In danger of losing your job? Buy a Hyundai!

Hyundai is capitalizing on the staggering U.S. economy and unprecedented unemployment rate by offering customers the option of returning their purchased car if they suffer a job loss. According to the Hyundai Assurance Program, if a buyer loses their job within 12 months of taking the car off the lot, he can return the vehicle to the dealer if three conditions are met: 1. The buyer must be able to prove they were laid off. 2. The car must be in good condition. 3. The buyer must be current in their payments. Is it just me, or does this drip with the potential for extreme red tape and fraud? What kind of proof will Hyundai require to confirm whether someone was laid off or simply fired? Even the U.S. unemployment office frequently interviews unemployment candidates to determine whether candidates qualify for unemployment assistance, and they’re the all-knowing government. And depending on how long it takes to verify unemployment, will the buyer be required to make their payments in the meantime? Are payments refunded to the buyer once Hyundai finally accepts the fact that the buyer was laid off? Regardless of the questions, loopholes, and fine print, this is a smart marketing move that differentiates Hyundai from their competition in terms of incentives offered. While every other dealer ad screams about a vague rebate, Hyundai has leveraged the concerns of the public to come up with a proposition that is both resonating and relevant. According to Automotive News, Hyundai conducted a focus group in late November, in which they realized that no amount of rebate would incentivize consumers to buy in such an unstable economy. With consumer confidence at a new low as of December ‘08, the last item people want to spend money on is a big-ticket new or gently-used vehicle. It will be interesting to see how competitors respond to this move. It’s also a nice middle finger to the U.S. Automobile Industry. As the Big 3 grovel for a government bailout, Hyundai has proposed a bailout for their consumers.

Toyota Halts Prius Production in Mississippi - Lesson Learned After Producing Unwanted Tundras?

Toyota has officially placed development of their Mississippi plant on hold, which is an added setback to the auto industry’s contributions to the U.S. economy. This plant, which is about 90% developed, was erected to house Priora production beginning in 2010. Since Prius sales have decreased over the past couple of months, Toyota is being prudent by suspending hiring and plant development until the market recovers. Smart move. In contrast, Toyota recently decided to resume production of their Tundra trucks, only because their inventory was depleting. Sales had actually decreased substantially, and Toyota failed to hit their Tundra sales mark at the end of 4Q 2008. Is it standard practice to produce products for the sake of restocking inventory, even if they aren’t selling well? Even the regional dealerships are wary of this idea. One general manager of a Muncie, IN, Toyota said in November, “If I don’t see another Tundra until January, I’ll be happy.” Well, it turns out Toyota North America felt the same way. The overproduced Tundras were shipped to the Middle East and Latin America.

U.S. Auto Suppliers Also Asking for Handouts. Who’s Next, the Ad Agencies?

U.S. auto suppliers are no doubt under financial duress because of decreased auto production from the Big 3. So they’re planning to follow in the Big 3’s footsteps by asking for federal aid. As I mentioned before when discussing the merits of bailing out the automakers, one major benefit of the $17.4B package is that it will help those connected to the auto industry. This should, therefore, include the auto suppliers as well. Where do we draw the line at who receives aid? The $17.4B is supposed to indirectly help sustain the industries who rely on U.S. auto production. I propose that the ad agencies who depend upon large broadcast production budgets ask for aid as well. Since GM must cut over $600 million in marketing costs over 4 years, they are expected to consolidate their accounts into a single ad agency holding company. This may not put as many people out of work as a collapse of the U.S. auto industry would, but it would certainly put a damper on agency Christmas parties and per diems across the country.

Keeping up with the Jetsons: Flying Car Making Journey from UK to Mali

A flying car developed by a self-taught engineer is being tested via a journey from London, England, to Timbuktu, Mali. Could we be closer to developing an aero-interstate than we thought? After taking a closer look at the details of the car, I’d say we’re a long way from wanting to ditch our earthbound vehicles for the airborne. The flying car reaches air speeds of 70mph and ground speeds of 120 mph. I see no immediate need to take to the skies just to go the same speed I can already drive on the roads. Especially since, if you crash in the air, there’s a very good chance you’ll win the fight against gravity. Also, the car cannot travel in the same weather conditions in which we currently drive, including rain and wind. The inventor states that the car is mainly for fun and not a means of transportation. Obviously.

Foreign automakers experienced large 2008 U.S. sales declines... is bankruptcy in the works?

With all the fuss over the U.S. automakers asking for a government handout, you’d think the foreign car market was either stable or at least eclipsing sales of clunky American cars. However, Honda and Toyota posted larger U.S. sales declines in December than Ford and GM. Here’s a rundown of the December sales dips: Ford Motor Co.: -32% GM Corp: -31% Toyota: -37% Honda: -35% In another blow to the auto industry egos, the only major automaker with a yearly U.S. sales increase in 2008 was... wait for it... Subaru of America Inc., with an increase of 0.3% from 2007. So how do the foreign car companies plan to weather the economic storm? Would they qualify for a double bailout from the U.S. and Japan? Would they be able to lower their pride enough to ask for a bailout? There’s a stigma against the U.S. car companies for producing cheap, low-quality cars, and little sympathy was shown to these companies as they groveled to the government to save them from bankruptcy. Maybe the difference is that although the foreign automakers are experiencing a decline, they haven’t been in the toilet for so long that bankruptcy is around the corner. Although the end of ’08 sales declines are dismal for foreign automakers, U.S. auto sales have steadily declined between 2000-2008, with only a slight .3% increase between 2003-2004. Therefore, foreign automakers are experiencing a decline due to a wretched economy, but U.S. automakers have to battle both the economy AND their faulty business models.

Midwest Credit Unions Pledge $10B to Help Consumers Continue to Buy Crappy American Cars

In an effort to help stabilize the American car industry, a group of 1,200 credit unions in Ohio, Illinois, Michigan and Indiana is offering car buyers $10B in car loans. Although this funding can apply to the purchase of any car, the credit unions have also worked out incentive deals with GM, offering a supplier’s discount (about 5% off the MSRP) plus $250 off. This is also a means of helping stabilize the Midwest economy since all Big 3 corporations and many of their plants are located in the Midwest. Is this just a big crusty Band-Aid over a larger problem? The government has already established that problems exist within management across all three companies and has mandated management improvements as a caveat to issuing $34B in bailout money. So why are the credit unions supporting corporations that are complacent in their inferiority? If anything, credit unions should finance goods from companies that do their best to produce a premium product.

Congress Passes a $17.4B Bailout for GM and Chrysler, with Ford Knocking on the Door.

After weeks of pleading at congressional hearings, GM and Chrysler have been awarded $17.4B in emergency federal loans. Even though Ford’s chairman has claimed not to need any government assistance unless “the world implodes as we know it,” recent sales declines indicate Ford may be asking for a piece of the handout as well. This $17.4B was taken from the $750B stimulus package Congress passed to assist Wall Street last year. It seems like everyone needs assistance in this economy. The question is, are we assisting the right people? One opinion is that the fat cats are the ones being bailed out while the real people facing home foreclosures and car repossessions still have to deal with their problems. These companies have been run into the ground by their management, who somehow rack up million dollar bonuses each year. These people have multiple properties to manage, while most people worry about their ability to make payments on their one and only home. On the other hand, the bailout affects more than the people who have screwed up the U.S. auto industry. This affects factory workers, steelworkers, and even ad agencies. By withholding money to punish the incompetent, those who work behind the scenes in the industry are in danger of losing their jobs. So once the money is put to use, time will tell whether companies pull themselves up by the bootstraps, or whether they’ll still sink because of a failing product.