HYUNDAI ABS FUNDING LLC Annual Report

Hey there! Let's chat about HYUNDAI ABS FUNDING LLC. Imagine we're grabbing coffee, and I'm breaking down their past year. My goal is to make it super easy to understand. You can then decide if this company fits your investment goals.

1. What does this company do and how did they perform this year? Okay, let's clarify this right away! HYUNDAI ABS FUNDING LLC isn't a typical company. It doesn't sell cars or offer loans directly to customers. Instead, it acts as a "Depositor" in a special financial setup called a securitization.

   Think of it like this: Hyundai Capital America (the "Sponsor" and "Servicer") lends money for Hyundai cars. These are called auto loans. HYUNDAI ABS FUNDING LLC then takes these loans. This is usually a pool of thousands of individual contracts. It packages them into "asset-backed securities" (ABS).

   A separate entity, Hyundai Auto Receivables Trust 2025-C (the "Issuing Entity"), sells these securities to investors. This process helps Hyundai Capital America turn loans into cash. They can then use this cash to make new loans. This efficiently funds their lending.

   So, in simple terms, HYUNDAI ABS FUNDING LLC helps turn car loans into investment products. Its "performance" means how well it handles these securitization deals. It also means how well it follows all the rules. This annual report covers their activities for the fiscal year ended December 31, 2025.

   Important Note for Investors: You wouldn't typically buy stock in this company. It's a special purpose entity (SPE) for financial transactions. It's designed to be "bankruptcy remote" from its parent company. If you invest, you'd likely buy the notes or certificates. Hyundai Auto Receivables Trust 2025-C issues these. They represent claims on cash from the auto loans, not the company itself.

2. Financial performance - revenue, profit, growth metrics HYUNDAI ABS FUNDING LLC acts as a pipeline for securitization. As a special purpose entity (SPE), its financial activity is limited. It receives auto loans from Hyundai Capital America and transfers them to the Trust, typically earning a small fee for this role.

   For investors in asset-backed securities, what matters is the performance of the underlying pool of auto loans. This includes their repayment rates, late payment rates, and default rates. It also includes the cash payments from those loans. These payments then go to the investors who hold the notes.

3. Major wins and challenges this year An independent accounting firm (Baker Tilly US, LLP) confirmed that Hyundai Capital America (the "Servicer" who manages all those car loans) followed strict rules. These are called "servicing criteria" under SEC Regulation AB. They apply to handling these asset-backed securities deals for the year ended December 31, 2025. This is a big positive. It means managing the auto loans and the trust has been independently checked and found to follow the rules. These servicing criteria cover things like collecting payments, handling late payments and defaults, and ensuring accurate records and timely reports to the trustee and investors. The auditors even noted some rules weren't applicable or didn't need action this year, which is normal for this type of review and shows a focused and efficient audit.

   More good news: Another independent accounting firm, KPMG LLP, also confirmed something important. Citibank, N.A. acts as the "Trustee" and "Paying Agent." They basically hold the assets and manage money flow to investors. KPMG confirmed Citibank followed its specific rules (servicing criteria under Regulation AB) for the same period. This means the company managing the loans (Hyundai Capital America) does things by the book, and the bank holding assets, keeping the trust sound, and paying investors (Citibank) is independently checked and found to follow all rules. This double-check by two different independent auditors adds strong confidence and shows the entire securitization process is reliable. This is vital for investors to trust these asset-backed notes.

   Even more assurance: On top of these independent checks, Hyundai Capital America (the "Servicer") provided a formal Compliance Certificate. An officer of the Servicer reviewed their activities from September 17, 2025, through December 31, 2025. They certified that, to their best knowledge, they met all duties under the main "Sale and Servicing Agreement" (the core contract for these deals) in all important ways. This further strengthens confidence in their operations and boosts the stability of the securitization structure.

4. Financial health - cash, debt, liquidity HYUNDAI ABS FUNDING LLC is structured as a bankruptcy-remote vehicle. Its main job is to hold the securitized assets and send cash payments onward.

   For investors in asset-backed notes, financial health means something different. It's mainly about the underlying pool of auto loans. It also includes the various forms of extra protection built into the deal. These protect investors against losses. Examples include having more collateral than needed, special reserve accounts, or a payment priority system.

5. Key risks that could hurt the stock price The report states that no major lawsuits are currently happening or expected. This applies to HYUNDAI ABS FUNDING LLC, Hyundai Capital America, the Trust, or Citibank, N.A. This is good news, suggesting no major legal troubles are on the horizon for the securitization structure.

   Investor Context on Risks: The SPE itself has minimal direct risks due to its passive nature and bankruptcy-remote structure. However, investors in the asset-backed notes face several key risks common to auto loan securitizations. They include:

   • Credit Risk: The main risk is that borrowers might not pay their auto loans, leading to losses for the trust and potentially for investors if extra protections are not enough. Economic conditions, borrower credit quality, and how carefully loans are approved all influence this risk.
   • Prepayment Risk: Borrowers might pay off their auto loans early (e.g., if they sell their car, refinance, or pay extra principal). While this reduces credit risk, it can also reduce the total interest paid to investors and might require reinvesting principal at lower rates, affecting your total return.
   • Servicer Performance Risk: Independent audits confirm compliance, but there's always a risk that Hyundai Capital America, as the Servicer, could fail to collect payments well, handle late payments, or manage the loans properly. This could negatively affect cash payments to the trust.
   • Interest Rate Risk: For notes with floating interest rates, rising market rates could increase costs for the Servicer or impact the notes' value. For fixed-rate notes, rising rates might make them less attractive than new issues.
   • Economic Conditions: A downturn in the economy (e.g., more unemployment, less consumer spending) could lead to higher default rates on auto loans and lower recovery rates on repossessed vehicles, directly impacting the asset pool's performance.
   • Collateral Value Risk: The value of vehicles securing the loans can drop, especially for used vehicles. If a borrower defaults, selling the repossessed vehicle might not cover the outstanding loan balance, leading to a loss.
   • Regulatory and Legal Risk: Consumer protection laws, lending rules, or bankruptcy laws can change. These changes could affect how loan contracts are enforced or the ability to collect on defaulted loans.
   • Liquidity Risk: Credit agencies typically rate these notes. However, the secondary market for asset-backed securities can sometimes have reduced liquidity, making it hard for investors to sell their notes quickly or at desired prices.

6. Competitive positioning HYUNDAI ABS FUNDING LLC doesn't compete in a traditional market. Its job is specific to Hyundai Capital America's securitization efforts. Other auto finance companies like Ford Credit, Toyota Financial Services, and Ally Financial also use securitization to get money. HYUNDAI ABS FUNDING LLC's success depends on Hyundai Capital America's ability to create many good auto loans and the market's demand for asset-backed securities backed by those loans.

7. Leadership or strategy changes As a special purpose entity, HYUNDAI ABS FUNDING LLC usually has few or no dedicated employees or management. Its "strategy" comes from the deal documents for the securitization, which outline its specific, limited role in transferring assets. Hyundai Capital America, as the Sponsor and Servicer, makes key decisions related to the auto loan portfolio and the overall securitization program.

8. Future outlook As a special purpose entity (SPE), HYUNDAI ABS FUNDING LLC's existence and function link to specific securitization deals. The "outlook" for investors in the asset-backed notes depends on several factors. These include the continued performance of the auto loan pool, the general economy, and the stability of the auto finance market.

9. Market trends or regulatory changes affecting them The report shows strong evidence of regulatory compliance. An independent audit confirmed that Hyundai Capital America (the Servicer) met all relevant servicing rules. This was required by SEC Regulation AB for the year ended December 31, 2025. This means they consistently meet the necessary standards for managing these financial products, which is key for stable, trustworthy asset-backed securities and keeps investors confident.

   Furthermore, another independent audit by KPMG LLP confirmed something else. Citibank, N.A., as Trustee and Paying Agent, also followed its specific regulatory duties under Regulation AB for the same period. This shows the entire system is independently checked, from loan management to asset holding and payment distribution, meeting all regulatory standards. This is a big plus for investor confidence.

   Broader Market Context: Several market and regulatory trends influence auto loan ABS performance and attractiveness. These include:

   • Interest Rate Environment: Changes in benchmark interest rates (like the Federal Funds Rate) directly affect auto lenders' funding costs and impact how attractive fixed-income investments like ABS are.
   • Economic Growth and Employment: Strong economic conditions generally lead to fewer late payments and defaults on auto loans. Economic slowdowns or rising unemployment can increase credit risk.
   • Consumer Credit Quality: Trends in consumer debt, credit scores, and household savings can affect loan quality, impacting new auto loans and existing pools.
   • Used Vehicle Market: The value of used vehicles is crucial for recovering money on defaulted loans. Big drops in used car values could increase losses for the trust.
   • Regulatory Scrutiny: Regulators like the Consumer Financial Protection Bureau (CFPB) and the SEC watch the auto lending and securitization markets closely. Changes in rules about loan creation, servicing, or disclosure could impact the industry.
   • Technological Advancements: Innovations in data analysis, artificial intelligence, and digital lending platforms can improve efficiency, servicing effectiveness, and fraud detection in auto finance.

This information should help you understand the structure and oversight of HYUNDAI ABS FUNDING LLC and the related asset-backed securities. Use it to inform your investment decisions.