The finance arm of Fountain Valley’s Hyundai Motor America Inc. is looking to expand in a down market.
Despite slower auto sales and the credit crisis, Hyundai Motor Finance Co. is aiming to eventually double in size from the 250 workers it has.
“The market will correct itself,” said Mike Buckingham, chief executive of Hyundai Motor Finance.
The finance arm is leaving Fountain Valley,the U.S. headquarters for South Korea’s Hyundai Motor Co.,for 100,000 square feet of office space at Maguire Properties Inc.’s 3161 Michelson office tower in Irvine.
Workers are set to move in the spring.
Part of Hyundai’s optimism comes from its sales.
U.S. sales for the year are down 5.8% from a year earlier to 337,664 vehicles. But that’s better than the industry’s average decline of 12%, Buckingham said.
The company had aimed to sell 500,000 vehicles here by year’s end, but now likely is to come in below 2007’s total of 467,000.
Even so, Hyundai is gaining market share here as its declines are less than those of other automakers.
Like the finance arms of other automakers, Hyundai Motor Finance offers loans to buyers of the company’s own vehicles. The unit borrows from banks and sells loans as bonds to get money to lend to auto buyers.
The auto industry’s slowdown, which the financial crisis now is fueling, is the biggest factor for Hyundai Motor Finance, according to Buckingham.
“People see all the negative headlines and it makes them think twice about buying a new car,” he said.
Hyundai Motor Finance lends to borrowers with strong credit as well as to people with imperfect credit.
Like other lenders, it has raised its standards for loans after a wave of defaults that began to hit the industry a year ago.
“I wouldn’t say the market is completely dry, but it’s more expensive with the banks so cautious,” Buckingham said. “I wouldn’t have believed it would come to this magnitude so fast.”
In the past couple of months Hyundai’s cost to borrow money has gone up 2% to 3%. The higher costs are passed on to borrowers, Buckingham said.
Like other auto lenders, Hyundai packages and sells its loans as bonds to Wall Street investment banks and pension funds.
Hyundai tends to do one or two bond sales a year. It last did one for about $1 billion in June.
The finance arm can go 15 months without having to do a loan sale, according to Buckingham.
“It’s clearly a challenging market,” he said. “But we’ll weather it fine.”
