Hyundai Auto Receivables Trust 2022-C Annual Report - How They Did This Year

Hey there! Think of this as our chat about Hyundai Auto Receivables Trust 2022-C. We'll break down its past year's performance in plain English. You'll easily understand what it does and how it's doing. This will help you decide if it fits your investment goals. No fancy finance talk, just the facts you need.

1. What does this company do and how did they perform this year?

Alright, let's start with the basics. Hyundai Auto Receivables Trust 2022-C isn't a typical company selling cars or services. Instead, it's an "Asset-Backed Securities (ABS) Trust." Think of it as a special financial arrangement created in 2022. It holds many car loans and leases from Hyundai Capital America. This company finances Hyundai and Kia vehicles. The "2022-C" means it was Hyundai Capital America's third such trust in 2022.

Here's how it works: Hyundai Capital America sells these car loans and leases to the Trust. The Trust then issues "notes" (like bonds) to investors. These notes come in different classes. They have varying payment priorities and risk levels. Car buyers make payments on their loans and leases. Hyundai Capital America collects these payments as the Servicer. These funds then pay back the investors who bought the notes. This happens in a set payment order. So, you're investing in many car loans, with the Trust as the go-between.

For the year ended December 31, 2025, the Trust's main job was to manage these car loans. It also ensured investors received payments on time. We don't see traditional "profit" numbers for the Trust. It just passes payments along, not make a profit. The good news is that both Hyundai Capital America (the Servicer) and Citibank, N.A. (the independent oversight trustee) reported full compliance. They followed all rules for managing these loans. This means they handled loan payments and accounts correctly. They also stuck to the original agreement. This is a positive sign for how well your investment is managed. This compliance builds investor confidence. It also ensures this investment setup runs smoothly.

2. Financial performance - revenue, profit, growth metrics

Things are a bit different for an ABS Trust here. Unlike a regular company, this Trust doesn't have "revenue" or "profit." Its job is to collect payments from the car loans and leases it holds. Then it distributes those payments to investors. This follows a set payment order. The Trust's "revenue" comes from the total loan payments received from these car loans and leases.

For an ABS Trust, numbers on incoming loan payments, defaults, prepayments, and current late payment rates are vital to judge performance. For instance, too many defaults would mean less cash for investors. High early payoffs could make the investment end sooner. This detailed data usually appears in monthly or quarterly servicer reports, investor reports, or offering documents, which are separate from this 10-K summary.

3. Major wins and challenges this year

Major Wins:

• Solid Servicing Compliance: The report's biggest win is clear. Both Hyundai Capital America (which collects payments and manages loans) and Citibank, N.A. (which oversees the trust and ensures rules are followed) confirmed full compliance. They met all required service standards. Independent auditors also confirmed this. They found no major issues with how the loans were managed. This means collecting payments, sending funds, and handling the loan portfolio runs smoothly. It follows all legal agreements. This is key to the reliability of this investment. This efficiency ensures money from the car loans reaches investors correctly and on time.

Challenges:

• For an auto loan portfolio, potential hurdles could include higher interest rates making loans harder to afford, job losses causing more loan defaults, or lower used car values meaning less money from repossessed cars.

4. Financial health - cash, debt, liquidity

Again, an ABS Trust's "financial health" differs from a typical company. The Trust's "debt" is really the notes it issued to investors. These notes had an original total amount set in 2022. Its "cash" comes directly from payments on the car loans and leases. The Trust is designed to pay itself off. This means its assets (the loans) are used to pay down its liabilities (the notes) over time.

For investors, key health indicators for an ABS Trust include overcollateralization (where the loans are worth more than the notes issued), savings accounts that boost security, and strict adherence to the payment order. These elements ensure the Trust can meet its duties to investors.

5. Key risks that could hurt the investment

Understanding risks is super important for any investment. For an auto ABS investment like Hyundai Auto Receivables Trust 2022-C, typical risks include:

• Credit Risk: Borrowers might default on their car loans. This could cause the Trust to lose money. Economic downturns, job losses, or changes in how creditworthy consumers are can affect this.
• Prepayment Risk: Borrowers might pay off loans earlier than expected. This happens through refinancing, selling the car, or insurance payouts. High early payoffs reduce total interest collected. It can also make the investment end sooner. This might mean you have to reinvest at lower returns.
• Interest Rate Risk: Many auto ABS notes have fixed rates. Some might have floating rates. For fixed-rate notes, rising interest rates can make the investment less appealing. Newer investments might offer better returns.
• Servicer Risk: Hyundai Capital America, as the Servicer, might fail to collect payments. It could also mismanage the loans or not send money to the Trust. The compliance statement in this report reduces this risk for the past year.
• Concentration Risk: The Trust holds a varied group of loans. Yet, a major economic slowdown in one region could impact performance. A downturn in a specific auto market segment could also hurt.
• Legal and Regulatory Risk: New consumer protection laws could arise. Bankruptcy laws or auto lending rules might change. These could affect the ability to enforce loan agreements. They could also increase the cost of managing the loans.

6. Competitive positioning

This section doesn't really apply to an ABS Trust. It doesn't compete like a car manufacturer or a bank. Its "competition" comes from other bond market investments. These include corporate bonds, government securities, or other asset-backed securities. Investors pick Hyundai Auto Receivables Trust 2022-C based on its credit rating. They also consider its return and how risky it seems. This is compared to other investments, not because the Trust has a competitive strategy.

7. Leadership or strategy changes

Charley Yoon signed the report as President and Secretary of Hyundai ABS Funding, LLC (the "Depositor"), the company that first put the loans into the Trust. An ABS Trust is a hands-off arrangement designed to pay itself off. Its purpose is only to hold loans and send out payments. Major strategy changes are rare for an ABS Trust, as strict legal agreements from its start in 2022 govern its operations.

8. Future outlook

As a hands-off arrangement that pays itself off, an ABS Trust's future depends mainly on the car loans and leases it holds. This is affected by the overall economy and how borrowers act. Investors typically use regular servicer reports and market analysis to gain insights into the expected future of the loan group.

9. Market trends or regulatory changes affecting them

The report confirms the Trust and its partners (Hyundai Capital America and Citibank) follow all rules, including service standards under Regulation AB.

For an auto ABS, important market trends that could affect performance include:

• Interest Rate Environment: Rising rates can make new loans harder for consumers to afford. They could also raise the risk of early loan payoffs if borrowers refinance.
• Economic Conditions: A weaker economy, more job losses, or inflation can cause more late payments and loan defaults.
• Used Vehicle Values: Falling used car values mean less money recovered from repossessed cars. This increases losses for the Trust.
• Regulatory Scrutiny: Government checking auto lending more closely could happen. New consumer protection laws might emerge. These could raise the cost of managing loans. They could also affect the ability to collect on late accounts. These factors are critical for judging the investment.