Hyundai, like all the other automakers, experienced a sharp drop in sales. According to the Examiner Las Vegas, Hyundai sales are down 40%. In an effort to attract buyers, the company now offers what they call the Assurance Program. Here’s a commercial that explains the program:
It’s a pretty interesting program. A company is basically saying, “If you aren’t buying a new car because you worry that your financial situation is unstable and the economy sucks and it would not be a fiscally responsible decision for you, don’t worry–we’ll let you back out if you really need to.”
This brings up what appears to me to be an economic paradox. On the one hand, for the economy to improve, consumers need to buy things so businesses, factories, and other employers can put people to work. So from that perspective, this program is good: it might give consumers the confidence to go ahead and buy a car. But as an individual, it seems like in an economic downturn it’s probably in your individual interest to cut back on spending and save money in case of job loss–unless you are wealthy enough and have enough savings to really not be concerned about the downturn. From that viewpoint, buying a car, particularly a new one, is probably a poor decision, unless it is absolutely necessary. Even with the Assurance Program, you still have made a number of months’ worth of payments, plus a down payment, and have nothing to show for it.
This might be useful for a discussion of self-interest and the possible conflicts between what is good for the group (and the individual members of it) in the long term and what is best for the individuals in a more immediate sense. Should we, as consumers, reduce our financial risk by saving as much money as we can, limiting consumption and spending as a result? Or should we increase our personal risk by participating in behavior that very well may lead to better conditions, but not immediately, and possibly not for us if we end up with fewer financial reserves to fall back on in case of a job loss? How do you convince people to do something that might be good for the group when it might not appear to be in their self-interest on a personal level? And does it matter that companies are asking individuals to take possible financial risks so the company can make a profit?
On a non-sociological note, holy crap the automakers are desperate.
Comments 7
Dubi — January 17, 2009
"Even with the Assurance Program, you still have made a number of months’ worth of payments, plus a down payment, and have nothing to show for it."
Maybe I'm wrong, but I was under the impression that by "you can return it" they mean "and get a refund for what you've already paid", probably minus interest. Am I mistaken?
Gwen Sharp, PhD — January 17, 2009
I don't think you get the payments back. I went to the company website (http://hyundaiassurance.walkawayusa.com/) and downloaded their brochure about the program. It appears that you have to have made a minimum of 2 payments, and if you're behind on payments, you have to make those up. THEN you can return the vehicle without "further financial obligation or negative impact to your credit!" If for whatever reason the car has lost more than $7,500 in value from when you bought it (which wouldn't be likely in less than a year unless it was wrecked or something), you also have to make up however much it is beyond $7,500.
So definitely better than having your credit destroyed or struggling to avoid having it taken back by the bank, but still incurring a financial loss if you have to return it.
Captain Crab — January 18, 2009
Capitalism depends on consumption. How to solve problems that the economic down turn has caused is complicated. How do you cure one segment of the economy without hurting another?
Duran — January 18, 2009
>> Or should we increase our personal risk by participating in behavior that very well may lead to better conditions, but not immediately, and possibly not for us if we end up with fewer financial reserves to fall back on in case of a job loss?
In this case, the decision to sacrifice personally for the good of the whole is a poor one. Get your own ducks in a row, then live your life. At the same time, manufacturers (and the government) will be making sweeter and sweeter deals because of falling consumption. At some point, your personal situation will be strong enough, and the deals sweet enough, that you'll start spending again. When enough people do this, the economy will start ticking.
So, basically, live for yourself. Government and industry will meet you (it's already happening, there are ridiculous sales nowadays, talk of tax breaks, stimulus payments, 0 interest rates, etc). It's not a paradox.
Comment on HYUNDAI’S JOB-LOSS INSURANCE PROGRAM by Captain Crab | No Brainer Profits — January 18, 2009
[...] Capitalism depends on consumption. How to solve problems that the economic down turn has caused is complicated. How do you cure one segment of the economy without hurting another? See more here: Comment on HYUNDAI’S JOB-LOSS INSURANCE PROGRAM by Captain Crab [...]
Heather — January 18, 2009
I emailed to ask if I could see a copy of the agreement - I wanted to read the fine print - and Hyundai said:
'Unfortunately, we are unable to provide a copy of the complete certificate. Please contact your selling Hyundai dealer for additional information or to discuss further details of the program.'
Seems a little weird that you can't read the thing without setting foot in a dealership.
Comment on HYUNDAI’S JOB-LOSS INSURANCE PROGRAM by Heather | No Brainer Profits — January 19, 2009
[...] I emailed to ask if I could see a copy of the agreement - I wanted to read the fine print - and Hyundai said:. ‘Unfortunately, we are unable to provide a copy of the complete certificate. Please contact your selling Hyundai dealer for … More here: Comment on HYUNDAI’S JOB-LOSS INSURANCE PROGRAM by Heather [...]