Resale anxiety is HMCA’s new BEV battleground
BY MATT CAMPBELL | 3rd Jun 2024
HYUNDAI will launch a new in-house finance business in Australia, Hyundai Capital, by the end of the year – and the company wants to ease the anxiety around battery electric vehicle (BEV) resale values with a guaranteed future value program as part of that.
Resale and residual values are a clear concern for all new car customers, but electric vehicles are seen to be in a different risk zone entirely, given the rapid advances in battery technology and the unknowns of the ‘second-life’ of an electric car beyond the warranty period of the battery pack.
Resale and residual values are a clear concern for all new car customers, but electric vehicles are seen to be in a different risk zone entirely, given the rapid advances in battery technology and the unknowns of the ‘second-life’ of an electric car beyond the warranty period of the battery pack.
Most brands represented in Australia – including Hyundai – offer an eight-year warranty cover for the high-voltage battery packs fitted to their electric vehicles, but Hyundai Motor Company Australia COO John Kett said there is a clear level of concern in the mind of BEV buyers as to what that means for their asset’s value once warranty cover for the battery expires.
“Residuals are key; second life of the EV is something I think we're all trying to try to work our way through to give consumers confidence that an EV does have a life beyond its eight-year battery warranty,” Mr Kett said at the launch of the new Santa Fe large SUV recently.
“I think that's where our focus is, to bring some focus around the fact that (BEV) residual value is more than an eight-year lifespan. And I think that's what we've been trying to focus on.”
Mr Kett confirmed that the brand will launch a dedicated finance arm that will offer its own guaranteed future value plan, something that many other marques already offer due to their own in-house finance offers.
Brands such as Audi, Skoda, Volkswagen, Cupra, Mazda, Nissan, Subaru and Toyota already offer such a deal, whereby a customer can find out what their car will be worth at the end of a finance period, with the premise being that if the crystal ball was inaccurate, the consumer will not be at a loss because they signed up for an agreed future value on the vehicle.
Most GFV offers include the choice to trade the existing car for a new financed model, or keep the car by paying out the remaining amount, or hand the car back.
Mr Kett said that this move – to offer a dedicated financial services business – will allow the brand to move to the next phase of its Ioniq BEV range expansion.
“It's already been approved, and it will get announced – the creation of our own finance company, Hyundai Capital – a wholly-owned finance company that will be established during the last quarter of this year,” Mr Kett said.
“And this is where we can start truly getting involved in guaranteed future values, giving people confidence around these vehicles – and we're gonna have to play that game.
“That's where we think the sustainability of EVs will be,” Mr Kett said.
The news mirrors similar sentiments from the likes of Skoda Australia managing director Michael Irmer, who recently telegraphed that residual values on BEVs is the great unknown for the company that is preparing to launch its first BEV, the Enyaq.
“For a consumer, there are two other things which are really important. One is, how is it going to be with selling the car in a couple of years – especially when you see the news coming from the UK, the Americas or from Europe, people are a little bit fearful (of BEV resale values),” Mr Irmer told GoAuto earlier this year.
“Technology advances, and battery (improvements) are much faster at the moment. And that means it maybe also makes sense for many consumers to say ‘I want to be ready to transition maybe in four or five years’, and with the GFV program you can really easily do it,” he said.
Meanwhile, Hyundai is planning to implement a bold new strategy to target 33 per cent of its sales as fully electric models by 2030, with the other two-thirds of the mix equally consisting of hybrid and ICE models.
Currently, Hyundai offers the Ioniq 5 SUV and Ioniq 6 sedan, while the brand also has the Kona Electric model as a vital part of its BEV offering currently in market.
