Lake Michigan Credit Union Latest To Open Car Lot For Off-Lease Vehicles
Lake Michigan Credit Union, one of the biggest auto lenders among credit unions, has opened a new facility to sell vehicles on which the leases have expired, one of just three used car lots run by a credit union.
With the motto, "Nearly new direct to you," Lake Michigan Auto Center offers as many as 225 cars spread across five acres of former farmland next to the credit union's branch here.
The credit union began running the lot as a pilot about a year ago when its fleet started growing, according to Kim Bray, manager of the facility and a third-generation car dealer whose grandfather started the lineage selling Model T Fords door-to-door. With hundreds of leases expiring on the credit union's 13,000-strong fleet, officials were looking for an alternative to selling the vehicles at auction.
"The initial thought was, 'Let's just run it through the auction," said Bray.
But the credit union came to realize there was a critical shortage of "clean" used cars, those with which the previous owners are known, and it asked itself, "Why not enter into the market? These are good clean cars with a pedigree. The history is no mystery." Cars returned after lease, he pointed out, are generally in better condition than typical used cars and thus fetch higher prices.
The operation is run by the credit union's CUSO, CU Financial Group, which also offers leases to customers through 150 area car dealers.
With as many as 200 leases expiring every month, the credit union expects to have a ready supply of vehicles for sale for years to come, according to Bray, who worried that the captive auto finance companies, who undercut every lender with their 0% financing, may decide to undercut them on their used car deals, as well. "We want to grow the business, obviously, but we're really concerned about what the Big 3 might want to do," he said," of General Motors, Ford and Daimler Chrysler.
For those customers not interested in buying a car, they can still clean their vehicles at the auto center's new 130-foot car wash tunnel, due open next month.
Lake Michigan Credit Union, the area's biggest credit union with $1.2 billion in assets, had sought to convert to a mutual savings bank but a winter vote by the members failed to attract the required two-thirds member approval, meaning the institution will remain a credit union.