LAS VEGAS -
That was the message from Greg Goebel, founder and CEO of Auto Dealer Monthly magazine. Goebel told attendees of CUDL's Auto Lending Symposium here he surveyed 287 car dealers across the U.S. in preparation for his keynote talk at the conference. Through dealers' eyes, he said, credit unions were panned for decades. Without indirect lending programs, the relationship between the two was "adversarial."
"Dealers hated to hear, 'I'm going to my credit union for the financing,'" Goebel reported. "For one thing, the credit union would tell the buyer he paid too much for the car. And without indirect lending, the dealers would lose the opportunity to participate in financing, and the opportunity to offer the back-end products credit unions offered."
The CU/dealership relationship has evolved, however, and "most scars have healed," Goebel said. In four states, credit unions are the largest auto lenders. One reason for CUs' new popularity-they offer lower interest rates, which he said is a win-win situation because the buyers get lower payments, which leads to paying off their loans more quickly, which get them back in the buying cycle.
There are many areas that still could be improved, Goebel continued. Most importantly, he said dealers would like to see the approval and funding process sped up.
"The relationship between dealers and credit unions has never been better, but it still falls short of banks and captives," he said. "The time line for credit unions is behind that of banks and captives, and in a competitive environment, dealers have to rely on speed."
Goebel said CUs' advantages in winning loan referrals from dealers are: lower rates, shorter terms, perception of buying deeper, and the fact they usually are local, which makes it easier for dealers to sell to their customers.
Obstacles to overcome include: a lack of awareness by dealers, inconvenient locations in the opinion of the dealers' finance departments, lengthy approval times, cumbersome contract funding, and a perception of limiting income for the dealership.
"Perception is reality, and scars remain from past experiences," Goebel said. "If the finance manager thinks working with a credit union will cost him money, a credit union will become his second, third or even fourth choice. Credit unions want to be the first choice."
Another hill to climb: most CUs do not have the manpower to canvass the market for relationships, while captives and large banks have the marketing budget to stay front of mind.
"It is more than just having a good rate; credit unions must build those relationships. There is unparalleled growth potential in the auto market."
