Should Detroit go to Hyundai school?

Alisa Roth Oct 23, 2009

Should Detroit go to Hyundai school?

Alisa Roth Oct 23, 2009


KAI RYSSDAL: The Tokyo Auto Show opens tomorrow. The media’s already cooing about all the hybrid Hondas and plug-in Priuses that’ll be there. The recession has led some manufacturers to pull out, including Hyundai, one of the biggest automakers in the world. It sells more cars here in the than Chrysler does.

We asked Marketplace’s Alisa Roth how Hyundai did it. And what the Detroit Three might learn.

Alisa Roth: For a lot of people, Hyundai is still synonymous with joke. As in, “Have you heard the one about what’s on page 4 of the Hyundai owners manual?” “A bus schedule!”

But Tom Kies thinks the jokes on them. He bought his first Hyundai, an SUV, in 2005.

Tom Kies: It fit our needs and I was able to get in within the price that I could afford to pay every month and still be comfortable with my bills. But this is nice because it’s got enough room for the two kids and my wife and I and stuff from the grocery store too.

He’s bought two more Hyundais since then and the salesman loves him.

Kies: I get calls on my birthday.

Kies isn’t the only one who thinks Hyundai’s lousy reputation is 25 years out of date. It’s true, the company did have serious quality problems when it first came to North America in the 80s. But so far this year, Hyundai is the fourth largest car company in the world.

John Paul MacDuffie runs the International Motor Vehicle Program at Wharton. And he says Hyundai’s first big success was the way it remade its products.

John Paul MacDuffie: They really were focused on thinking that they needed better products, a fuller product line, maybe styling that would appeal to export markets much more.

But after that, Hyundai still had to convince consumers to give its vehicles another try.
In 1999, Hyundai made American drivers a great offer: a ten-year, 100,000 mile warranty. Most companies were offering three years or 30,000 miles.

MacDuffie says the message was clear.

MacDuffie: “Here’s why you don’t have to worry about us, here’s a reason to overcome your past perceptions of us.”

And it worked. Americans started buying Hyundais again. The company pulled off another marketing coup last winter. When nobody was buying cars because of the recession, they managed to get customers into their showrooms.

This is the spot that ran during the Super Bowl. It introduced the new Hyundai Assurance plan.

Hyundai’s Super Bowl commercial:: Now finance or lease any new Hyundai and if you lose your income in the next year, you can return it to us, with no impact on your credit.

David Stokols: They hit the timing just right with this, and they hit on a sentiment that really resonated with the marketplace.

David Stokols is CEO of Automotive Marketing Consultants.

David Stokols: And it brought Hyundai forward as an innovator and someone that was addressing the needs of the time.

And that’s a tall order for any carmaker right now. So could GM, Ford or Chrysler possibly pull off what Hyundai did?

David Stokols thinks they could.

Stokols: You have to get to a place in time, whether it be through skill, timing or luck, that you get people to look at your product and willing to accept it that way.

He says the Detroit Three have been introducing some pretty nice cars. And they’re trying to convince skeptical customers with some fancy ad campaigns. Something better work soon. David Letterman’s already making jokes about tipping cab drivers with 100 shares of GM stock.

I’m Alisa Roth for Marketplace.

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