Is there anything more gimmicky than a free maintenance plan on a new car? Pin stripes or other cosmetic dealer add-ons might be worse, but at least those might be valuable to a customer five years down the line. On the other hand, any type of complimentary maintenance is gone almost as quickly as it appears. Despite many other automakers either cutting back or dropping their free maintenance perks altogether, Hyundai is charging right on in.
There’s nothing particularly thrilling or different than Hyundai’s new program. It’ll attempt to woo customers with some fairly basic perks:
The program is available for new 2020 Hyundai models purchased or leased on or after Feb. 1 and covers scheduled oil and filter changes and tire rotations during the three-year/36,000-mile period.
I can take my Ford to the local dealership and get “The Works,” which includes all of the above for $50. That means Hyundai owners are likely saving $150 at most. Palisade aside, savvy shoppers could easily shave that money off during a negotiation.
To be fair to Hyundai, a decent number of automakers offer complimentary maintenance plans. Subaru, Toyota, and Volkswagen offer 2 year/24,000 mile plans. And nearly every luxury automaker has one too. Ultimately, it seems like a cheap and ineffective way to get people into showrooms. It’s the product that drives showroom traffic. If anything, the real reason people will be talking about Hyundai tomorrow has more to do with the celebs they’ll feature in today’s Super Bowl commercial announcing the program.
I can understand why luxury car makers do this: They have reputations for being expensive to maintain, and they are targeting leasers who will only have the car long enough for the first several servicings.
For Hyundai, the case is not so clear. As you pointed out, the actual cost for this (oil change and tire rotation) is very small, but they do get a jolt of free publicity (like this article) and some customer goodwill.
I bet this program silently disappears in 2021 or 2022, just to return with a big splash as few years later.
Free maintenance also has a benefit for the seller.
IIRC some 30 years ago Audi furnished free service on a new car, and that perk was rare at the time. A coworker who bought an Audi 100 told us he learned, in his after-sale chat with the salespeople, that this was being done because the brand had too much experience with American buyers treating their Audi like an American car. So they would not do the maintenance as called for, or take it to a shop that didn’t know how to do the work correctly. Either way the resale value was damaged and maybe the car also, making it harder for the dealer to sell used. The free maintenance was for them a cheap way to increase the chance that the car would get at least the basic services, making it easier for the car to be resold later on the Audi dealer’s lot.
So maybe Hyundai is telling us something about its customers. Also, it would not surprise me if Hyundai might not see a documented service history as a way to up the resale value. They may need that boost, since it looks to me as if the Korean brands have brought up their transaction prices, but still have an Achilles heal when it comes to resale values.
Early in Hyundai’s 100K mile warranty era I had a mechanic tell me that they were good cars, but watch out for used ones because people would drive them for about 100k while doing as little upkeep as possible, so that there would likely be time bombs for the next buyer. I suspect that this has been less of a problem as they have moved up the food chain, but it may still occur to some degree.
I never understood why people would buy a new car and not maintain it. I guess they just think of it as a disposable item. Reminds me of a friend who bought a flawless used MkIII Golf and then never washed it because “that would make it attractive to thieves”.
My cousin’s now husband bought his first new car, a Celica, in the mid 80’s He did take it in for the complementary first oil change and then proceeded to drive it ~40k only adding gas. It of course gave up the ghost on the freeway in rush hour traffic and of course he had to pay for the repairs himself.
That’s nothing. The local guy at a neighborhood auto parts store, store now gone, showed me a Lexus that was brought in to him to get running. This was around 2007 and the Lexus now had 145,000 miles with no maintenance done on it at all. None. Zero. Nada. Same oils, same filters, same fluids and so forth. He said that is what that owner does.
These programs get the owners in the habit of going to the dealership for service. Many of the will stay with the habit once it has started.
That’s the primary reason for these. Dealers make all their profits on service, essentially none on actual selling of cars. Getting them to come in, and treating them well in the process, is a critical factor for their future service income stream.
This is off-topic, but it is exactly why existing dealers hate to sell EVs – little or no service required. Tesla figured this out early. Probably Rivian will sell the same way as Tesla.
Dealers as much as anything is why non-Tesla EVs have had disappointing sales. Good friends here in EV-friendly Portland just shopped Chevy dealers for a new Bolt. All the major dealers were clueless and uninterested. They finally got one from a dealer I never heard of across the river in Washington.
I’d like to know what Ford, VW and other manufacturers with major EV programs are telling their dealers.
It’s not quite as simple as all of that. As you presumably have read, Teslas haven’t exactly been the most trouble-free cars in the world! In fact, quality and reliability issues have created some of the biggest negative press about Tesla, especially the difficulty in getting them repaired, due to their rapid growth and lack of enough (or big enough) service centers.
A high percentage of early Model S needed new motors, some several times. Many have had new battery packs under warranty. And there are numerous issues with M3s, including rust and leaks and other things. Tesla has even taken to a large fleet of vans and cars for mobile service, to take pressure off the service centers. Owners have complained of ti taking months to get parts and/or service. It really has been one of their major shortcomings. Presumably they are improving quality and service as well, otherwise it might become a serious issue for them.
As to dealers selling EVs, it’s a long and complicated story. Obviously there’s little or no incentive in it for them.
It may be a while before EVs fully live up to their “little or no service” hype. There’s still plenty to break or not work right.
True enough in an EV builder’s early days. In principle there’s so little to go wrong in an EV drivetrain, very few moving parts. That principle will apply over the long run as EVs mature. In practice all new technologies have their infant teething period. And all newly designed cars have their share of non-drivetrain maladies.
Maybe I’ve been lucky with my electric Fiat these first three years. Once they got a brake leak found and fixed when brand new it’s been just great.
Anyway as EV reliability improves and they take more market share, independent dealers have a fundamental problem to face. Which means ultimately the manufacturers need some answers to how an independent dealer can make a living in an EV world.
With Ford to be able to sell the Mach-E you have to be a EV certified dealer, that means training for certain minimum percentage of sales and service personnel. It has been that way since the Ranger EV and carried over to the Focus Electric. It also requires an investment in the vehicle specific special service tools as well as charging equipment.
One of the reasons that many dealerships and sales people have here to now shied away from EV sales is that many have been compliance vehicles with low margins. Even if you don’t need an oil change the vehicle should still have the rest of its fluids checked at least once a year and a tire rotation. Brake and suspension inspection while the wheels are off. Plus the cabin air filter and/or battery air filter should be replaced periodically.
So really not that much less than a non EV. Fact is most cars don’t call for more than oil changes and engine air filter changes than is listed above until they hit 100k and by that time the likelihood of dealer service is much lower.
My dad bought a 5 year plan with his F150 in 2015. It was $1500 CAD. Fast forward 4.5 years, he’s had 3 rear brake jobs(the last with rotor and park brake shoe replacement), the pads done twice in the front to match warranty rotor service(one machining at 22,000km and a replacement at 58,000 km), 9 oil changes, 9 sets of wipers replaced, the air and cabin filters done yearly, and he’s up for the “big” service in April just before his package ends. The last service will entail transmission fluid flush, front and rear diff fluid replacement, transfer case fluid replacement along with the usual “Works” package and air filters.
Other than what I consider to be excessive brake wear, and the dealer finally put on Ford pads instead of Motorcraft to solve heat spotted rotors, there has been very little trouble with the truck.
Overall, the maintenance packages sold by the manufacturer/dealers CAN be a good investment, but you have to be smart about it. The package for our ’15 Fiesta 1.6 was $1100 CAD at the time of purchase, which we declined. Oil changes run me $35-55 CAD once a year for supplies, plus the cost of filters and wipers when needed.
What’s the downside? If you’re handing out $150 checks or whatever because it’s not a significant amount of money, I’ll take one too. 🙂
As others have stated it gives people, especially lessees, one less reason to avoid maintenance and thus can increase the resale value of the car.
As far as negotiation, this is a manufacturer perk while your purchase negotations are done with the dealer, a separate entity. You can still try to negotiate another $150 off with the dealer if you’d like. As far as value, it’s probably more like the manufacturer including a set of alloys instead of steelies and a hubcap, i.e. a sellable “benefit” at minimal actual cost. Will it be the main driver/criteria for a purchase? Hardly, but it’s one more point of positive differentiation.
What would be interesting to find out is if it’s capped at one every 10k miles as you seem to indicate by your math, the Hyundai oil service schedule varies on usage using multiple criteria (not just “severe service”) and they have an app as well as a reminder inside the car that reminds you when it’s time for one based on the criteria one selects along with multiple other things included in the app.
EVs all have free maintenance, as in no maintenance, the first five or so years. By then maybe brake pads (regenerative braking you know). And tires of course. Motor coolant every ten years or so. Cabin air filters. That’s it.
I remember the first Prius had free oil changes for awhile. That made sure they got a look at the hybrid system every so often.
You really shouldn’t be going 5 years w/o checking the motor coolant, brake fluid and final drive fluid levels. It is also a good idea to rotate the tires periodically and while that is done look at the brakes and suspension bits. All those same other things that are done on an ICE powered vehicle as part of the regular maintenance.
Seems like a smart move on their part, it doesn’t cost them much and it makes it much less likely that at the end of the lease the vehicle will have the same oil it left the factory with and they’ll have a record of it when it comes time to decide if the vehicle qualifies for the CPO program.
Dealers will like it too as it will get people back in the door and hopefully develop a habit of going to the dealer for service, and hopefully keep the dealer top of mind when it comes time for replacement.
I am surprised at the bit of vitriol that comes through this reporting. I see it as having several possible benefits. First, it costs the manufacturer very little and is probably seen as a benefit by purchasers. Some will never use it so it won’t cost a dime with those folks.
Second it is good for the dealers as it will get folks in rather than going to a QuickLube somewhere. Also when the dealer has the car they can offer wiper blades and filters and can also have more opportunities to get cars in for recalls or to perhaps see problems early rather than late.
Hyundai/Kia are staking out ground as a “Value Brand”, meaning that you get a lot for what you pay for. A benefit like this plays right into that value branding. These folks have done a much better job than the American companies of playing a long game. I have been waiting for a decade for US companies to match that 10 yr/100k warranty but none has so far as I have noticed (certainly not at the low end of the market).
Edward, you’re lowballing the maintenance costs. Hyundai’s recommended maintenance schedules run on a 7,500 mile interval, with 7.500 and 22,500 being minor service (and, depending on the dealer, costing anywhere between $50 and $100) and 15,000 and 30,000 being major service (again, depending on the dealer, between $100 and $160).
So, assuming the 30,000 is part of the deal—and it better be—going for the dead center of those estimates, we’re talking $75 for the minors, $130 for the majors…that’s $410 saved on stuff that needs to be done.
Even at the lowball figures, it’s $300 (and if you have the most expensive dealer, it’s $520).
I’d take 30,000 miles of free scheduled maintenance all day long.
Not to mention all the snake oil the dealer will try to upsell. When I was in LA visiting my brother, he got one of these complimentary maintenance services on his Lexus. The waiting room gave off a (relative) vibe of luxury with some freebies like soft cookies, bottled water, and Keurig coffee. But along with that was their proposal that he spend five or 600 bucks on a fuel injection cleaning, throttle body cleaning, brake fluid change, high-mile synthetic oil change, etc – all the usual unnecessary crap for a Japanese car with 70k miles. My brother scoffed all that off and just asked for his oil change and rotation, but he was likely in the minority. Most people just give deference to the dealer and take the shellacking.
So it’s all about getting you into the dealer where the average idiot cedes rational thinking to the salesman and signs on the dotted line for whatever the powers that be are bold enough to ask for.
Free maintenance is the new perk in the auto industry
The local ford dealership has that oil change for life thing.
My Hyundai dealer always has a coupon so i get the oil changed and tire rotation done for about $50 every 6 months. Yes Hyundai has many service periods but most are oil and tire rotations. I have no problem paying the $50 or $100 every 6 months or so at the local dealer. There are some perks of dealership work such as loyalty remembrance. i was reminded of that 2 weeks ago when my car was getting an oil change. A person had brought a car in with a blown engine. The engine died 3000 miles after all the warranties expired. Because the person got all their serviced done at that dealership, Hyundai replaced the engine and covered everything(including loaner car) for just the cost of the sales tax (something like $300). I was sitting in the waiting room and overheard the whole exchange. The dealer could have told them they were out of luck or to buy a new car from them but they (and Hyundai) covered it.
It reminded me of when i worked at the local Chevy dealer, they would do the same for folks that had all their serviced done at the dealer.
At the end of the day, it’s a fairly cheap differentiator in a crowded market. It’s a good answer to the question “why Hyundai?” Between the warranty and the service spending Honda money begins to look like expensive overkill.
I think the dealers will probably like it too because it will be regular guaranteed money from the factory, will allow them to get their -known- customers into the dealership more often, and also allows for ‘secret warranty work’ which avoids bad press and recalls. Additionally, as pointed out above, the service department gets a chance for up sells and your salesman gets to bend your ear about the great deal he can get you on a trade in….