Ensure your CU is on the right road to auto loan growth.
A quick glance of recent headlines in the auto industry would have most thinking 2018 is a throwaway year. But nothing could be further from the truth. Despite the story the numbers may be telling, there are plenty of opportunities that will aid in growth.
What does a credit union need to do to make sure it is positioned correctly this year? Get creative and smart. This is not the year to throw something against the wall and see if it will stick. Reaching auto-buying members in this atmosphere will take some strategy.
Before we jump into strategy, let's go over the numbers from last year. A review of where the industry stands shows us that in 2017 new car sales topped 17.2 million units. These are great numbers; 2017 is down only 1.8% from the prior year. It is also important to note that reaching 17.2 million in annual new car sales has only happened five times in history. While the dip in numbers compared to 2016 is making some in the industry nervous, it's music to the ears of the National Automotive Dealers Association. The dealers' association in a recent report said it is confident 2018 is on pace to closely reach the number of units sold last year. To reach their goals, dealers understand it will require steady and consistent moves on their part. This is familiar territory for them. They understand incentives and good promotions will help drive consumers to their showrooms. Credit unions need to take a page from the dealers' playbook this year when attempting to reach auto-buying members.
Some strategies to explore in 2018 include: Working closely with dealer networks, offering incentives to members, offering promotions on auto loans and exploring leasing opportunities.
Credit unions and dealers can benefit each other. Let's remember members are being sent to dealerships through credit union marketing programs and other messaging that promotes auto buying. Opening the dialogue with dealerships helps educate them on the premise that they need to take care of you and your members. If a credit union has an online auto resource, it's a great place to showcase the dealers who work closely with you.
Incentives and promotions will play a big role in auto loan marketing this year. Credit unions should capitalize on all areas of member interactions, from branch communications to social media and online auto buying resources. The goal this year is to message the member on a very consistent basis. Don't rely on the same message about loan rates. Instead, describe the journey of vehicle buying and let the member know your credit union should be their first stop. Understand which vehicles are selling this year; for example, passenger cars are not pulling consumers in like they used to. The hot vehicles and features to promote include SUVs, crossovers, technology, safety and fuel efficiency. The goal is to be a part of the member's journey into a new vehicle from the start so you cross the finish line together.
Leasing also remains an area with great potential for credit unions. The retail automotive space is crowded, with dealers having upwards of 15 lenders vying for a customer's business at any given time. Typically, only the captive and one or two other lenders focus on leasing. Also, consider the average monthly three-year lease payment is $330, a significant difference from an average monthly loan payment of $479. Many manufacturers are not supporting some of the most popular vehicles by offering lease programs, and this is great news for credit unions as lease inventory will be expanded for them to include a range of vehicles to meet members' driving needs.
By making a few strategic moves, and helping members understand their best options begin at their credit union, you can make 2018 a year of continued auto loan growth.
Frank Rinaudo Frank Rinaudo is SVP for GrooveCar and CUXpress Lease, a Fusion dba. He can be reached at 631-454-7500 or [email protected].
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