Hyundai Motor, BAIC set up China auto financing venture
SEOUL, Sept 25 — Hyundai Motor Group said today it had established an auto financing venture in China with Chinese state automaker BAIC Group that will help it take advantage of growing interest in car loans in a market where most consumers still pay with cash.
The move will also reduce the need for Hyundai Motor Co and affiliate Kia Motors Corp to offer cash discounts just to compete with rivals such as General Motors Co, which has been in auto financing in China longer, a spokeswoman for the group’s financing arm said.
Hyundai Motor, which entered the China market in partnership with BAIC in 2002, was the country’s third-biggest-selling automaker with an 8.9 per cent share in the first half of this year after General Motors and Volkswagen.
“Only 10 per cent of car purchases are financed by loans in China, a ratio that the industry estimates will triple by 2017,” Ted Chung, CEO of Hyundai Capital, said in a statement.
Hyundai was once the fastest-growing automaker in China, but limited manufacturing capacity has slowed growth for the Korean manufacturer in the -past couple of years.
But Hyundai recently began production at its third China plant while Kia Motors plans to start production at a third plant in 2014.
The finance venture, called Beijing Hyundai Auto Finance Co, will be 60 per cent owned by the Hyundai Motor Group while BAIC Group will hold 40 per cent. — Reuters