Shaken Supply Lines In Japan Could Open Opportunities For CUs

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HAUPPAUGE, N.Y.-The limited supply of Japanese vehicles that's affecting car prices and incentives demands credit unions pay close attention to the auto loan market and be ready to move if opportunities arise.

David Jacobson, president of GrooveCar, shared that advice, after his company has seen a dramatic increase in leasing opportunities on Japanese makes this year due to lease incentives coming off a number of the Toyota and Honda models.

"After the earthquake and tsunami, the Japanese manufacturers did not have capacity to build cars so they took incentives off and our leasing programs expanded on Honda and Toyota cars," Jacobson said.

Due to Honda taking down leasing incentives on Civics, GrooveCar credit unions have gone from doing no Civic leases to more than $2 million a month.

"All of a sudden there is tremendous business because the factories are not supporting these cars," said Jacobson.

Toyota, which Jacobson said has traditionally been very supportive of its product line, backed off leasing incentives for 60 days and GrooveCar CUs racked up very good Toyota business for the first time.

"We had a pretty good two-month period on Toyotas," said Jacobson, who noted Toyota lease incentives are back.

The lesson, pointed out Jacobson, is "keep your finger on the pulse of the market. You need to be plugged in so when something like this (Japan production shortage) happens you can take advantage of the opportunity. GrooveCar does that for our credit unions. When the Toyota and Honda incentives came off we were in the dealerships the next day talking to them and finding ways we could support them."

As credit unions learned when banks retreated from auto lending during the height of the recession, dealerships needed credit union support. Jacobson said that same support is needed now with Japanese manufacturers producing fewer cars and cutting back incentives.

"This is the time when we are in better graces with these dealers," observed Jacobson. "They know credit unions can play a bigger role for them, can be a trusted partner, and can react quickly. Lenders like B of A and M&T Bank can't react overnight and credit unions can. It's stepping up quickly, which also builds long-term relationships."

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