As many used car dealerships look to survive a period of declining sales, credit unions have been critical to keeping these dealerships afloat.
About a year ago, Chrysler cut back its franchised dealerships. Of the nearly 800 cutbacks nationwide, two of those dealerships were located in San Luis Obispo, CA. According to the San Luis Obispo Tribune, as the franchise tag left these dealerships, so did captive financing and larger banks such as Chase and Bank of America. As national lenders stepped away from dealerships, three local credit unions stepped in (and ensured the survival of Ted Miles Motors in the process).
Although the San Luis article focuses on the role of three credit unions in one particular situation, these credit unions are not alone in their support of the used vehicle market. As the economy struggled, consumer preferences shifted toward used vehicles, due to their lower average price. As such, many credit unions placed an increased emphasis on their used auto loan offerings. This paradigm shift helped credit unions develop stronger relationships with local used auto dealers, leading to a higher market share for credit unions in the used auto loan space. In 2009, credit unions captured 24% of the used auto loan market, financing nearly 1 in every 4 used vehicles sold. Funding loans for dealerships transitioning from franchise shop to used car lot is not only crucial to helping the dealership stay afloat, but also helps deepen the relationship these dealerships have with credit unions. This is just one of the many ways credit unions are able to serve their membership and benefit small businesses in the community.