Hyundai-Kia captive steps up leasing, financing

Michael Buckingham of Hyundai Capital: “A breakout year for leases.” Photo credit: JOE WILSSENS
ORLANDO -- It may be easier for Hyundai and Kia dealers to close deals this year as the finance arm serving both brands offers more enticing leasing and financing offers.

Hyundai Capital America President Michael Buckingham also said he's making loans to customers with lower credit scores.

"We started buying deeper during the fourth quarter of last year and will continue this year," Buckingham said here during the National Automobile Dealers Association convention. "We're buying well into the 500 range. Anything below 680, we're trying to give support. That's the mid- and nonprime range."

Leasing is getting a bigger emphasis. Buckingham predicts that close to 30 percent of the finance company's transactions will be leases this year, up from 10 percent last year.

Hyundai plans strong lease programs with the redesigned Sonata sedan, Tucson crossover and new Equus sedan, which goes on sale in the fall. Kia plans to push leasing for the redesigned Sorento crossover.

"This will be a breakout year for leases," Buckingham said. "It is very important for customer retention and repeat sales."

He plans competitive annual-percentage-rate programs for Hyundai and, to a lesser extent, Kia. Buckingham said Kia focuses more on customer cash deals than on offers of low interest rates.

By the end of March, the company also will offer subvention programs for certified pre-owned vehicles.

"We'll get more aggressive with our certified pre-owned pricing," Buckingham said.

Hyundai division sales chief Dave Zuchowski welcomes the stronger partnership with the captive.

"What has separated us as a true Tier 1 classification is not having more penetration with our captive," Zuchowski said.

At most brands, he said, captives control 50 to 60 percent of dealers' retail business. At Hyundai, it was under 10 percent in 2008 and rose to about 22 percent in 2009.

"We're pushing for over 30 percent this year," Zuchowski said. "We will build a world-class relationship between Hyundai and the finance company."