By Dee-Ann Durbin, AP Auto Writer
NEW YORK (AP) — Hyundai Motor Co. said Wednesday that it will guarantee the trade-in price of new cars sold in the U.S. starting May 1.
Analysts said it's the first time an auto company has made such a guarantee. While the program probably won't cost Hyundai much, it will likely increase the number of return customers to the brand, since buyers can only apply the trade-in value to a new Hyundai.
The company will guarantee the value of a car that's traded in after two, three or four years.
The offer is the most recent in a series of innovative marketing programs from the automaker, which surprised the industry in 1999 with a 10-year, 100,000-mile warranty. The company recently ended a program that promised to buy back buyers' cars if they lost their jobs. It was called the Hyundai Assurance Program.
"It's a bold move for Hyundai. Like the assurance plan, it's a minimal cost to them, but it creates a lot of buzz," said Jesse Toprak, vice president of industry trends and analysis at TrueCar.com.If the assessed value of that car is higher than Hyundai's guaranteed price, the buyer will get to apply the higher value to a new car. If the assessed value is lower, the buyer will be able to apply the Hyundai price.
Toprak said the program is likely to be a wash for the company, since in some years the guaranteed trade-in value will be more than the assessed value and in some years it will be less. Even if Hyundai's price is lower than what the owner could get on the open market, some people will opt for the program because it eliminates the hassle of selling a car, Toprak said.
It's also a good time for Hyundai to introduce the program because used-car prices are rising. The company will be less likely to lose money when it resells cars turned in by customers.