The global economic crisis gave Korean auto manufacturer Hyundai a break in the third quarter of 2009, showing them a 300-percent surge in net profits. This gain constitutes an all-time quarterly high according to Hyundai spokesman Ki Jin-ho. According to a regulatory filing on November 19, the company reportedly earned $827.30 million from car sales during the third quarter.
For some, the explanation is as simple as the Cash for Clunkers program, but closer scrutiny of Hyundai’s 2009 sales reveal a much more successful profile. Of course, the fact that the Elantra model was the fifth most purchased car under the program didn’t hurt the company, but perhaps the aggressive marketing strategies are the root cause of Hyundai’s impressive growth. When consumer credit all but dried up earlier this year, many auto manufacturers spent significantly less advertising dollars. However, Hyundai ads were as prominent as ever. Not only did they continue to offer factory financing at attractive rates, they preceded the Cash for Clunkers program by allowing buyers to claim the rebate before the program began. Economic insecurities became a selling point for Hyundai as they launched a campaign that would allow car buyers to return their purchase if they lost their job and offered a year’s worth of gasoline at an unheard of $1.49/gallon price as an add-on to every new Hyundai sold. Jim Hall, managing director of 2953 Analytic in Birmingham, may have summed it up the best by calling Hyundai promotions a “triumph of merchandising.” Hall goes on to point out that Hyundai, “kept their name out there and stayed on the customer’s radar.”
The Hyundai product itself is a large part of their success story. N.J.-based consulting group AutoTrends admires the Hyundai fleet. “[Hyundai has] made very substantial gains in styling, and even bigger ones in quality and reliability,” says Joe Phillippi, principal of AutoTrends. Indeed the company can rightfully boast that they offer America’s Best Warranty. Hyundai backs their new cars with a 10-year/100,000-mile Powertrain Protection policy that covers most engine and transaxle components, and, among several other impressive warranty programs, offers a 5-year/60,000-mile warranty that covers nearly every new vehicle component.
To complete the “perfect storm” of the company’s success, the Korean won continues to devalue compared to the U.S. dollar. Even though the slump in the value of the U.S. dollar has threatened global commerce, Korean export products like Hyundai vehicles enjoy the distinction of being a very good value to American car buyers, offering more car for the buck.
Hyundai seems to be doing everything right to attract those in the market for a new car, and their third-quarter prowess might just be an indication of things to come.
