SEOUL, South Korea (AP) — Hyundai Motor Group said Tuesday that it has set up an auto financing joint venture in China to start providing auto loans for Hyundai and Kia customers.
South Korea's largest automotive group will have a 60 percent stake in Beijing Hyundai Auto Finance Co. with an initial capital of 500 million yuan ($79 million). Beijing Automotive Industry Group will hold the remainder.
The move will help increase its market share in the world's largest car market, where cash is still the dominant method of payment for vehicle purchases.
Hyundai said the new venture is aimed at tapping 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 industry estimates will triple by 2017," Ted Chung, chief executive officer of Hyundai Capital Services, said in a statement.
Rivals like General Motors, Volkswagen and Toyota have been providing auto finance to their customers in China.
Hyundai said its auto financing venture will catch up with early starters by rapidly processing loans in three days and by offering low-interest financial services to customers and dealers of Hyundai Motor Co. and its affiliate, Kia Motors Corp.
During the first six months of this year, Hyundai and Kia sold combined 1.17 million vehicles in China, trailing General Motors and Volkswagen.