in large part because of the "cash for clunkers" program, which ran from July 24th to August 24th. Foreign car companies had the majority of sales with 61.4%. Hyundai, however, proved to be the biggest surprise; it reported a stunning 47% increase in sales, its best month ever and a new record.
"Cash for Clunkers" Program
Thirteen of Hyundai's sixteen models qualified for under the "cash for clunkers" program. As a result, Hyundais accounted for 7.2% of all cars bought under the program. The Hyundai Elantra was the fifth-best-selling car overall.
Hyundai rushed to embrace the clunkers program, telling dealers early on that it would honor clunker sales, even prior to any reimbursement guidelines from the government. It told dealers it would advance them the funds necessary to buy up the clunkers while dealers waited for reimbursements to come through. This has been especially valuable since the government has been slow at processing the clunkers program paperwork, leaving many dealerships holding the bag.
Recession Marketing
During a recession, marketing is usually the first budget to get cut. This is especially painful in the auto industry, where marketing is vital to sales. Hyundai took the innovative approach of integrating the faltering economy into its marketing and responding quickly to changing conditions. It started its Hyundai Assurance Program under which car buyers could return a Hyundai within twelve months of purchase if the buyer lost his or her job. That raised eyebrows in the industry, but proved a boon to sales. When GM had to pull its Academy Awards advertising, Hyundai stepped in as the only auto sponsor. And, of course, it was an early, active supporter of the clunkers program.
Most Hyundai buyers state they choose the brand because it offers "good value for the money." Hyundai has further leveraged this with its recession marketing. It puts Hyundai in a tough spot, however, because it's also trying to change the company image with the Hyundai Genesis – its answer to luxury brands. It's a difficult proposition to be both the "good value" company and the luxury car company at once.
Then again, given that the Hyundai Genesis won North American Car of the Year at Detroit's auto show, it may do just fine.
