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June 30th, 2009

Hyundai Offers Buyers $1,000 or Gas at $1.49/Gallon

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Hyundai is leading the auto-incentive pack once again. Beginning tomorrow, the South Korean automaker will launch their “Assurance Gas Lock” promotion, an incentive that will offer new vehicle buyers either a $1,000 cash rebate or the chance to lock in gas prices at $1.49/gallon for one year:

With gas prices at $2.70, someone driving a V6 Hyundai Sonata, one of its most popular models, for 12,000 miles over the course of a year would save about $580 with the gas price promotion, given the Sonata’s EPA-estimated 25 miles per gallon fuel economy in combined city and highway driving.

Gas prices would need to average about $3.60 a gallon or more for a typical Sonata buyer to benefit from the gas card instead of the cash.

In the June 12 edition of their weekly newsletter, The Kiplinger Letter, the personal finance and business forecasting organization says that while they do expect oil prices to increase to $85 a barrel in the coming weeks, “By year-end, oil will be closer to $65 a barrel, with gas near $2.25 a gallon.” That being said, we’re betting most will opt for the cash.

Hyundai’s latest promotion completes a triple threat for the automaker that’s looking to gain an even greater lion’s share of the automotive market. The “Assurance Gas Lock” promotion, combined with their year-long “Assurance” program, and the newly enacted “Cash for Clunkers” law, could serve to push Hyundai even further to the head of the pack:

[from CNN Money, 2/19/09] The auto industry’s U.S. sales in January were at the weakest monthly annualized rate in 27 years, but Hyundai saw demand rise 14%, a trend [vice president of marketing at Hyundai Motor America Joel] Ewanick, Ewanick partly credited to the Assurance program, which was launched in early January.

[from CNN Money, 6/30/09] Hyundai will announce its June sales on Wednesday and industry trackers at Edmunds.com expect them to be down 18% from the same month last year, but that would be much better than the overall industry which is expected to be down 28%.

We wrote this exact conclusion back in February when we first reported on Hyundai’s “Assurance Plus” program, and we think it still applies: “Automakers take note: if you can prove to consumers that you’re willing to stand behind them, they’ll be more willing to stand behind you.”

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4 Responses to “Hyundai Offers Buyers $1,000 or Gas at $1.49/Gallon”

  1. Chris Says: July 1st, 2009 at 2:47 pm

    “Cash for Clunkers” ? How many people with be able to take advantage of this program? If your vehicle doesn’t have a combined city/hwy miles per gallon number of 18 mpg or less, then your vehicle doesn’t qualify. The combined mpg number is calculated by the government, and even most old, larger sedans have combined numbers of greater than 18 mpg.

    This means mostly old trucks and SUVs will qualify, and most people who drive old trucks are not likely buy a new vehicle even with the $3,500 or $4,500 trade in allowance.

  2. Tim Manni Says: July 1st, 2009 at 2:55 pm

    Chris,

    You’re right — your criticisms are exactly what skeptics are fearing about the program. I believe most analysts have predicted the program will increase auto sales by about 500,000.

    Thanks for commenting,
    Tim

  3. Mitch Says: July 5th, 2009 at 7:49 am

    Man, if the Hyundai dealership was close, that would be the easiest decision I could ever make. At around $50 a week right now just to “almost” fill up, knowing I could fill the car for less than $25 a week would do it for me, and make me feel I could drive more around town, which I hesitate to do now because it burns gas quicker.

  4. Tim Manni Says: July 6th, 2009 at 10:52 am

    Hey Mitch,

    Good to hear from you. I’ll never forget — when gas was real low a couple months back I almost filled up for $18 — that was a great day.

    I’m continually impressed by Hyundai and their strides to really improve their product and their customer incentives. Every other car maker take note!

    You bring up an interesting idea. As car dealerships are becoming fewer and farther between, will their lack of proximity influence sales at all? You say if the Hyundai dealership was closer, you would really consider that brand. Since it isn’t, will that stop you from shopping in their lot?

    Thanks as always,
    Tim

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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