Measuring adaptability: Marcelo Brutti, Auto Finance Executive of the Year

Hyundai Capital America President and Chief Executive Marcelo Brutti shares a core piece of his DNA with the captive he leads: adaptability. The past four years have challenged the automotive industry, forcing adaptation in the wake of a global pandemic, a microchip shortage, production disruptions, high interest rates and inflationary pressures. With inventory building on dealer lots, some manufacturers are leveraging incentives to drive sales as car prices remain high. Captives are gaining share in the market amid increased incentives and new product launches. Hyundai Capital America (HCA)’s strategy hinges on growth, diversification and innovation , Brutti told Auto Finance News . The captive provides loan and lease financing along with flexible options, such as short-term car subscriptions and commercial vehicle financing. “We want to be the leader in financing mobility globally,” Brutti said. “We're targeting strategies based on responsible growth of our core portfolio, our green portfolio — hybrids and EVs — our commercial portfolio, mobility portfolio and insurance business. We diversify our sources of income, our portfolios and our products.” [caption id="attachment_58347194" align="aligncenter" width="1024"] Hyundai Capital America President and Chief Executive Marcelo Brutti (Photo/HCA)[/caption] Supporting HCA’s three tenets of growth, diversification and innovation is Brutti, who is a planner and risk strategist at heart. Before taking on his current role in April 2023, he was chief risk officer at HCA from 2016 to 2019, then served as CRO at City National Bank for more than three years before returning to lead the captive. “I don't like to improvise in the moment; I like to have a plan for five different scenarios.” — Marcelo Brutti, HCA Brutti’s expertise in banking and risk management combine with his passion for the automotive industry to define his leadership style, Andrew Leone , chief commercial officer at HCA, told AFN . Leone joined HCA in 2008. The CEO “is very sensitive to the needs of a business as a risk professional,” Leone said. “He loves cars, the business, the industry and dealers.” Hyundai Sales rise, HCA portfolio grows HCA’s mandate is to support all brands within Hyundai Motor Group — Hyundai, Kia and Genesis — Brutti said, noting that the captive will support Hyundai Motor Company Chief Operating Officer Jose Munoz when he becomes chief executive of the global business in January. “Our brands are growing; we're doing great because we support our brands,” Brutti said. “We're launching new products, we have good designs, we’re able to attract good people and grow from within.” Hyundai Motor America ’s total sales in November climbed 8% year over year to 76,008 units, according to the OEM’s Dec. 3 sales report. Retail sales increased 15% YoY. Year-to-date sales ticked up 4% YoY through November to 758,304 vehicles. Hyundai Motor America sales YoY % change [caption id="attachment_58347192" align="aligncenter" width="600"] Source: Hyundai Motor America sales reports. (Chart/Auto Finance News)[/caption] Hyundai Motor Group ’s share of U.S. vehicle sales has risen to 10.5% as of the end of the third quarter, up from 7.3% in 2018 prior to the pandemic, according to data provided to AFN by HCA. The captive has about 2.6 million customers in the U.S., up from about 1.7 million in 2018. HCA’s managed portfolio as of June 30 stood at $40.8 billion, up 19.1% YoY, according to an Oct. 2 S&P Global presale report of the captive’s $1.7 billion prime auto asset-backed securitization issuance. The captive’s growth so far in 2024 follows a similar increase in 2023. At yearend 2023, HCA’s portfolio rose 19% YoY to $55.3 billion, making it the ninth-largest auto lender by outstandings, according to the latest Big Wheels Rankings data . In originations, HCA was the sixth-largest auto lender at $29.2 billion at yearend 2023, according to Big Wheels data . Brutti projects the captive’s portfolio will grow 20% YoY in 2024. “That’s a fast-paced growth for a financial company,” he said. “I wanted to make sure it’s responsible growth, not just growth for the sake of growth.” “That’s a fast-paced growth for a financial company; I wanted to make sure it’s responsible growth." — Marcelo Brutti, HCA HCA’s total assets under management reached $73 billion through September, up 120% compared with 2018, according to data provided to AFN . The captive’s credit quality across the consumer portfolio has consistently improved, with about 85% of the portfolio made up of prime borrowers as of September, according to the company. The adaptability quotient Preparing for growth in a changing market, Brutti looks beyond the traditional metrics of emotional quotient and intelligence quotient to prioritize adaptability quotient (AQ). AQ is a holistic measurement of workplace adaptability, with a higher reading indicating a better ability to recover from setbacks, find alternative solutions to challenges and embrace change. “You need to be able to adapt and thrive under change, and that's what we're good at,” he said. “ Lease [grew] in 2024 , and we embraced it. ... We did thousands of trainings for dealers at the beginning of the year.” “You need to be able to adapt and thrive under change, and that's what we're good at." — Marcelo Brutti, HCA In fact, HCA’s lease volume returned to pre-pandemic levels in the spring, Brutti previously told AFN . About 60% of consumers who lease a Hyundai vehicle return to lease another from the OEM, he said. Brutti isn’t one to improvise but instead employs playbooks for as many conceivable scenarios as possible, Leone said. “We talk a lot about AQ and flexibility, so that, knowing things are going to change and there's always cycles in the economy, we can be prepared,” he said. “That fits with the spirit of Hyundai Motor Group.” HCA adapted to a market that, amid rising incentives, captives are leading. In fact, in Q3 captives held the largest share of total financing at 29.1%, down compared with 30% in Q3 2023 but up compared with 21% in Q3 2022, according to Experian ’s Q3 2024 State of the Automotive Finance Market report published Dec. 5. Market share by financier type Q3 2024 [caption id="attachment_58347193" align="aligncenter" width="1024"] (Courtesy/Experian)[/caption] Lead with ‘family values’ Brutti lives by the motto that HCA is a “team with family values,” noting that both Hyundai and he are competitive. “A team is competitive, a team likes to win, a team works together and communicates well,” he said. “It's a good match for me to work in this company that is competitive, innovative and wants to grow.” [caption id="attachment_58347196" align="aligncenter" width="683"] Hyundai Capital America President and Chief Executive Marcelo Brutti (Photo/HCA)[/caption] Under Brutti’s leadership, the HCA team is tasked with meeting the needs of the whole organization, James Vincent , interim chief risk officer at HCA, told AFN . “More than any other leader I've worked for, Marcelo sets a goal and drives toward it,” he said. “He is always willing to adapt to changing business or market needs, and he's great at building trusting stakeholder relationships. He has a 360-degree view of the enterprise.” Brutti is “highly competitive” and often tells his team to aim high, Leone said, noting that the CEO’s leadership style is to focus on the big challenges, get the team aligned and move fast. “He’d rather I set the bar high and fail than set the bar low and succeed,” Leone said. “As we think of our future, we're growing fast. We're going to set the bar high and find a way to hit the goals.” Eyes on green growth HCA, Brutti said, eyes diversification across its: Products; Core and commercial portfolios; and Insurance business. “We’re not just growing with our current products and our penetration; it’s also reaching more clients and launching new products.” [caption id="attachment_58347197" align="alignleft" width="300"]<img class="wp-image-58347197 size-medium" src="https://www.autofinancenews.net/wp-content/uploads/2024/12/419231192-300x200.jpg" alt="A Hyundai Motor Co. Tucson fuel cell electric vehicle displayed during the company's event in Goyang, South Korea, on Thursday, Oct. 31, 2024. Hyundai unveiled a new hydrogen-powered vehicle called Initium, which it aims to release in the first half of next year as part of its broader push into the clean-burning gas. Photographer: SeongJoon Cho/Bloomberg" width="300" height="200" /> A Hyundai Motor Co. Tucson fuel cell EV is displayed during the company's event. (Photo/Bloomberg)[/caption] About a month ago, the captive launched an extended warranty for EV batteries spanning 12 years or 200,000 miles — which extends a warranty offered by the OEM for 10 years or 100,000 miles, Brutti said. HCA has also diversified its financing portfolio by expanding to include both internal combustion engine vehicles and electric cars, plug-in hybrids and hydrogen-powered trucks. The captive’s finance penetration of Hyundai Motor vehicles across its entire portfolio ranges between 60% and 70%, but for EVs and other green vehicles , penetration surpasses 80%, Brutti said. Hyundai Motor EV sales up 70% In November, Hyundai Motor America’s total EV sales jumped 70% YoY and hybrid sales soared 114% YoY, according to the sales report. Retail EV sales increased 77% YoY, with hybrid sales up 104% YoY, while sales of electrified vehicles spanning EVs, hybrids and plug-in hybrids grew 92% YoY, according to the report. The manufacturer set the following sales records: Tucson HEV sales soared 227% YoY; Elantra N sales increased 140%; IONIQ 5 sales jumped 110% YoY; Santa Fe HEV sales rose 64% YoY; and Tucson PHEV sales increased 23% YoY. Meanwhile, any potential changes to federal EV tax credits on the horizon under President-elect Donald Trump won’t likely deter Hyundai’s commitment to green vehicles, Brutti said. Hyundai Motor broke ground in October 2022 on its $7.6 billion EV and hybrid production “Metaplant” in Savannah, Ga. that is set to begin production this quarter. The facility was planned before federal incentives for EVs were passed, he said. “EVs are here to stay and will continue to grow; not just EVs, but green vehicles,” he said. “Our mindset doesn’t change. We just have to adapt.” ‘Consumer-centric’ innovation Innovation for HCA is about supporting each brand’s needs to drive sales and customer loyalty, and to finance mobility, Brutti said. The captive offers car rental and flexible finance and lease terms that provide consumers with short- and long-term options from a weekly rental up to a seven-year loan, he said. Hyundai also has signed on with Amazon to allow consumers to shop for a Hyundai vehicle through the online retailer, according to a Dec. 10 Amazon release. The service, Amazon Autos , launched this week and is active in 48 U.S. cities. Shoppers can search through available vehicles, apply for financing or pay in cash, add ancillary products and schedule pick-up at a participating Hyundai dealership, according to Amazon. Available models include the IONIQ 5 and 6, Elantra, Kona, Palisade and Santa Fe. The vehicles are priced in line with Hyundai dealerships, with some offering a lower price when the vehicle is financed, according to an AFN analysis of the Amazon Autos webpage. As far as communication, HCA meets customers where they are with a variety of online communication options along with chatbot, text, e-mail and phone calls, Brutti said. “It comes [down] to the innovation of products, channels of communication and self-service,” he said. “We’re innovative when it comes to being customer-centric.” “We’re innovative when it comes to being customer-centric.” — Marcelo Brutti, HCA HCA must balance the needs of its three OEMs, more than 1,700 dealers nationwide, over 2.7 million clients and the company’s employees, Brutti said. “If any of those four are not satisfied, then it drives worse customer service and brings down loyalty and satisfaction.” E-funding goal above 50% On the funding front, e-contracts comprise an average of 92% to 94% of all contracts each month, Brutti said, noting that it’s “difficult to go above 94% e-contracting.” The captive’s next focus is on streamlining the funding process “from customer application to contract, through [automatic] decisioning, e-funding, onboarding and servicing,” he said. HCA has reached 49% e-funding in a span of 18 months, Brutti said. The goal, he said, is to reach 52% e-funding at yearend 2024 and 60% in 2025. The captive employs AI to improve application decisioning and speed funding, he said. “Our dealers get paid on those contracts pretty much before the customer drives off the parking lot,” Brutti said. “We want AI to mimic human operations and do it faster, and it gives us flexibility.” As a risk professional, Brutti likes to “push the needle on AI, machine learning and automation,” Leone said. Looking ahead Whether rates come down, federal EV tax credits are eliminated, tariffs are implemented, incentives shift, consumer dynamics change or the automotive market changes in any other way in the coming year, HCA will maintain its focus to grow, diversify and innovate, Brutti said. “We'll continue to support our OEMs, not just on the core portfolio, but also our mobility portfolio, and we'll continue to innovate on new products and new technologies,” he said. “We're going to be launching new products across mobility, our core portfolios of loan and leases and new insurance products.” Brutti is “pragmatic about how to deliver results,” Vincent said. “As priorities shift, what we need to do today shifts, but he keeps the long-term vision in mind.” The CEO’s sights are on competitive growth. Hyundai Motor Finance , Genesis Finance and Kia Motor Finance originated, on a combined volume basis, the second-highest number of total new vehicle loans and leases in 2023, according to HCA, which did not provide volume specifics. Year to date, HCA is on track to be the third-largest lender by number of loans and leases originated. “Last year, we were the second-largest originator of auto loans in the U.S.,” Brutti said. “My goal is to be No. 1.” Register here for the free webinar "Tapping Aftermarket Products to Improve Dealer Relations and Profitability," taking place on Tuesday, Jan. 14, at 10:45 a.m. ET.

Measuring adaptability: Marcelo Brutti, Auto Finance Executive of the Year

Brutti is president and CEO of Hyundai Capital America

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