AUBURN HILLS, Mich.-How times have changed.
It wasn't that long ago General Motors employees and their credit unions were dealing with layoffs and other financial cutbacks. Now GM employees are set to begin receiving bonuses of up to $7,000 each as a result of the auto giant's recent profitability.
But some GM-affiliated CUs are warning that it could have an adverse effect on their bottom lines.
At Genisys CU here, VP of PR Lon Bone said he expects as many as 1,500 of GCU's 127,000 members will receive bonuses ranging from $3,000 to $7,000. But he isn't expecting that to translate into pay-downs on loan balances or new loans with bigger downpayments.
"I haven't heard anybody tell us this yet, but with people seeing where gasoline prices are going right now, my gut feeling is that the majority of these dollars are going to be put into savings accounts," said Bone.
Genisys has three full-time financial planners on staff, but has no plans to reach out to GM-employed members about what to do with the financial windfall. There are not currently any plans to market loans specifically to those members.
"We're always doing loan promotions, but we're not doing anything special saying 'Take your bonus and put it down on a new car,'" said Bone.
At Security CU in Flint, Mich., CEO Christopher Estes said his staff has had "preliminary conversations" about the possibility of both reaching out to GM employees or tailoring loan promotions to them, but nothing has been solidified. He estimated that as much as 10% of Security Credit Union's 54,000 members are GM employees.
"We're not looking for deposits," said Estes. "We're flush with liquidity; what we need most are loans. We're going to talk to members about the age of vehicles on the road and using that (bonus) as a downpayment on a vehicle that we could finance for them. But first and foremost we'll look out for the member's best interest."
The Pain in the Gas
Like Genisys' Bone, Estes noted that with gas prices approaching $4 a gallon in Michigan, it may be in members' best interest to hang on to some of that money.
"I've heard anecdotally people saying they're saving money for a rainy day because of the economy, but for that same reason, people with loans with us may pay them down or pay them off." Estes is projecting there will be a 50/50 split in the membership in terms of saving the bonuses or using the funds to pay down loans.
Estes noted that if gas prices retreat even half as quickly as they've risen, credit unions could still see a benefit.
"I think consumers really want to be optimistic," said Estes. "If gas prices go down, I definitely think it will be beneficial in seeing some additional loans. But they're talking about gas hitting over $4 in the not-too-distant future, and I think that will put a screeching halt on loans.
