In recent years, car sales through companies like Enterprise have emerged as a significant contributor to loan volume.
But showroom pressure at new car dealers, along with attractive 0% and other low APRs, have drawn much of the attention of members. Below, The Credit Union Journal asks Mary Mahoney, assistant VP with Enterprise Car Sales, for her response to a variety of questions related to her company, car sales and consumer behavior.
The Credit Union Journal (CUJ): What is the level of awareness among credit union members that their credit union offers vehicles for sale through Enterprise and that Enterprise does more than just rent cars.
Mahoney: Although many credit unions are familiar with Enterprise Car Sales, many aren't aware that it is a division of Enterprise Rent-A-Car, the largest single buyer of vehicles in the country. In addition, credit unions may be familiar with Enterprise credit union sales events, but aren't familiar with our other marketing and promotional efforts to help each credit union increase loan volume numbers. These programs are designed to communicate with members on a continual basis. For instance a credit union may want to link its website to the Enterprise Car Sales site so members can shop on-line anytime. We are linked to more than 600 credit unions across the country. Others may want to have one of our employees stationed in-house at a credit union national call center to answer questions and assist members in selecting a vehicle that meets his or her needs.
CUJ: Are there particular strategies or lessons learned that can inform members vehicles are available and enhance volume at car sales?
Mahoney: There are a number of things that credit unions can do to increase loan volume, and a lot of this has to do with putting together a tailored program for everyday business. The program could involve holding a car buying seminar with the credit union staff and members, talking to them about vehicle trends in the coming year, or providing articles for member newsletters. The credit union sales events are very successful, but are only one way to reach out to members.
CUJ: What have the special financing offers from the auto manufacturers' financing arms done to volume when someone can get a new car at 0.0% or 2.9%?
Mahoney: Certainly the financing offers have had an effect on sales, but the 0% financing is often limited to shorter terms and may be only good up to 36 months, which can be a fairly hefty payment. In addition, larger down payments may be required and pre-payment penalties may exist. Customers may be limited to on-site stock thus minimizing their choices in models, colors, styles, and other options. Also, a customer's credit history with these offers often has to be blemish free.
In our case, with more than 60 makes and models and with the credit union doing 100% of the financing of our vehicles, CUs can overcome these often enticing offers.
CUJ: How effective are preapprovals and, generally, where do most CUs stand in terms of providing "on the spot" financing at car sales?
Mahoney: Many of our vehicles aren't sold at the sales specifically, as many members are interested in purchasing vehicles throughout the year from Enterprise Car Sales. Generally, pre-approvals and on-the-spot financing are very effective at car sale events.
CUJ: What sells best? Is there a particular type of vehicle members looking for?
Mahoney: There isn't one specific vehicle that is popular. The vehicles we carry mirror the driving public-anything from fuel-efficient economy cars to sports utility vehicles, vans or trucks.
CUJ: What type of warranty is available, and do members often buy the extended warranty from another third party?
Mahoney: Each certified vehicle includes a 12-month or 12,000-mile limited powertrain warranty and a seven-day repurchase policy, so if members have a change of heart they can bring their purchase back within seven days or 1,000 miles. The vehicles are also covered by a one-year roadside assistance program provided by AAA Motor Club.
In addition, Enterprise has a one-price system so members are ensured a no-haggle price that is fair and competitive. Each vehicle is rigorously tested with ASE certified inspections. Trade-ins are also accepted. Enterprise also offers an extended vehicle contracts backed by General Motors.
CUJ: Has the reduction in travel meant a reduction in rental car fleets and hence, a reduction in the number of vehicles available?
Mahoney: Enterprise Rent-A-Car's market focus is much different than our competitors, who focus primarily on the airport market. Because 95% of our business is in the local market, renting to individuals in their own hometowns, our business has remained steady. Therefore we have not had a reduction in our fleet.
