Who Wants the Clunker Segment?

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Elio Motors does. Let Kia and Hyundai battle for spots in the luxury auto market. Paul Elio is targeting his brand new $6,800 rides to the folks who frequent used car lots.

Who Wants the Clunker Segment?
Elio P4: The Clunker of the Future

The first thing that surprises one on approaching the Elio P4 three-wheeled automobile is how strong and sturdy it looks. It features steel bar construction, it's as long as an average compact, and looks like in the event of a collision could easily sever a Smart Car in twain. The second thing is the Jetsonian panache of the open-wheeled ride designed by veteran automotive engineer Paul Elio. Were someone to tell you it's a $100,000 runabout for the Hamptons set, it would be entirely believable. But then comes the third and most sticker-shocking surprise—the 84 mpg economy car (gas, no plug) goes for $6,800.

The orange Elio parked in the middle of the Internet Week show floor in New York this week drew the rapt attention of the digital marketers present on looks alone, but its marketing story is far more compelling. As innovative as its design may be, its marketing plan is downright revolutionary. The company wants to sell new cars to people who don't buy new cars.

“The biggest segment we think we can connect with is the clunker market, people with cars that are 12 years old or older and that are worth about six or seven thousand dollars,” said VP Sales Jerome Vassallo. “These are people who can't afford to spend twenty or thirty thousand dollars on a new car. They just trade their old clunker in for a slightly newer one. There are 95 million of these people, and now we can sell them a brand new car.”

Elio Motors will debut the P4 in 2015 and already has nearly 18,000 on preorder. The car comes with a three-year, 36,000-mile warranty that will be serviced nationwide by Pep Boys, and houses a 70-horsepower, one-liter, three-cylinder engine that propels the sliver-like vehicle from 0 to 60 mph in 9.6 seconds, hitting a top speed of around 100 mph. But the feature most cleverly designed for the clunker segment is the novel financing option.

As long as the clunker set is okay with a motorcycle-style two-seater and limited storage space, they can own one with very little investment. When Elio lots begin opening nationwide next year, purchasers can drive one off with an Elio ride no money down. Using an Elio credit card to buy fuel, owners will incur a charge twice that of the fuel charge that will be applied to the vehicle cost. Because the Elio gets at least twice the gas mileage of a typical economy car, the extra spent at the gas station won't amount to much more than they paid in gas for their previous cars.

As it ramps up to full production (ironically, in the old Hummer plant it bought in Louisiana), Elio's marketing plan has been 100% social media and word-of-mouth. Seizing brand recognition among media influencers is the reason Elio is at Internet Week.

“We've been out on Twitter, Pinterest, and Facebook from the beginning, but we've pretty much focused now on promoted posts on Facebook,” Vassallo said. “We have 127,000 likes, which we think is pretty good at this point.”

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