Hyundai chase market share but at what cost?

With the scrappage scheme due to imminently disappear up its own tailpipe Hyundai are trying hard to find ways of carrying on the momentum created by their massive success with the scheme.

These include “Trade & Upgrade” which allows buyers the same £2,000 part exchange allowance as scrappage customers and “Happy Returns” which offers Hyundai’s existing scrappage customers the chance to swap to a new ’10’ registration in March for as little as £499.

The “Trade & Upgrade” initiative allows buyers to choose any new car from the Hyundai range and will offer the 6.4 million owners of seven to 10 year old cars in Britain the same £2,000 allowance offered to official scrappage customers.

Happy Returns will allow buyers who bought a new i10, i20 and i30 last year to swap it for a brand new ’10’ registration Hyundai and the swap can be made any time up until the original car’s first anniversary.
According to Hyundai the customer’s contribution to the deal will be £499 for an i10, £599 for an i20 or £749 for an i30. Customers will be able to trade up and down the range if they want to switch to a different car or add options.

On the face of it these sound like great innovative deals. Hyundai are certainly gambling on the success they’ve had with the government scrappage scheme to give them greater market share.

A word of caution however, the problems will come when they realise that there is no margin in a 1yr used example. If you think about it why would a customer entertain a nearly new Hyundai when there is such a compelling reason to buy a new one?

Hyundai say the scheme has been made possible because of the “exceptional residual values” of Hyundai ‘i’ cars and the high demand for quality used cars in the Hyundai network but someone somewhere is taking a hit if a year old example has only lost £500 in a year.

This could be seen as a cynical exercise by Hyundai in chasing market share and we have seen many high profile examples of where this kind of car retailing has failed.

All it will take is a blip in residual values for the wheels to come off this deal for Hyundai. The thing in favour, in our opinion, is the range is very impressive and will appeal to a wide audience; however this kind of distress selling, if we can call it that, may gain more volume in the short term but that could be at the expense of longer term profits.

Watch this space.

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