Hyundai's Gas Promotion Just in Time

With summer driving season upon us, and recent attacks on Nigeria’s oil pipelines (the U.S. imports almost half of Nigeria’s production of light crude, which is the oil used in gasoline refining), gasoline has returned to the headlines as energy analysts predict higher prices at the pump, which may just end up paying dividends for Hyundai. Already benefiting from an increase in attention after edging Toyota in J.D. Power & Associates Initial Quality Study, which measures problems in the first three months of owning a new vehicle, as reported by buyers, the Korean automaker implemented a summer promotion on Tuesday, June 30, 2009, guaranteeing buyers of its vehicles one year’s worth of gas at $1.49 per gallon.

Compounding previous offers, the gas guarantee should help Hyundai boost its share of the U.S. auto market, which has already jumped from 2.9% to 4.2% so far this year. This year Hyundai initiated its “Hyundai Assurance” program guaranteeing that buyers can walk away from a new-car loan, with no adverse effect to their credit rating, if they lose their jobs. Already offering one of the most charitable warranty programs in the industry, Hyundai proceeded to buy a series of extremely high-audience TV ad buys, such as the Super Bowl and the first ad spot on CNN after then-President-elect Obama’s election night acceptance speech.

With Japanese companies engaged in a downward spiraling battle with the economy, and Detroit automakers regrouping, Hyundai is trying to increase its market share amid the recession with promotions that are hitting home during tough economic times for all.

Research has demonstrated that nearly 40% of potential new-car buyers were staying away from the market explicitly because of uncertainty around future gas prices. Chris Perry, director of marketing communications at Hyundai, says: “Our programs are designed to address consumer needs, the ones they are talking about around their kitchen tables.” Indeed, while Hyundai’s Assurance program increased Web interest when it was launched last January, fewer than 10 buyers have had to take advantage so far, the company says.

In order to take advantage of the discount gas offer, called Hyundai Assurance Gas Lock, consumers must buy or lease a new Hyundai by August 31, 2009. Perry says used Hyundai Chicago is also sponsoring advertising reminding new-vehicle buyers of the Hyundai models that qualify for the Federal government’s Cash for Clunkers program (which gives consumers up to $4,500 trade-in value for trading in old vehicles that get below 18 mpg for new, more fuel-efficient vehicles). “We already are marketing our vehicles that qualify on our Web site, and we will add it to our ads as the government program rolls out.”

After purchase new Hyundai in Chicago, the buyer registers a Visa, MasterCard, American Express (or Discover credit card, or a Visa or MasterCard check card), at hyundai.pricelock.com. Once activated, the consumer receives a new Hyundai Assurance branded card to be used for all future fill-ups. The consumer is billed $1.49 per gallon of regular grade gasoline, regardless of the price at the pump, with Hyundai paying the difference. (The driver may elect to purchase mid-grade gasoline for $1.64 per gallon or premium gas for $1.79 per gallon as well, though all eligible Hyundai vehicles are factory-certified for regular fuel.).

The card ranges between any gas station in the Voyager credit -card network, which covers 93% of gas stations nationwide, including brands such as Exxon (XOM), Chevron (CVX), BP (BP), Shell, Texaco, and many more. Consumers are eligible for a maximum number of gallons, equal to 12,000 miles divided by the EPA combined fuel economy rating for the qualifying model.

* Chicago Hyundai dealer says buyers who opt for the gas discount have to subtract $1,000 from any rebate offered on its individual models. That may mean many buyers will pass on the gas discount.