SEOUL, Sept 25 (Reuters) - Hyundai Motor Group said on Tuesday it had established an auto financing venture in China with Chinese state automaker BAIC Group, that will help it take advantage of growing interest in car loans in a market where most consumers still pay with cash.
The move will also reduce the need for Hyundai Motor Co and affiliate Kia Motors Corp to offer cash discounts just to compete with rivals such as General Motors Co which have been in auto financing in China longer, a spokeswoman for the group's financing arm said.
Hyundai Motor, which entered the China market in partnership with BAIC in 2002, was the country's third-biggest selling automaker with an 8.9 percent share in the first half of this year after General Motors and Volkswagen.
"Only 10 percent of car purchases are financed by loans in China, a ratio that the industry estimates will triple by 2017," Ted Chung, CEO of Hyundai Capital, said in a statement.
Once the fastest growing automaker in China, limited manufacturing capacity has slowed growth for Hyundai in the last couple of years. But Hyundai recently began production at its third China plant while Kia Motors plans to start production at a third plant in 2014.
The venture, called Beijing Hyundai Auto Finance Co, will be 60 percent owned by the Hyundai Motor Group while BAIC Group will hold 40 percent.