A third-party provider responsible for servicing, collections and the build-out of lease-end processes is helping new captive financiers for Hyundai and Kia launch quickly in the Canadian market.
Ross Williams, president and CEO at Hyundai Capital Canada, says the new captive drives all the rules and development strategies for the recently to market lenders. The unidentified third party is more about implementation.
The unique part of the business model sees the front-end processes of credit and funding handled internally by the lenders with the aforementioned back-end processes being farmed out.
“Dealers have a vested interest in that front end, which is why we want our people to have relationships with the dealerships,” Williams told the crowd at April’s Auto Remarketing Canada 2015 conference and expo.
Williams says the decision was a part of the “launch fast” philosophy Hyundai Capital has employed globally to launch captives in a number of markets. The model forces the conscious decision to push some activities into the future to ensure a fast release. Any problems that arise are dealt with as they may occur.
“This was our way to get to the market fast versus us having to build it from scratch. It was a certain activity that made sense at this stage. Later on, it might not make as much sense,” he noted.
His presentation revealed the decision to open captive business here and the stages the company has worked to hit the Q1 launch dates.
Conversations started back in late 2013 and included a study on the Canadian retail market. Benchmarking a lot of data against the U.S., the similarities and synergies between the two were evident.
Automotive retail here has enjoyed strong gains in recent years. Long-term financing trends showed promise for a lease-like product, as did growth in the Canadian lease market since the doldrums of 2008.
Combine the performance with traditionally low delinquency rates here and Williams says corporate made the decision to launch the captive business for both brands. Launch philosophy was to hit the market quickly and work out any issues while in market, as opposed to taking a more time-consuming approach.
Initial programs were rolled out with both OEMs starting in February and March and included cross-Canada regional leasing sessions with dealers.
In a separate interview Williams wouldn’t elaborate on performance of either captive in the first few months. He also wouldn’t share penetration targets or discuss which nameplates for either brand have posted strong initial gains.
“We are working on getting value proposition out to dealers, communicating properly and ensuring our systems work versus worrying about the quantitative activity. That will come later,” he says.
Phase one of dealer training is finished and they are determining if there should be an adjustment to training to capture more specific issues brought up the first time around.
When asked what success will look like in the short term, he says it will be on the service side and involve having a good delivery platform to the dealers.
“I appreciate the patience from the dealers. We have a lot of supportive Hyundai and Kia dealers that have helped us out piloting and launching. We look forward to having some good strong relationships and we are well on our way with those, too,” he says.