Would You Buy a $30,000 Hyundai?

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A few years ago, Hyundai had a target of selling 1 million vehicles in North America by 2010. That has been dialed back to 700,000. The automaker spends about $300 million a year on national advertising and its dealers spend about the same.

The brand problems for Hyundai go back a decade ago, when quality of Hyundai's highest-volume car, the Excel, was awful. To get people back, it began offering a 10-year, 100,000-mile warranty. But Hyundai public relations chief Chris Hosford says it's been difficult to erase the memories. "Some 400,000 customers were probably affected a decade ago, and those people probably influenced the impression of at least 10 people each who are still in the marketplace, and then those people spread negative word of mouth."

Consumers Distrustful of the Data

Hyundai earlier this month kicked off a new advertising effort produced by Siltanen, which had lobbied the automaker for work before it decided to review its advertising account. Those ads carry the theme "Smart Move" and boast that "There's nothing smarter than a buying a Hyundai." One ad, for example, compares a Sonata sedan to a BMW 525i. The idea is to show that Hyundai buyers get more bang for their bucks. As improbable as the ad may seem, it makes the point that the Sonata's V6 engine cranks 235 horsepower, compared with BMW's in-line six cylinder's 215 horsepower.

The campaign is seen as an interim to the work Goodby will produce. Arnold Communications, which pitched the account, told Hyundai of its research findings that get to the heart of the obstacle Hyundai must overcome. The agency found, in talking to car buyers, that many did not believe the data indicating that Hyundai quality was ahead of Toyota's, even when presented with the information and sourcing from J.D. Power. Strawberry Frog CEO Scott Goodson said, "There is a 'Do Not Enter' sign on the Hyundai brand for a lot of people."

Goodby, Silverstein & Partners has recently been recognized across the industry, winning Advertising Age's Agency of the Year, Creativity magazine's Agency of the Year, and Advertising Age's Digital Agency of the Year. "We are thrilled and honored to work with Hyundai at this very important time for their brand. There is a great opportunity to share their fantastic product stories and push their momentum even further," says Jeff Goodby, co-chairman of Goodby, Silverstein & Partners.

Ewanick said one of the aspects of Goodby's pitch that appealed to the selection team at Hyundai was the agency's ability to "tell stories" in ads that ranged from short, snappy billboards to TV ads, Web sites, and print ads that in some cases carried several paragraphs of ad copy. "We think Goodby has the right feel for our brand, where we are, and where we need to be going," said Ewanick. "Our story is about to change," he added.

Kiley is a senior correspondent in BusinessWeek's Detroit bureau.