Hyundai is set to launch a UK finance joint
venture with Santander Consumer Finance UK (SCF), to start
transacting business within the next 24 months.

The move will see SCF take over Hyundai’s
current white label finance arrangement with Black Horse, the
Spanish-owned provider’s biggest rival. However, a spokesperson for
Lloyds Banking Group, owner of Black Horse, said they could not
comment at present.  

The news has emerged after a meeting between
Hyundai Motor Company chairman Chung Mong-koo and Banco Santander
Chairman Emilio Botin in Seoul, aimed at forging a strategic
partnership between the two groups in Europe and Latin America.

It is understood that the deal between SCF and
Hyundai has not been formally signed yet, but is approaching
completion in the next few weeks.

Last year, Black Horse trading as Hyundai Car
Finance funded around 17 percent of Hyundai’s 62,000 vehicle sales
in the UK.

Hyundai UK managing director Tony Whitehorn
expects that under the new arrangement, this figure would be
increased to 40 percent within three years.

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By GlobalData

Other finance providers will see more Hyundai
business too. At present, around 13 to 15 percent of Hyundai’s
total sales are funded by Barclays Partner Finance, SCF and Black
Horse (outside its participation in the Hyundai Car Finance
programme).

According to Whitehorn, Hyundai would like to
see this proportion rise to 20 percent, as part of a general push
to achieve more sales through finance.

“Currently about 70 percent of our sales are
financed by cash, bank loans and other means, whereas under our
plans this percentage will reduce to about 40 per cent. We are
pushing heavily on finance – we will promote it more and more.”

Whitehorn is also bullish about his ambitions
for PCP business. “Of the 17 percent of business that Hyundai Car
Finance currently writes, only 20 percent is PCP. That will change.
Of the 40 percent share that we’re aiming for, we want 70 percent
to be PCP,” he stated.

Hyundai is strengthening its foothold in the
UK market. In 2009 it doubled sales on the back of scrappage,
selling a record 56,000 vehicles. Last year it did even better,
selling 62,000 vehicles and breaking through the 3% market share
barrier.

SCF currently runs the UK finance programme
for Kia, the other brand owned by Korea’s Hyundai motor company.
While Santander currently funds Hyundai vehicles in several
European territories, this deal will be the first formal joint
venture in which Hyundai shares risk and reward with the bank.

SCF also runs the UK manufacturer finance
programmes for Mazda and Volvo.