Get Marketing Plans In Place For Auto Loan Uptick

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ONTARIO, Calif.- To take advantage of an increase in new car sales next year, CUs must start planning now for marketing and improved member-segmentation strategies, insists Credit Union Direct Lending.

CUDL is projecting improvement in auto sales in 2012, said Joe Greenwald, vice president of marketing.

"The auto space was starting to improve and then we had a little setback with Japan. But all signs point to more cars will be sold in 2012-not what we saw four to five years ago, but certainly more than we've seen in the last couple years. Now is not the time to be shy about getting out there."

Greenwald said credit unions need to beef up plans for auto-loan marketing because too many CUs mistakenly believe members know they make such loans.

"That is not the case. You have to be aggressive in your marketing and make sure members know you are in the loan business so when they go to purchase a car you are top of mind," noted Greenwald, who stressed preapproval and prescreening as two tactics to boost volume.

CUDL sees more CUs doing well by being flexible with loan rates and structure.

"Where we see credit unions being successful versus those that are not, it always comes down to being competitive on rate and terms. The ones getting hurt are those that stick to a standard broad-brush policy and say, 'I don't ever go over 80% for these rates and terms.'"

Credit unions just can't afford to let a good loan candidate walk out the door in favor of another lender, and can determine good risks through stronger analytics and member segmentation.

Greenwald explained that if the credit union knows a member is a good risk, it can make exceptions on rates and loan to value, for example.

"Segmentation and analytics let you know where you can take more risk and keep the loan that you will otherwise lose to the bank, because the competition is not going away. It also lets you know when you have to stick to your guidelines on members who are a poor risk," he added.

The final step to take to get ready for the uptick in car sales, noted Greenwald, is managing the dealer relationship. "Ninety percent of the car loans are being consummated at the dealership. We have to continue to manage those relationships, and that has to be in your plan for the year."

Greenwald re-emphasized the importance of a strong auto-loan strategy, since loan-to-share ratios will likely continue to be challenged in 2012. "With many of the top credit unions we track, we are seeing loan to share is low, and even trending downward," he added. "That is not a sustainable business model."

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