LIVONIA, Mich.-The fact that General Motors is in talks with large financials to broaden the availability of loans for GM vehicles is a good sign for credit unions, contends Invest in America.
According to a Wall Street Journal report, GM is in discussions with some big banks, and Dave Adams, CEO of CUcorp acknowledged that could mean subvented rates from some of the money center financials. While that may present a challenge for credit unions as the auto loan market slowly rebounds, the move signals that GM is not looking to acquire its own lending arm, after divesting most of its ownership in GMAC as part of the government bailout of the automaker.
More Positive Than Negative
"This is a much more positive sign than negative," Adams told Credit Union Journal. It signals that GM, at least for now, isn't looking at owning a captive finance company, and may be distancing themselves from GMAC, looking for alternative ways to provide financing at the point of purchase. That bodes well for credit unions. Also, new financing options for CUs could emerge."
Adams acknowledged that due to the interest GM is currently showing in establishing preferred lender relationships, Invest in America is considering ways in which the CU car-buying discount program could be presented to GM through a more "aggregated" approach.
"We are working on some methods that would position (Invest in America) credit unions as having a single point of partnership-have loans flow through a single entity in some way."
Adams believes GM's effort to reach out to banks is actually a move to capture more below-prime borrowers, who have struggled to qualify for many of the automaker's discounts. "This is a huge book of business for the auto industry," Adams said. "A lot of subprime borrowers are being forced into the used car market."
Meanwhile, Invest in America sales through GM are on pace to exceed 2009 levels, according to Adams, who stated that the program is currently tracking about 12,000 units per month, and is growing. "But potential for the program is still much greater," he said, urging more credit unions to take active roles in promoting the car-buying discount. "It takes more than a tacit nod of the head to truly benefit from the program."
Chrysler Could Return Soon
Chrysler, after suspending its participation with Invest in America in April, could be back in early August, according to Adams. "We have had some very good meetings with Chrysler recently. The company is doing much better in the marketplace, picking up share and touting a positive cash flow. So the door is open again and we are talking about putting a program back in place as soon as August 1."
CUcorp is a subsidiary of the Michigan CU League.
