CU auto lending: Wake up, it’s not “your daddy’s Oldsmobile” anymore!

After a storied 107 year history, including a whimsical song, “In My Merry Oldsmobile” where Johnny Steele courted his girl, Lucille, in his new Oldsmobile, the brand fell to the ash heap in 2004.  For Oldsmobile, they lost their MoJo as technology, consumer preferences and the auto industry were passing them by.

And more recently, companies like Blockbuster, Circuit City and Sears lost their MoJo and slipped into oblivion based, in large part, on lack of strategic thinking, foresight, technology and once again, consumer habits and preferences.  As an aside, in 1999 Blockbuster turned down the opportunity to buy Netflix for about $50 million, .00023 of Netflix’s current market value of $220 billion, and we all know the rest of that story.  Hindsight is 20/20 but strategic thinking is luminous, shining the light on what can, might or will be.

So why do I bring this up?

It’s all about the “thinking”, pondering the what ifs, developing strategy, executing and taking action, sometimes boldly, that these companies lacked. Unfortunately, lack of strategic thinking, especially as it relates to technology, will put more CU’s in the merger column or out of business than anything else.

So how does this relate to auto lending?

If you thought auto dealers and internet marketers were out-maneuvering you in the auto vertical prior to COVID-19, you were right!

And if you think COVID-19 is a wakeup call for the use of technology and digital in car buying and finance, you are right … Dealers had no choice but to further embrace digital!

71% of consumers NOW say they want to complete some, if not all, of their auto buying/financing online … and THIS IS A BIG DEAL!  Blockbuster and Sears shareholders, did you hear that?

So what are you doing differently in your auto lending TODAY to adapt to the “newest” digital paradigm shift in auto lending?  HINT:  Car buying doesn’t start at the LOAN, it starts with online research, hopefully on your CU website’s Digital Car Buying Portal!

Here’s some facts to consider as you plan your auto lending future.  Unfortunately all these lead to reduced CU auto lending volume, unless you act to mitigate … online and digital is the future.

  • NADA projects new vehicle sales in 2020 will be down 20-25%, compared with 2019 sales
  • Three of the largest online vehicle sellers have invested billions of dollars in online research, selling and financing digital technologies and every brick and mortar dealer is following suit:
    • Carvana has invested $2 billion in their digital solutions and their market value now equals the #2 auto manufacturer’s (Ford) market value
    • Vroom has invested about $1 billion in their digital solutions
    • Carmax has invested over $300 million in their digital platform
    • Thousands of new car dealers are investing heavily in advanced digital solutions

AND contactless curbside as well as home vehicle delivery are now commonplace.  In this environment there’s less room for CU auto loan engagement so it is a “must” to engage members when they first begin the vehicle research process.

Your members are spending 10-12 hours online researching and shopping before they buy a vehicle and if it’s not on your website’s Digital Car Buying Portal, out of view of the internet “cookies”, they’ll be bombarded with EZ finance and auto loan offers from internet marketers and BIG banks with their sophisticated digital solutions.

Even if you do indirect auto lending, don’t turn a blind eye to the use of technology. Dealers and internet marketers are all using the newest digital solutions including data mining, cookies, SEO, AI, chatbots and more and if you don’t “get in the game”, you will lose whatever mojo you thought you had. You now can integrate direct and indirect auto in your auto lending solution, maximizing both channels’ performance.

So the question to ask your Team is: Is your auto lending trending toward the Oldsmobile, Blockbuster and Sears model where your view is through the rear view mirror, or are you on the Amazon, Apple, Google path embracing technology, thinking strategically and charting your course? You must question your auto lending strategy and approach in your planning sessions as Digital Car Buying is here to stay. Are you one that makes things happen, watches things happen or wonders what happened?

As busy financial institution professionals, it’s understandable that most wouldn’t stay abreast of the auto industry and how technology is rapidly changing the car buying experience. Do yourself and your members a favor and seek help from solutions partners that understand the new auto lending paradigm and digital and marketing landscape. A CU is the only one in the auto vertical with members’ best interest at heart … people helping people!

Ed Bourgeois

Ed Bourgeois

Ed Bourgeois is a founder and CEO of Auto Link, a CU-Centric Technology and Marketing Solutions-provider that helps CU’s stay relevant, compete and win in the competitive auto vertical ... Web: Details