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So, four auto dealers walk into a room and sit down with a bunch of credit unions. And (insert punch line here):

* Credit unions left with a 12.9% rate and an 84-month term on the chairs they were sitting in.

* The conversation kept being interrupted as the dealers repeatedly got up to go talk to their sales managers to see if they could "work the numbers a little bit."

* The credit union execs soon found themselves "captive."

* Report cards were issued afterward, and credit unions got all the Cs and the Ds.

And yet none of that happened. Instead, for more than an hour there was a frank, friendly and at times even pro-credit union (they were all auto salesmen after all) discussion that centered on what credit unions can do to capture more indirect loans, and why they often don't.

The give-and-take did not take place across a battered metal desk; instead it happened as part of the Credit Union Direct Lending-East Coast Conference at a Renaissance Hotel close enough to Reagan National airport to have flight attendants tell you to sit down and be seated in your room. The auto dealers reps hailed from North Carolina, Indiana, Maryland and Illinois, respectively-and sold different brands-but their views on many of the issues and questions posed by credit unions were pretty similar.

What It All Comes Down To
As the story "Dealers, CUs Talk Shop," details, talk ranged from floor plans to buy rates to "relationships" to warranties. But in the end, it really came down to these words from one dealer: "It's all about the almighty dollar to every person in the room," the dealer said. "As a finance manager, you're going to work according to your pay plan. You are going to go with where you can make the most money, but also where you can get that deal bought."

It's the last part of that sentence that should be of the most interest to credit unions looking to work with auto dealers. In different ways each of the four dealers made it clear that rule No. 1 in the auto sales business isn't that "the customer is always right," but rather: "The customer should never leave the showroom." At least not until they have been approved for financing and are walking out with keys in hand to that brand new automobile.

Each of the auto dealers individually made reference to the "loyalty" members feel toward their credit unions, and of the willingness of CUs to work with members who fall into that gray area of loan-application approval as reasons price doesn't trump everything. But the quartet had a few quarrels with credit unions, specifically with that much touted "service" credit unions are always talking about. Perhaps the service really is swell for members, but the talk doesn't always seem to extend to auto dealers, the four reps stated. Credit unions, they said, can be inconsistent in their policies and at times difficult to get a hold of.

When one credit union loan officer asked why it isn't "payback" time now for credit unions that kept making loans in recent years when other lenders pulled back, one dealer replied, "You are correct in saying credit unions stuck with us during hard times. That's when you build the relationships that should carry you through where you are now. And if it hasn't, the relationship wasn't as strong as you thought."

That same dealer noted that credit unions can't have it both ways, either; lecturing members that they are going to be ripped off at the auto dealer on one hand, and asking for that dealer's paper on the other.

Sabotaging Themselves
Some credit unions will almost sabotage deals by telling members they paid too much and didn't get a good deal. "That can mess up the relationship with the dealer," said the dealer from Indiana.

You will find a lot more dealer observations and insights in the story that's in this issue. And you won't have to buy an extended warranty when you finish it (unless it's from a credit union).

Frank J. Diekmann can be reached at

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