Hyundai Capital, Which Achieved Record Performance Last Year, Faces COVID-19 as a Variable This Year

Achieving 50 Trillion KRW in Overseas Assets 30 Years After Establishing Foreign Subsidiaries
This Year Faces Economic Contraction Due to COVID-19
Moody's Reviews Possible Credit Rating Downgrade

[Asia Economy Reporter Ki Ha-young] Hyundai Capital achieved its highest-ever overseas performance last year, but this year, the economic downturn caused by the novel coronavirus infection (COVID-19) is expected to be the biggest variable.

According to Hyundai Capital on the 2nd, the assets of its overseas financial subsidiaries reached 50.8184 trillion KRW last year. This is an achievement made 30 years after establishing its first overseas subsidiary in the U.S. under the name 'Hyundai Auto Finance' in 1989. During the same period, this figure is about twice the domestic financial assets of Hyundai Capital, which stood at 29.6577 trillion KRW. The pre-tax profit (IBT) of overseas subsidiaries also recorded a record high of 766.3 billion KRW.

The rise in global performance is attributed to a standardized business model and a strong localization strategy. Hyundai Capital develops and applies unique business models according to market size and the maturity of the auto finance market, and develops products specialized for local markets and customers. It also secures a talent pool centered on local experts and unifies work systems to enhance communication and work efficiency among global subsidiaries.

However, this year, changes in management conditions due to COVID-19 are key to performance. At the end of last month, international credit rating agency Moody's placed Hyundai Capital's credit rating under review for downgrade. Moody's currently assigns Hyundai Capital a long-term foreign currency corporate credit rating of 'Baa1'. Moody's explained, "Considering the difficulties faced by the parent company Hyundai Motor due to the expected global new car demand slowdown over the next few months, we judged that Hyundai Motor's ability to support Hyundai Capital may weaken."

It added, "We reflected the judgment that the deterioration of the business environment and increased market volatility could potentially pressure Hyundai Capital's profitability, asset soundness, and liquidity."

Jung Tae-young, Vice Chairman of Hyundai Card, Capital, and Commercial, also recently stated in an internal message, "COVID-19 will change the global economy on a scale larger than the 2008 Lehman Brothers crisis," and added, "We will wisely manage sales, financing, and risk management amid the COVID-19 economic crisis."

Hyundai Capital's strategy is to continue pursuing global business from a long-term perspective. Currently, it operates in 10 countries worldwide, including the U.S., China, Canada, and Brazil. In 2012, it became the first domestic credit finance company to enter the European market and was the first domestic financial company to establish banks in Europe and South America. Recently, it acquired Sixt, Europe's largest car rental company, becoming the first domestic financial company to do so, and is expanding its global footprint by introducing a global standard platform to overseas subsidiaries.

A Hyundai Capital official said, "We will continue to discover business strategies tailored to local characteristics on a unified work system and develop into a true global financial company."

This content was produced with the assistance of AI translation services.