New car sales totaled 16.5 million in 2006, down from 16.9 million in 2005, according the National Automobile Dealers Association. The market is expected to slow further in 2007, as predictions range from 16.2 to 16.4 million units, making it the slowest year since 1998. In order for credit unions to stay competitive in this sluggish auto market, they must offer members comprehensive auto-related services. This crucial step will help credit unions capture a greater share of auto-loans, currently at 17%.
Market knowledge will help provide the information and services that members need in order to make the right car buying decision. What you offer your members could start and end at a fair loan rate. Or, you could include an information system in branches and online to ensure your members are informed car buyers.
Buyers are online now more than ever, and they’re using manufacturer, dealership, and third-party sites. About 67% of new car buyers conduct research online according to J.D. Power and Associates. This unmerited dependence and trust in the internet has resulted in a system diluted with information and sites that offer tips and advice, along with various third-party financing ads. Monitoring legitimate information and services is limited on the internet, so online shoppers need to tap into known and trusted resources – such as their credit union.
Today’s informed consumer looks for a non-threatening environment both in person and online. Credit union sites should provide members with credibility and security. Car buyers can research, interact, and shop, and they don’t necessarily have to commit to anything.
Wheels 101, is a popular member education program offered by University Federal Credit Union ($758 million in Austin, TX). Since 2000, this growing program has enrolled 1,890 members. Although Wheels 101 does not match members with local dealers, it does prepare them for the experience by providing a payment calculator, information on how to negotiate with a dealer, and model reviews.
UFCU also places high value on a well-informed staff, which leads to more loan volume. Since 2000, the credit union has re-financed almost 11,700 auto loans. “We used member mailings, word of mouth, and took every opportunity to discuss a better deal than our member’s current outside loan,” said Jim Brown, senior manager of consumer lending at UFCU. The credit unions efforts fit well with its philosophy: “UFCU gets stronger financially when you get stronger financially.”
Tips to Stay On Top
Stay Alert: Whether or not you have a partnership with a dealership, it is important to be aware of dealership offers and the indirect loan market in your area.
Keep Staff Informed: Members want to see you as an experienced resource for their car buying needs. So, re-financing loans is just one of the reasons it is important for staff to be trained regularly on their knowledge of vehicles and auto le
After Hours: Availability is important to members and dealers. Consider extended or weekend hours, since most car dealerships see their highest traffic on weekends and most holidays.
Multilingual = Multi-Service: In this ever-changing market, it helps to consider services that cater to Spanish speaking members. As the fastest growing demographic in the country, the Hispanic market could be an untapped category in your community.
The marketplace is slowing, but the potential for market share growth remains high. Credit unions must look beyond auto loans if they are to continue to be competitive in the auto market. Be a resource for your members. When credit unions have a comprehensive array of services, you become a one-stop shop for member needs.