LIVONIA, Mich.-There was a day, Dave Adams recalls, when struggling automakers General Motors and Chrysler knew little about what credit unions were, who they represented, and what they might offer.
More than $3 billion in credit union loans later, thanks to Invest in America, they now have a very good understanding.
"One of the biggest questions GM had before Invest in America ever started was, 'Who are you guys and what do you bring to the table?'" said Adams, CEO of CUcorp, which manages the discount program.
A little over a year later, GM - and the other two members of the Big Three - have a much clearer picture of credit unions and the impact they can have on car sales. Invest in America, which delivers discounts for CU members on new car and truck purchases from GM and Chrysler, has helped the two automakers move over 215,000 vehicles this year.
For that reason, and the ongoing expansion of the program, Invest in America is being recognized as Credit Union Journal's 2009 Innovation of the Year.
As Adams noted, it wasn't easy selling GM on the Invest In America concept. But what helped the troubled automaker sign on and launch a four-state pilot in mid-December 2008, was the successful member discount program CUcorp had in place with phone service provider Sprint.
"We were able to sell ourselves based on our track record with Sprint," Adams said. "Once we had GM under contract, Chrysler was more amenable." About a week after GM came on board, Chrysler signed on with a 12-state pilot of its own.
Chrysler's need for business, and financing, led it to quickly expand its Invest in America partnership. "Chrysler Financial was going out of business," Adams reminded, "and they had no reliable sources of financing. In the early stage of the program, credit unions were accounting for 40% of the auto financing for Chrysler sales nationwide."
The Value of a Phone Call
Only two weeks into its deal with Invest in America, Chrysler let CUcorp know they wanted to go nationwide, Adams said. "So I picked up the phone and let my contact at GM know what Chrysler was doing and very quickly GM went nationwide as well."
Adams admitted it has been a tougher road with Ford, which has only participated in Invest in America through a limited leasing pilot. Ford is also alone among the Big Three in not requiring federal bailout funds.
CUcorp may never have arranged discounts with any of the Big Three had not Adams attended an open house at a Community Choice FCU branch in Southfield, Mich., in October of 2008. CUcorp, a subsidiary of the Michigan league, already had the successful Sprint contract and was looking for other large business partners to provide discounts to credit union members.
"With the Big Three right in our back yard, they were a natural consideration for some kind of program," said Adams, who got the chance to pitch the Invest in America concept he had fashioned to General Motors. "One of GM's VPs was at the credit union event and I struck up a conversation with him precisely at the time when things were really getting dicey for GM. I told him we wanted to talk with General Motors about this very simple idea-give us a credit union member discount, we'll get credit unions to promote it, and we'll generate incremental sales for you, car loans for credit unions, and a marketing opportunity for CUcorp."
The VP eventually connected Adams with GM's then-VP of marketing and sales, Mark LaNeve. "GM was desperate at this point, and their financing had dried up," Adams recalled. "More importantly, credit was being squeezed in all corners and it was one of many factors causing the precipitous fall in GM sales."
A great deal has happened with Invest in America since that initial GM meeting, Adams emphasized. "The bottom line is that today we can say credit unions have channeled hundreds of thousands of car and truck sales to Chrysler and GM, and 60% of that business has resulted in financing at credit unions-roughly $3.3 billion in loans."
Despite its success, the auto discount program has hit a few bumps in the road. GM has shifted its discounts during the year, and Chrysler pulled back its participation in late summer to focus on Cash for Clunkers. Chrysler came back in September with a 1%-below-invoice deal that is in place today, and GM offers CU members Supplier Pricing.
"One thing became very clear," said Adams. "Auto companies don't look at their incentives long term. They look out in 30- and 60-day increments. Where we are at with GM, with an evergreen contract, is as close as you can get to a long-term or permanent partnership. In the case of Chrysler, it is more of fluid, month-to-month discussions. All we can say is that if we continue to deliver as credit union industry, I think Chrysler will be there with us."
Which led Adams to address his biggest concern with, and hope for, the Invest in America program. "One of the sad things we see is that there is the tendency to think of programs like this as a flash in the pan or flavor of the month, as opposed to something that we ought to grasp onto and ride it for long time," he said. "Invest in America is a differentiator for credit unions, who need to find ways to separate themselves from banks and other financial providers."
'Scratching the Surface'
Currently, 2,100 CUs are on board with the auto discount program. "I think we are just scratching the surface with what we can do," Adams insisted, citing the impact the program has had in Michigan. Backed by a $1.6-million co-op marketing effort and 200 of this state's CUs fully engaged in the program, Adams believes Invest in America has contributed to "phenomenal" car sales in Michigan.
"From June 30, 2008, to June 30, 2009, credit union new car loan growth in Michigan was 32%, while nationwide credit union new car loan growth was negative 3.8%. And that's in a state with one of the highest unemployment rates in the country."
Adams credited the success of Invest in America to credit unions across the country and the state leagues that have gotten behind the effort, and the entire Invest in America team, which now totals 12 employees.
Drew Egan, president and COO of CUcorp, has been part of the effort from the beginning. Kim Irwin was hired as VP of Invest in America February. Adams acknowledged that the program benefits CUcorp financially, with the Michigan CU League subsidiary receiving marketing reimbursements from its Invest in America partners, with 90% going directly back to direct promotional expenses.
But more important, he said, is that the "Michigan Credit Union League and our member credit unions benefit from the increased loan volumes and the tremendous public relations Invest in America generates. We also hope the program results in increased membership for credit unions."
In Adams' assessment, Invest in America has delivered on expectations. "We wanted to generate about a 10% sales boost for GM and Chrysler. Interestingly, today, that's right where we are."
Other Discounts Available
SOUTHFIELD, Mich.-CUcorp's Invest in America has expanded beyond car discounts to include special savings from Thor Industries (a manufacturer of recreational vehicles), Allied Moving and Storage, and FTD. The program will continue to branch out, according to Dave Adams, but car discounts will always remain the focus.
