Leasing buoys Hyundai's chart-topping loyalty
Hyundai Motor America CEO John Krafcik: "Leasing definitely helps keep people in the family."
Photo credit: JOE WILSSENS
NEW YORK -- The Hyundai brand is taking advantage of higher residual values to step on the gas in leasing.
In turn, leasing is helping Hyundai build loyalty that ranks among the best in the industry.
"Our loyalty is 55 to 60 percent," John Krafcik, CEO of Hyundai Motor America, said last week at the New York auto show.
That could be conservative. The Hyundai brand was No. 1 in the industry at 64 percent loyalty in the 2012 Customer Retention Study from J.D. Power and Associates, up 4 percentage points from the previous study in 2010. The 2012 study was released in January. Results were based on 2011 data for customers who replaced a vehicle that was bought new.
"Leasing definitely helps keep people in the family," Krafcik said. "Our residual values have been coming in very, very high," he said, especially as new models are introduced.
According to the March-April Industry Report from ALG Inc., the Hyundai brand had an average predicted 36-month residual for 2012 of 49.4 percent of sticker price. That was No. 5 in the industry behind Mini, Subaru, Honda and Scion.
A higher residual value cuts monthly lease payments because the customer in effect borrows the difference between the upfront cost of the vehicle and the predicted residual value.
According to Experian Automotive, leasing accounted for 53 percent of new-vehicle volume for captive finance company Hyundai Motor Finance in the fourth quarter of 2011. That's for the Hyundai and Kia brands combined.
For the total industry, leasing averaged 23 percent of new-vehicle volume for the quarter, Experian said.
Krafcik said the captive finance company serves to remind customers of the brand every month when they get their statements: "We are maintaining a relationship, talking to those people every month."
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