LANSING, Mich. — Preliminary Chrysler sales totals for May suggest that GM's bankruptcy filing may not hurt Invest in America.
David Adams, CEO of the Michigan league and its subsidiary, CUcorp, which is managing the Invest in America program, told Credit Union Journal that the Chrysler bankruptcy is providing a glimpse into consumer buying behavior while a company is in Chapter 11. "Chrysler will soon release its May sales data, but we have early indications that the credit union cash program continues to be strong and we actually expect to see very high volumes," he said
Invest in America, the national credit union member auto-discount program, has generated more than 102,000 car sales for GM and Chrysler through April, and $1.6 billion in CU auto loans.
The GM bankruptcy filing could send ripples of concern throughout the CU movement. But Adams assured that both carmakers stand behind Invest in America. "We have received very clear assurances from both GM and Chrysler that they intend to honor all existing agreements and they consider our partnership long-term," said Adams. "Obviously the bankruptcy judge needs to approve critical issues that relate to how suppliers are paid, and how dealer incentives are paid."
Invest in America has an agreement with GM that extends through Dec. 31, and its contract with Chrysler runs through June 30.
While CUcorp is confident in Invest in America's future, it's planning to give credit unions a clear understanding of how GM views the CU partnership. Later in June, CUcorp expects to host a conference call with GM leaders and representatives of some of the largest credit unions participating in Invest in America.
"The meeting will give credit union leaders a chance to have dialogue with senior GM executives as we work to strengthen this partnership. We are also initiating separate strategy sessions with both GM and Chrysler to see about how we can continue to grow and expand the partnership. When we have the meeting with GM, it will be part listening to presentations from GM and part offering feedback and input for how to improve the program."
Adams reminded that what's contributing to projected strong May Invest in America sales for Chrysler is the absence of Chrysler Financial. "Credit unions are providing a critically important source of financing during this period," he said.
Tony Boutelle, president and CEO of the Ontario, Calif.-based Credit Union Direct Lending (CUDL), concurred, and explained why CU auto loan volume could increase in the coming months. Boutelle told Credit Union Journal that 154 Chrysler dealerships currently working with CUDL are losing their franchise, but two-thirds plan to remain in business.
"These dealers have really soured on national lenders, soured on the manufacturers, and they are looking for a business partner on a local basis they can work with," he said. "I think there is a lot of opportunity for credit unions to build those relationships they have with dealerships today to become a primary loan source for them."
