Secret ingredients behind Canada's resilient growth

HCS has its presence in 11 countries including Korea. As a global financial company with around 2,500 overseas employees, HCS is making all-out efforts to expand our business territories to the whole world. From this month, HCC/HCS Newsroom delivers stories of expats who are working hard at every corner of the world to introduce and expand HCS’s financial services. You can see vividly what is really happening in the global business of HCS aiming at Global One Company.

North America region, encompassing Canada and the United States, is the biggest auto market in the world. Given the huge size of the two countries, people there rely heavily on vehicles. Public transportation systems are available in big cities such as Vancouver and Toronto in Canada, but you can’t live without a car if you live elsewhere. It means a car is part of living necessaries for Canadians and regulations allow Canadians to start driving at age 16. Some high school students drive to school. But Canadians do not regard their cars as valuable assets, meaning they don’t really cherish cars. It is hard to find hand wash or lamination and polishing services in Canada, unlike in Korea, in Canada. From Koreans’ perspective, the situation is quite peculiar.

Despite being part of North American market, Canada’s business conditions and social atmosphere are different from those of the United States. Government regulations in terms of consumer protection or private data protection are relatively stricter in Canada. That has raised the bar for introducing latest trends such as electronic payments or customer data-base-based marketing campaigns and Canada is slower than the United States in that aspect. But the Canadian market has its own upshots. Customers’ credit ratings are stable, meaning payment delinquencies barely take place. In particular, the portion of long-term delinquencies is low. Compared to the U.S. counterpart, Canadian financial market is conservative.

Daniel Park (middle in front row) and HCCA leadership team

Canada sees about two million new cars annually. Even though the market has shrunken by 3 percent every year over the last three years due to decline in real estate prices and consistently low oil costs, new car sales volume has maintained solid.

Let me explain about the unique characteristics of Canadian automotive financing market Local banks are allowed to sell retail auto financing products of Hyundai and Kia, HCCA has to compete against them. Big Canadian banks try hard to win the retail auto financing market but HCCA has continued to increase its market share.

Canadian customers tend to use monthly installments lasting for an average of six to seven years and most of them switch cars before maturity. What is interesting is that instead of paying off the remaining payments on an old car, customers prefer extending a loan with the outstanding balance added to the principal of a new car. Since annual percentage rate is mostly below 3 percent, monthly payment burden isn’t too high. Most financial companies ease their burden further by offering bi-weekly payment options and extending the loan maturity to as long as eight years.

(Left) Lease Right is a lease product offered exclusively by HCCA. It includes warranty/parts warranty offered by Hyundai Motor and also waives penalties charged for excess mileage and wear & tear at lease-end. It plays an important role in encouraging customers to come back for HCCA lease products.
(Right) Kia 1% Loyalty Rate Reduction offers 1 percent discount on annual percentage rate for existing Kia customers who want to switch to a new Kia car with the cost of this program split between Kia Motors and HCCA. This program, a good example of collaboration between an original equipment manufacturer and its financial arm, is available throughout 2020.

HCCA contributed to revitalizing lease market in Canada. Launching business in Canada in 2014, the Canadian entity unveiled a lease product that allowed customers to pay lower monthly payments by setting higher used car value, or residual value, as of the expected car return date. The product was inspired by the finding that lease products offered by local leasing companies were far from attractive to customers due to their high annual percentage rate. Ever since HCCA began operation, Hyundai/Kia lease product sales constantly increased and the relationship between original equipment manufacturers and dealerships improved.

HCCA office is located in the middle of the Financial District in Toronto, where its major competitors such as Royal Bank Of Canada, Toronto Dominion Bank, Scotia Bank and other big banks are in presence. HCCA employees take pride in the fact that the company has been growing by shoulders with such big banks in the same market category. HCCA had a huge event to celebrate at the end of last year. It threw a party with all of its employees to celebrate accomplishing 2 billion Canadian dollars in assets a little over five years after entering the market.

(Left) HCCA was chosen as one of Toronto’s best employers 2020 by Globe and Mail.
(Right) HCCA’s Corporate Culture Committee members. HCCA encourages keeping in mind “Global One Company,” Hyundai Capital Services’ corporate cultural value, and creating HCCA’s own corporate culture as well.

I believe HCCA’s corporate culture of supporting active communications among employees played a role to a certain extent. If someone asks me what is most impressive about HCCA after I was dispatched here last year, I would say HCCA employees who are not afraid to express their opinions and are proud of working for the company. I think such an atmosphere is largely indebted to the HCCA management’s open-minded leadership.

HCCA celebrated achieving 2 billion Canadian dollars in assets at the end of 2019.

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