Hyundai Capital’s growth momentum continued globally in 2020 despite the impact of COVID-19. Its global entities and Hyundai Capital Services (HCS), the headquarters in South Korea, posted 1 trillion won (US$900 million) in combined net income in 2020, a year-on-year increase of 43.6. This is the first time that the combined net income surpassed 1 trillion won.
The combined net income that global entities of Hyundai Capital posted in 2020 at 704.9 billion won accounted for more than one third of the combined net income of major of Korean financial companies (including top five financial holding groups) posted outside of Korea. Hyundai Capital’s share in the entire net income pie of Korean financial companies doing business overseas stood at 37% in 2020, a year-on-year increase of 10.6 percentage points.
Notably, while other Korean financial companies saw a combined net income from overseas business grow 19.2% over the one-year period to total 1.9 trillion won, the combined net income at Hyundai Capital’s global entities jumped by 67%, 3.5 times more than their Korean competitors.
Financial assets combining those of Hyundai Capital’s global entities and HCS also rose 9% year on year to 86.8 trillion won in 2020. Financial assets of Hyundai Capital’s global entities increased by a larger margin of 11% to total 56.4 trillion won, by comparison.
Hyundai Capital’s global business performance is growing rapidly.
Since entering the United States in 1989, Hyundai Capital has been ever expanding its global business, now operating in 12 different countries across the globe – including South Korea, the United States, China, the United Kingdom, Canada, Germany, and Brazil. Hyundai Capital operates Hyundai Finance, Kia Finance and Genesis Finance.
By entity, increased retail penetration rate at HCA led to improved product portfolio and profitability. The entity’s penetration rate rose by an impressive 8 percentage points year on year in 2020. HCCA's nationwide expansion of its Hyundai retail subvention products in July 2020 contributed to a record-high penetration rate. Its sales volume went up by 49% year on year. BHCB’s sales volume increased 53% year on year to achieve the largest size since it launched business in 2019. BHAF launched used car business and started selling lease products in 2020. HCUK’s lease products resulted in an increased market share in 2020.
“Despite global economic downturn and reduced vehicle sales worldwide in the aftermath of the COVID-19, Hyundai Capital was able to show significant earnings results in 2020,” said Paul Skiadas, head of the Global Business Division at HCS. “In tackling the unexpected scenario integrated efforts by global entities to review and revise the entire scope of business from scratch – from products to services, operation, sales and risk management – helped boost overall competitive edge and drive growth.”
Hyundai Capital held the first Virtual Global Forum in Dec. 2020. Executives from15 entities in 10 different time zones discussed global business.
Digitalization and product expansion bear fruits
With rapid changes in global business circumstances, spurred by the pandemic, Hyundai Capital’s global entities were nimble enough to proceed with digitalization of auto financing and to develop various measures to attract new customers.
Digitalization is a significant pillar of business for Hyundai Capital. As the trend of consumers around the globe increasingly preferring contactless financial transactions spread rapidly amid pandemic, Hyundai Capital’s global entities stepped up digitalized services to enhance customer experience and reduce costs.
One of major digitalized financial services is “e-Contract,” a paper-free documentation digitalization process that enables customers to complete their agreements for both loan and leasing products. Most entities, with the exception of HCUK and BHCB, have high reliance on paper documents and fax for underwriting and loan approvals, which usually takes more than a couple of days and requires more human resources.
HCA has been expediting the adoption of e-Contract recently amid rising demand for vehicle purchases. By partnering with two major e-Contract platform providers in the country, HCA encouraged dealers to use e-Contracts further and the percentage of e-Contracts used in the entire number of contracts signed stood at 61% at the end of 2020, more than double from a year ago.
Digitalization of customer services at Hyundai Capital’s global entities has gained momentum recently as well. Global entities introduced a chatbot for their web sites or apps, an automated retrieval system (ARS), and an interactive voice response (IVR) system, which all fall into the so-called “e-Servicing” category, to minimize mobilization of human resources.
It was HCS that took the lead in introducing eServicing to enable customers to complete financial services on their own without the aid of human agents. Global entities such as BHAF followed suit to adopt some or all of the elements to their needs. At BHAF, the number of human agents for underwriting also went down by 40% over the same period of time.
Hyundai Capital has been driving digital transformation with its automotive finance in recent years. Its ultimate goal is enabling customers to resolve their queries and complete the entire financing transaction without having to talk to human agents, which the company defines as “one-stop self-closing.”
Global entities set up their own product expansion plans and ultimately find out new customer groups and explore new markets thanks to the strategy HCS introduced in 2020. HCS first developed “Global Product Frame,” which enabled global entities to compare and analyze different elements such as customer demand and payment methods of existing products and revise the elements that are needed to develop different products or revise existing products.
Hyundai Capital’s first Global Product Marketplace was held on March 12, 2021, which was joined by about 100 executives and employees across the globe.
Global cooperation to help each other tackle COVID-19
In a preemptive move against potential economic fallout of COVID-19, HCS ran a crisis simulation in three stages according to the results of monitoring different countries’ economic indicators such as GDP, unemployment rate and household income.
Each department at HCS in charge of sales, finance and risk worked together to decide on action plans such as how much loss to burden for each crisis stage and what kind of countermeasure to take. Respective entities may immediately proceed with the action plans when needed.
“Despite the unprecedented pandemic situation Hyundai Capital’s global entities were able to conduct business as usual and come up with better-than-expected performance without panicking in 2020,” said a HCS spokesperson. “Being equipped with preemptive risk management system led to employees feeling secure and confident.”
On the actual business scene, Hyundai Capital’s global entities implemented various programs in partnership with Hyundai Motor, Kia and Genesis to support customers affected by the pandemic. The programs include 180 days of payment deferrals and waivers for customers who cannot afford to pay back due to economic hardship. Most entities offered up to 210 days of payment deferrals when it comes to a floorplan, while supporting their cash flow and wavering interests. Those dealers who were short of cash for rents and payrolls were offered working capital loans.
The pandemic situation led to more active collaboration between HCS and global entities, upheld by the corporate culture slogan of “Global One Company.”
HCS encouraged global entities to introduce anti-virus films and acrylic screens, whereas HCA shared related guidelines and different COVID-19-related image samples to other global entities so they could use according to their situations.
HCA and HCCA sent a care kit consisting of a touch tool made to minimize contacts with public places such as doors and elevator buttons to all of its employees. HCA plans to stage a “6-feet rule campaign” for social distancing once employees are back in the office.
Hyundai Capital America plans to stage a “6-feet rule campaign” for social distancing.
Starting with the entry into the U.S. market in 1989 Hyundai Capital has expanded into 12 countries across the globe. The company laid foundation for new mobility business in the European market by acquiring Sixt Leasing SE in July and established a consulting entity in Indonesia Hyundai Capital Indonesia (HCID) in December of 2020 to expand into the Southeast Asian market. Launching a branch in Italy is planned for this year.