LANSING, Mich.-General Motors' recent 0% financing offer should not surprise credit unions participating in the Invest in America program - in fact, CUs should expect financing competition from all of the Big 3 throughout 2009.
That's the opinion of Michigan CU League President David Adams, whose league is spearheading Invest in America that offers discounted auto pricing and special loan rates to CU members on Chrysler and GM brands (CU Journal, Dec. 22).
"I think some within the credit union community may react to this and say, 'Wait a minute. We thought these guys were our partners.' That thinking would be fairly naïve," said Adams. "While GM and Chrysler are our partners in our program, the auto manufacturers' captive finance companies have always been and always will be competitors to credit unions. The other thing everyone needs to realize is that GM and Chrysler are still in dire straits. It should be no surprise to anyone that they will use everything at their disposal to try to boost sales."
Announced the day after GMAC Financial Services accepted a $5-billlion loan from the Treasury Department, GM's latest 0% deal was offered through Jan. 5 for up to a 60-month term on five car models. For that same time period, the carmaker also offered financing between 0.9% and 5.9% on more than a dozen other 2008 and 2009 models.
"The kinds of incentives the manufacturers are running now, the rebates and subvented financing, are always temporary because they can't afford to offer them for the long term," Adams contended. "The good thing about Invest in America is that the pilot runs through June of 2009, and hopefully the program runs longer."
Invest in America could soon include Ford, according to Adams. "Talks are going well. Since Ford is in better shape and has been running Employee Pricing during the holidays, I think they're waiting and looking to the February timeframe, when we're hopeful they'll come on board."
Adding Ford would strengthen Invest in America, which is being offered in 12 states: GM's discounts are good for members in Michigan, Ohio, Indiana, and Illinois. Chrysler's discounts include those states, as well as Oklahoma, Texas, Kentucky, Arkansas, Tennessee, Louisiana, New Mexico, and Mississippi.
While Adams said GM and Chrysler have yet to provide early results from the program, hits to www.lovemycreditunion.org increased significantly after the program was announced and Invest in America details were placed on the site. "Normally we get about 3,000 hits a week," Adams said. "When we launched with GM we received 300,000 hits the first week. When Chrysler came aboard, the following week we had over 400,000 hits. We expect that as the program expands so will consumer interest."
Invest in America could see a spike in business early this year as credit unions begin to market the offer, predicted Adams. "When we introduced Invest in America Dec. 8, credit unions were already starting to pull back for the holidays. They certainly were not ready to ramp up any marketing efforts, and I am sure many were waiting until the first of the year."
Adams believes that credit unions could move to lower auto loan rates in 2009, already seeing some CUs, as part of Invest in America, drop rates by .25%-.50%.
MORE@CUJOURNAL.COM
For more on the Invest In America Program, visit www.cujournal.com and search the following headlines:
Midwest CUs, GM Partner On Program
Auto Loan Program Expanding
For more info:
www.lovemycreditunion.org
www.mcul.org
www.gm.com
www.chrysler.com
www.fordvehicles.com
www.efgcompanies.com
www.hyundaiusa.com
