RANCHO CUCAMONGA, Calif.-Credit unions are gaining significiant auto loan share, but overall declines in auto purchases are preventing that from translating into big volume increases.
From its low ebb in February 2008, credit unions' car loan market share across the country jumped from 14.7% to 21.6% in October.
"It has been an improvement in market share for credit unions but as a volume issue it has not materialized because the sales have fallen faster than the market share has gone up," said Tony Boutelle, CEO of Credit Union Direct Lending (CUDL). "I think that's a challenge but at the same time we see this as an opportunity to form bigger and stronger relationships."
Boutelle urged credit unions to follow the lead of investors and fly to quality-instead of reaching out to as many dealerships as possible. He advised credit unions expanding indirect lending to carefully select dealers that have been in the marketplace for a long time and put down roots with them. The goal is that as other lenders vacate the market, credit unions are well-positioned to boost volume when the economy recovers.
"If you're now in the one, two, three position, you're going to get a lot more volume and be able to have a relationship with that dealer where he needs you as much as you need them," Boutelle noted.
National market contraction aside, there are a number of credit unions who have reported seeing a signficant loan volume increases and are struggling to keep up. Larry Highbloom, CEO and President of VINtek, Philadelphia, joined with Boutelle's message that credit unions should be able to leverage the recession to prepare for future growth. To do that, CUs need to streamline their lending departments by putting staff emphasis on decisioning and marketing, he argued, while leaving processes like collateral management up to third parties.
"I once saw a credit union in Georgia have a 3x5 metal box and they would have an index card with the member's name and the date they received the title, and that's the way they knew they had titles on all their loans," he noted, pointing out that VINtek houses both electronic and paper titles and is essentially the title department for CU giant Navy Federal. "What we do is provide economies of scale and tech so we handle the backend and the grunt work so the CU can focus on the lending decision and growing their volumes correctly and not wildly."
Highbloom offered that companies such as VINtek cut down on trivial paperwork, slices out the need for title mailbacks or even filing, which then gives credit unions the opportunity to focus on growth. When looking to expand, Highbloom stressed the need for credit unions to be aware of applicant demographics and how Generation Y differs in its approach to information gathering and decision-making compared to its predecessors.
"The young people today are more intent in controlling the transactions because they have grown up in the world of information at their fingertips," he continued.
In addition to basic mailings and website promotion, Highbloom suggested credit unions look to emphasize auto refinancing as members look to pare down their monthly payments.
"Refinancing is a great source of opportunity for the CU because the customer is already in the car so a lot of the risk is already addressed," he said. "(And) when you refinance somebody, there is great satisfaction there."
