Hyundai scales back guaranteed trade-ins

Hyundai has stopped guaranteeing trade-in values for most of its nameplates.

Under the program, launched May 1, Hyundai agreed to pay fixed sums to buyers of new Hyundai vehicles when the buyers traded in those vehicles three or four years later.

The program sought to erase the perception that Hyundai vehicles depreciated faster than competing vehicles.

"It was a marketing program and we wanted to bring a spotlight on the strength of our residual values, and it did its job," said John Krafcik, CEO of Hyundai Motor America.

The program ended last month for Hyundai's mass-market vehicles. But it remains for upscale cars such as the Equus luxury sedan, Genesis sedan and Genesis Coupe, Krafcik said.

Under the program, buyers are required to service the vehicle at a Hyundai dealership and buy another Hyundai.

The guaranteed trade-in values are based on residual values set by ALG, a consulting company that estimates values of used vehicles. Residual value is the projected value of a used vehicle after a certain period, such as at the end of a three-year lease.

Hyundai's residual values have steadily improved in recent years. Hyundai was the No. 3 mass-market brand in ALG's 2012 Residual Value Awards, up from No. 14 in 2007.

Mike DeSilva, general manager of Liberty Hyundai in Mahwah, N.J., said the program was effective "because it gave customers that peace of mind."

Hyundai "figured that that was one of the main reasons customers stayed with Toyota and Honda, and that program gave them peace of mind," he said.

Hyundai hopes the same will be true for consumers considering Hyundai's upscale options, Krafcik said.

"This is where we thought it was most important to have that message; where one might encounter more resistance to the Hyundai brand is on the premium product side," Krafcik said.

ALG spokesman Mike Cooperman said the Hyundai Equus has the third-best residual value in the premium-luxury segment behind the top-ranked Lexus LS 460 and the Jaguar XJ. The Genesis sedan has the second-best residual for a full-sized car behind the Nissan Maxima.