Three Ways Credit Unions Can Recapture Auto Loan Market Share?

As the automotive market continues to slow, credit unions must react and innovate in order to recapture market share.

 
 

The past year has not been kind to US automakers. The Detroit “Big 3” have no only been forced to cut back sales forecasts, but they also experienced the first month on record where they did not account for at least half of total US auto sales. As the effect of these sales figures trickle down to auto lending activity, it becomes clear that credit unions, as auto loan providers, need to make changes to increase their share in this slowing market.

As September dawns, we leave summer behind, a time that usually results in the highest auto sales. However, as of the most recent data, most automakers are not on pace to meet the sales goals they have set for 2007. Credit unions also are feeling the squeeze as credit union market share begins to slip. As of July, credit union market share has slipped to 14.7%, the second consecutive monthly drop after a 3-month resurgence early in the year. Credit unions therefore find themselves hanging on to a smaller piece of an already shrinking pie.

In order to reclaim market share there are three key steps that credit unions can take.

  • First, would be a loan recapture program. Under this type of program, credit unions actively search out members who have outstanding auto loans at another institution. By offering a more competitive rate or additional advantage credit unions have the ability to bring that member back to the credit union.
  • A second option credit unions should look towards is maximizing their online channel. According to a recent J.D. Power & Associates study, more than 67% of new car buyers use some type of online research before making their final purchase. By maximizing their online offerings a credit union can provide the research to its members directly through the credit union’s website. This makes the credit union part of the auto-buying process from the start, and thus, at the front of the member’s mind when it comes to financing the new purchase.
  • One other option available to credit unions is offering unique auto loans that go above and beyond the traditional loans found at other institutions. “Green” and “Diesel” auto loans, provided to customers that purchase hybrids or other more “environmentally friendly” vehicles, can be one example of this. Another example of loan innovation is Day Air Credit Union ($148M, Kettering, OH), which offers an “Auto Loan Plus” solution where the member’s monthly payment is slightly more than the calculated payment for the loan, but that additional amount gets placed into a savings account for the member. This loan program, which combines a service the member already requires – a car loan - with a savings benefit, has seen great success at Day Air.

As the automotive market struggles to right itself, credit unions and other auto lenders are facing an uphill battle. Credit unions cannot afford to remain complacent, they must find some way to adapt to the current market situation in order to maintain their market share and remain a top contender for their member’s auto lending needs.

 

 

 

Sept. 10, 2007


Comments

 
 
 
  • Great article! Auto recapture with a regular outbound calling program can produce tremendous results.
    Jeff Frantz
     
     
     
  • Ways of obtaining the information in the first bullet would have been great information.
    Anonymous