The automotive industry is having a tough year. As the struggling economy and rising gas prices impact consumers' wallets, the market for new vehicles continues to contract. Even consumers still committed to a vehicle purchase have changed their vehicle preferences thanks to mounting costs and rising fuel prices.
Shifting Preferences Impact Vehicle Sales Trends
The most obvious impact of rising fuel prices is on the sales volume of trucks and SUVs. As you would expect, sales of pickup trucks are down 23% during the first six months of the year. Similarly, SUV sales have also decreased 27.4% on a year-to-date basis. In fact, the only segment of the automotive market that has seen growth is the more fuel efficient “small car” segment, which has increased 10.6% during the same time period.
As sales of larger vehicles decrease and small cars are unable to pick up all the slack, the impact on the monthly sales charts for the most popular vehicles is obvious. Ford's F-Series pickup truck has been the perennial favorite on the top vehicles sales list. The F-Series has topped the list all the way back to 1992, but that impressive streak finally came to an end in 2008. In May of 2008, the F-Series was finally overtaken. The truck didn't slip to second place, however. In a single month the F-Series fell from the top of the chart all the way to 5 th place and all four vehicles that overtook the F-series were hybrids. No flash in the pan, this trend continued into June with no signs of slowing.
Finding the Benefit in Changing Trends
As a credit union, being aware of these significant trends is important. Understanding these trends and determining how you can effectively act on them is even more important. As hybrid vehicle sales trend up, the obvious approach for credit unions to capture this business is to offer a “green” auto loan to your members, perhaps coupled with free educational seminars on hybrid vehicles. By offering your members rate discounts or additional benefits when purchasing a hybrid vehicle, you have a greater chance to capture business from this one growing segment of the automotive market.
While the hybrid trend is just one example, understanding the data around other trends can make it easier to respond to your members' unique needs. If you see your members moving from new auto loans into used auto loans, consider offering rate specials on the used side of the business. Providing your members with auto buying options, research tools, or education regarding purchasing a used vehicle helps establish your credit union as a trusted resource early in the auto buying process. The earlier the credit union becomes involved, the greater the chances that when that member is ready to finance the purchase they will think of the credit union first.
For a credit union willing to closely track and quickly respond to trends both in the external market and within their membership, opportunities abound. Tracking how members are responding to the current market is a crucial step in defining how the credit union can come to the aid of their members, providing the services and products they want and the unique member-focused touch that only the credit union can offer.
Source: Wall Street Journal