Stop relying on rates and rates alone to drive auto loan growth. It’s a big world out there so make the message clear for members: The fast track to driving a vehicle is through you. Sound simple enough? It can be. However, as much as members love and want to do business with you, the competition and barrage of messaging from banks to auto dealers is hard to ignore. Cutting through the communications clutter to do battle for your member’s business, is a contest you must be ready to win.
Auto loan debt has reached beyond the $1 trillion mark for the first time in U.S. history, as reported by The Wall Street Journal. Auto lending and credit-card lending used to jockey for their positions in the second- and third place for U.S. household debt, after mortgages. This all changed in 2011 when auto loans outpaced credit cards. While auto loans grew, credit cards have remained at the same level they were four years ago. Credit unions positioned correctly will do well when capturing a large piece of this explosive growth. It does take a well thought out plan.
First, look at strategy. How is your credit union poised to reach members interested in an auto loan, before they know they need one? If your credit union is going the old school route of advertising rate without substance, your message could be dead on arrival. For the most part, everyone needs an auto at some point, and there is a constant flow of members who are in the market to purchase a vehicle. Stopping short of relying on a crystal ball to predict when a member enters the market to purchase a vehicle, there are behavior indicators your credit union can get in front of that help make this an easier task.
Make the commitment to members your credit union is a resource for all things automotive. The average consumer will take approximately four months-time before making their purchase. During that time, they will spend on average 14 hours researching and comparing vehicles. Providing information related to auto-buying and leasing is appealing to the member and provides a reason to investigate your auto offerings in greater detail. They may, or may not, want or need a vehicle at this point, but if you’re planting the seed now, it will pay off later. It is well documented millennials, one of the largest potential buying powers to hit the planet, do everything online. Embrace this statistic and bring more of what this group needs online.
Showcasing rates along with an auto buying resource demonstrates the credit union is serious about getting members into cars that will work for them financially. Knowledge is power, and based on the latest statistics for tapping into the millennials’ automotive cravings, having an online buying resource is fundamental to serving them. Millennials are looking to jump into an auto either through a lease or a loan. MTV did a study that found 33% of millennials in 2015 were looking to do just that, this year.
Recent data reports that auto loans have grown to a level not seen since 2005, while mortgage refinancing has slowed significantly, as have mortgage originations. Credit unions have seen their auto loan portfolios improve, climbing steadily during the past four years. In May, consumers purchased vehicles at an annual pace of 17.6 million, the highest it has been in a decade. Also, leasing is meeting the needs of putting drivers in cars they couldn’t otherwise afford. Leasing accounts for over a quarter of all new car purchases nationwide and in some regions of the U.S. it is over 50%.
There is a great deal of emphasis on the millennials, but don’t ignore the tech savvy buying power of the Boomer generation who still make up 50% of retail sales, according to Business Insider Magazine. There are a lot of similarities between the groups and understanding this will give you the edge in capturing both, at the same time. For example, both are comfortable with browsing, researching and shopping online. While Boomers also rely on technology up to a certain point, they still enjoy human interaction; they are less likely to follow the online shopping experience to the end. Millennials, on the other hand will go the distance and close the deal via their fingertips.
Cater to both the online and in-branch experience, as these equally attractive demographics possess key indicators to increase auto loan growth. More importantly, make sure the message you are delivering is relevant to what they are looking for. If they are shopping for a car, provide them with what they need to find the right car for the right price while saving them time. Your first priority is to engage them with what they want/need while continuing to build trust with your members. Once you have their attention and are capturing these leads, then you can successfully cross-sell your products and services. If you stay committed to this approach, the results will follow.