Hyundai Capital offers dealer loan aid

TOKYO — The Hyundai Motor Group is securing emergency financing for both itself and its dealers to help weather the COVID-19 pandemic downturn in the U.S. and around the globe.

The moves are being orchestrated by Hyundai Capital Services, the Seoul-based financial arm of the South Korean automaker which booked a record level of overseas assets in 2019.

In shifting its strategy to protect access to cash during the slowdown, Hyundai Capital Services cited IHS Markit’s forecast for an 18 percent tumble in global auto sales this year.

In the U.S., Hyundai Capital America, the financing group’s local unit, issued a $1.8 billion bond this month to secure sufficient liquidity as dealerships close and sales plummet.

Hyundai Capital America also is assisting dealers with floorplan deferral up to 60 days and working capital loans for three years, the company said last week. Qualified customers in the U.S. may also defer interest payments on new vehicles for up to 120 days. The assistance applies to the Hyundai, Kia and Genesis brands.

Hyundai Capital Canada will extend loan-payment deferral for new customers of the Hyundai and Genesis brands up to 180 days and up to 120 days at the Kia brand. Existing customers of all three brands can defer payments up to 90 days on loans and up to 30 days on leases.

Meanwhile in Great Britain, Hyundai Capital UK leveraged its “click to buy” digital sales service, which does not require dealer engagement, to mitigate the hit of slumping demand.

Hyundai Capital Services has been rapidly expanding overseas in tandem with the carmaker.

Since launching its first international business in the U.S. in 1989, Hyundai Capital has expanded to 11 countries, including Canada, China, Germany, Brazil, Russia, India, Australia and Singapore. The company’s combined financial assets outside South Korea reached a record $41 billion last year, about double the size of its assets in the home market. 

Hyundai Capital credits its international growth to globalizing financial products that are successful in local markets.

The company’s U.S. unit last year imported a reward program from South Korea called Agent Based Risk Management. It distributes incentives and penalties to dealerships based on the volume of cars sold and their delinquency rates. The program also was introduced to Germany, Canada and China and heads to Brazil by the end of this year.

Hyundai Capital also aims to slash costs overseas by digitalizing loan processes. At the headquarters in Seoul, about 90 percent of loan applications and reviews have been done without any human engagement for three years. This process also will be rolled out globally.

To help seed the exchange of ideas around the world, Hyundai Capital implemented another initiative called the Global Mobility Program. It allows employees to transfer to affiliates in other countries and work at the local entity. About 300 people have taken this career path so far.

“Hyundai Capital Services’ global operations,” the company said in a release, “have created synergy by sharing their best practices, based on the premise that nimble localization based on previous experience is crucial to capture the minds of local customers.”