Mega Used Car Dealership Offers Financing to Potentially Unemployeed

The nation’s largest used car dealer, AutoNation, is adopting a Hyundai Assurance like program that alleviates some of the uncertainty people are having about their jobs. Hyundai pioneered a program that would let laid off consumers to return a car back to the manufacturer within the first 12 months of ownership, provided three months of payments were made first and a maximum of $7,500 in losses were covered.

The AutoNation program will do something similar. Under their program, monthly car payments up to $500 will be covered for six months if the buyer becomes unemployed. The buyer must at least make the first three payments; the offer expires within 12 months of purchase, and the insurance only covers up to $3,000 in losses. The other big difference is that the Hyundai program doesn’t hurt one’s credit. The AutoNation program can negatively affect one’s credit if, after six months, the person still cannot make payments.

What’s interesting about all of this is that even used car dealers are realizing the impact the original idea from Hyundai is having on the American psyche. So, why not help used car shoppers by easing their confidence issues?

I’m beginning to wonder if this isn’t the new way to buy any car? Also, the bigger question is does this type of program bring more buyers into market? Or is it just helping usurp buyers from other brands in the existing market? My guess is that it is bringing more buyers into the market, as there are probably a lot of potential sales sitting on the sidelines as people assess how severe the downturn will be.

The good news is that the stock market is thinking it may have hit bottom last week and Ben Bernanke’s recent interview on 60 Minutes gave the nation a relief when he said the recession would end in 2009. All of this is helping to build confidence and programs like Hyundai’s and AutoNations’s are just helping bringing people back into market earlier as they are able to worry less about job security in the near term.

Toyota Saturates to Annoyance

Maybe it’s the use of 80’s song “Saved by Zero” by The Fixx? Or perhaps it’s just that no matter what program you watched, on whatever channel you had on, whatever station on your radio too, you were bound to catch Toyota’s national sales promotion to get 0% financing in one of the worst auto slumps and the first time Toyota recorded an operating loss.

Apparently you are not alone if you had enough of this ad. It even gathered some negative sentiment when a Facebook group started called "Stop Playing Toyota's 'Saved by Zero' Commercial" recruited almost 10,000 members.

It’s official now the WSJ and AdFreak.com voted it one of the worst ads of 2008.

Really? The worst? Sure it was lame and the link between 0% financing and “Saved by Zero” wasn’t the most ingenious connection ever. But is it the worst because of the song choice or the message? It was the relentless buying spree that Toyota went on to promote the offer. The problem was over saturation. Toyota could’ve handled this issue by coming up with a variety of ads for their 0% financing campaign. Rotating ads with different messages could’ve also appealed to different consumers.

I’m not sure “Saved by” is the right language too at this perilous time. The message implies Toyota is reaching out to help people by having them buy a new car with no financing charges. Good luck. The problem right now is too much debt and people are for the first time in years reducing their debt load.

It is a brutal time to sell cars. Unfortunately, the entire backlash around heavy consumer spending in prior years, macroeconomic stress, and most people concerned with just keeping what they already have, all caused Toyota a bit of negative press when they bought a ton of airtime promoting “Saved by Zero.” Unfortunately, they’ll be playing “Red Skies” at their upcoming shareholder meeting.