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Pink-Slip Protection: What’s the Holdup?

March 2010, F&I and Showroom - Cover Story

by Gary Fagg

Not only did the Hyundai Assurance program stand out as one of 2009’s most successful marketing campaigns, but it epitomized the challenges the industry faced last year. Its successful run has left many wondering why job-loss protection has yet to become a staple on F&I menus. The reason dates back to the beginning of F&I, while the solution may rest with the industry’s efforts to remove products like GAP from insurance regulations.

It was a banner year for Hyundai. Not only did its complimentary job-loss, vehicle-return program (Hyundai Assurance) spur traffic at its dealerships at a time when car buyers were scarce, but the company’s Genesis model earned North American Car of the Year at the 2009 Detroit auto show. Hyundai’s revolutionary job-loss protection program offered one promise: If the owner of a new Hyundai lost his or her job, he or she could return the vehicle to the dealership and walk away from both the vehicle and its associated debt.

Most purchasers were intrigued by the understated TV commercials. The ads conveyed true concern for the plight of consumers and drew even those who had never considered a Hyundai before. However, once vehicle owners clearly understood the protection, some of the appeal was lost. At the heart of their concerns was that in order to take advantage of the program, buyers had to walk away from their vehicles. But while this realization dampened some of the enthusiasm, it was clear how meaningful job-loss protection was. Hyundai and other brands followed up on this buyer concern by providing pink-slip payment protection plans.

Hyundai’s Source

The source of Hyundai’s revolutionary program was WALKAWAY, which introduced its program in Canada in 2003. WALKAWAY USA was later licensed by the Irving, Texas-based Enterprise Financial Group, which brought the program to the U.S. marketplace in 2005. The U.S. version offers complimentary coverage for the first 12 months of ownership, but dealers can up-sell several optional packages that expand the term and amount of protection.

There are six events WALKAWAY protects against: involuntary unemployment, disability, loss of driver’s license resulting from a medical condition, self-employed personal bankruptcy, international employment transfer, and accidental death. The most valued protection in 2009 was clearly the involuntary unemployment protection. In the case of Hyundai Assurance, protection was not provided within the first 90 days following the vehicle sale, which was simply a 90-day vesting period. During the succeeding nine months, owners could exercise the WALKAWAY option if they remained involuntarily unemployed for at least 45 days or experienced one of the other protected events.

However, by February 2009, buyers’ concerns with potential job loss were a clear impediment to vehicle sales, as it was clear buyers wanted protection that allowed them to keep their vehicle and get payment relief as they sought out a new job. That’s when Hyundai enhanced its program by adding “Plus” coverage, which was offered on new-vehicle sales in March and April. It reimbursed vehicle buyers for three months of vehicle payments (up to $500 per month) if they became involuntarily unemployed within the 12 months succeeding the 90-day vesting period.

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