FRANKFURT -- Hyundai and Kia plan to support their new-car sales in Europe by launching a captive financial services business, breaking away from partner Santander and starting with the foundation of a bank in Germany.
Headquartered in Frankfurt, the Hyundai Capital Bank Europe will provide financing options for customers of both brands starting with Kia. The automakers have obtained a full license from the European Central Bank so they can expand into other EU markets without the need of additional authorizations from national regulators.
"Whether it's leasing, financing or in the future at some point insurance, the focus is an optimal offer for our customers and therefore not maximizing profit at the bank as would a third-party," said Steffen Cost, managing director of Kia Germany. "That's why we are confident we can continue to grow."
Most large players in Europe already offer their own financing, including Volkswagen, which are often funded in part by issuing bonds, packaging car loans for sale as a security or by accepting customer deposits like a normal bank.
Forming its own would help facilitate purchases by both end customers as well as retailers, especially given the large share of Kia models in Europe bought from dealer inventory stocks.
"With our own bank we now have the possibility to provide floor plan financing for our retail partners, not to primarily look at minimizing risk – as a bank usually and understandably does – rather our own bank is there to optimize our business and that's a completely different approach," Cost said.
With an initial capital of 67.1 million euros, HCBE is 80 percent financed by Hyundai Capital Services and the remaining 20 percent by Kia Motors.