It Helps to Understand Consumer Fears—Ask Hyundai

When Hyundai Motor launched a new U.S. incentive program allowing buyers who lost their jobs to return just-purchased new cars, Rick Case was blown away by the consumer response.

Case, who owns six Hyundai dealerships in Cleveland, Atlanta and Fort Lauderdale, Fla., watched sales spike more than 60 percent in January, even doubling in some locations. While rebates and new products helped, he remains convinced the buyback offer was the big sales driver.

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"I've been a car dealer for 45 years and I've never seen a promotion like this," Case said. "It caused a buzz and everybody was talking about it."

Far from downplaying recession worries, Hyundai and other companies such as JetBlue Airways and the National Basketball Association's New Jersey Nets are tapping directly into consumer concerns about the economy with special offers, giveaways and marketing.

AP Hyundai

The U.S. Commerce Department said last month that the country's economy shrank at its fastest pace in nearly 27 years in the fourth quarter. Consumer spending, which accounts for two-thirds of economic activity, fell 3.5 percent.

Meanwhile, spending on durable goods like cars and furniture plunged 22.4 percent in the quarter, the steepest decline since the first quarter of 1987, the agency said.

Already at 7.2 percent, the highest since 1992, the jobless rate is set to soar to 9.1 percent, a level not seen since 1983, before it stabilizes, according to a recent Reuters poll of economists.

For companies that hit the right tone, the payoff can be huge. Hyundai's U.S. vehicle sales in January rose 14 percent even as the overall market slumped 37 percent.

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"This is the toughest economic climate for consumers that any of us in the advertising business have seen in our lifetime," said Fran Kelly, chief executive of advertising agency Arnold. "In tough times, companies have opportunities to gain share, but they have to approach the market sensitively."

"What you want to do in tough times is mix value with values," he added. "You don't just want to roll out the 'for-sale' sign, because it's difficult to roll that back."

CONTINUED : FOUR COMPANIES GETTING IT RIGHT

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