Hyundai Motor Group sets up auto finance unit in China

HONG KONG (Yonhap) -- Korea's Hyundai Motor Group has set up an auto finance company in China to strengthen its sales in the world's No. 1 car market, group officials said Friday.

Beijing Hyundai Auto Finance Co., a joint venture between Hyundai Motor Group and Beijing Automotive Industry Holding Co., is capitalized at 500 million yuan (US$79 million), according to the officials.

Hyundai Motor Group, which encompasses Hyundai Motor Co. and Kia Motor Corp., holds a 60 percent stake in the financing venture, while the rest is owned by Beijing Automotive Industry.

The South Korean automobile giant hopes the new entity will help tap the growing demand from younger generations of Chinese who are more willing to borrow money to buy cars than their parents.

"We are confident about our growth perspectives since only 10 percent of car purchases are financed by loans in China, a ratio that the industry estimates will triple by 2017," said Ted Chung, the CEO of Seoul's Hyundai Capital Services Inc., the financial unit of the automobile group.

"Having a captive finance company will benefit Hyundai Motor Group in its future efforts to gain a market share in the world's largest car market."

The joint venture's capability in China will be supported by Beijing Automotive Industry's extensive network and knowledge on China's domestic market, the officials said.

Hyundai Motor Group rose to the third-largest automobile maker in China last year, rolling out 1.17 million there, following Volkswagen Group's 2.2 million and General Motors Co.'s 1.32 million.

China surpassed the carmaker's home country of South Korea in 2010 to become the largest source of revenue for Hyundai Motor Group. The automaker is aiming to sell a combined 1.25 million vehicles in China this year, with Hyundai targeting 790,000 units and Kia 460,000 units.