GrooveCar credit unions reported double digit growth, or a 21% increase in 2015 over 2014, in auto loans. While a robust economy and competitive lending programs enticed members to borrow, credit unions pulled out all the stops to compete with captives and banks. Credit unions worked hard to increase market share, utilizing multiple channels to reach members. Engagement and communicating with members was a key component, playing a larger role in business development than in previous years. The combination of competitive rates, an auto buying resource coupled with enhanced dealership relations, all helped to close more deals and grow business.

 

Credit unions serving New York’s metropolitan region, one of our markets, are fortunate enough to provide services to a growing member base of over 1 million strong. Along with a solid member pool to draw from, the majority of the credit unions also operate under an open charter, which means individuals can easily become members if they live, work or worship in this region. Because of this favorable business climate, indirect loans are an extremely effective route to membership; while at the same time positively impacting growth. With membership on the upward swing this signals great news for credit unions and for members looking for value over banks.

One of the factors credit unions were able to compete, and garner more market share, was because of competitive rate offerings. With rates as low as 1.45% on a 60-month new vehicle loan term with terms extending up to 96 months, credit unions positioned themselves as very competitive players in the automotive market. Chuck Price, VP of Lending for NEFCU, Westbury, New York, with assets over $2.3 billion, revealed that when they compared results to 2014 in both new and used car segments it showed, “Strong gains, up 42% and 78%, respectively.” Nationally, credit unions earned a 17.6 percent market share of the automotive loan market as reported by Experian. As Price points out, “The increase in volume was coupled with a slight increase in the average loan term to 70 months and consistently strong credit quality with FICO scores continuing to average over 750.”

 

Rates were not the only reason for increased market share. By providing real time data as it relates to the competitive landscape, credit unions were able to react to market conditions in a timely manner. Understanding what members want and how to best deliver services also increased members’ engagement and satisfaction. Providing best practices and recommendations on how to capture more market share has been our strongest suit and it showed based on the results we are seeing. Teachers Federal Credit Union, a leading credit union on Long Island with assets over $5.2 billion, found, “2015 was a banner year for indirect auto lending and 2016 is proving to be just as good, if not better than last year. This is a result of our strong vendor relationship,” offered Francis Collins, Sr. Vice President of Credit, Teachers.

Credit unions and dealers benefited when importance was placed on delivering quick decisions and funding. Realizing that providing top notch service to the dealers was as important as being competitive, credit unions honed in on processes to make them even more efficient. This enabled the credit unions to strengthen relationships and facilitate dealers with the service levels they have come to expect from manufacturers and banks. Quick decision turnaround and the infrastructure to reduce response times provided the dealer with the tools to close more loans at the point-of-sale. Indirect loan growth benefited greatly because of this. With a solid foundation to build upon, the GrooveCar indirect program continues its expansion as credit unions have the innate desire for sustainable auto loan growth. While each market has its unique challenges, the appeal remains the same: Serve members, establish and grow relationships with dealers while streamlining the processes for advancing loan portfolios.

As cited in:

CU Insight

Tags:

Auto Buying

credit union

lending

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