Leasing programs look to get a boost in 2018…time to review strategies!

Now is the time to review strategies for growth. What worked, and what didn’t, as we approach 2018. What will serve members with what they want?  How does all of this benefit the member and the credit union? What’s the big picture?

There is solid news being conveyed for auto sales in 2017, as sales will remain near 2016’s record, as reported in USA Today. Popular vehicles delivered profits in the sport-utility, crossovers and pickup truck categories, this year. While opportunities in new vehicle sales is looking to remain the same as 2016, there are other predictions on the horizon. There’s some very good news for credit unions looking to increase auto loan portfolios in 2018, through leasing. While mixed reports have the new car sales market with little to flat growth, the desire to lease continues in popularity as aggressive incentives can be readily found.

Growth Strategy

How did your portfolio perform this year? Depending on the financing made available to members, the answer to this question could be varied. This was a year of peaks and valleys with respect to numbers being reported. According to Autodata, U.S. auto sales increased by 1% in November from a year earlier, yet overall the first 11 months of the year found industry sales for new cars down 1.5%. Let’s also keep in mind the cost of a new vehicle reached an all-time high of $35,870 according to Kelly Blue Book. There is a great deal of pressure to obtain financing that will fit a member’s budget while vehicle prices continue to soar.

Enter leasing. As the cost of a new vehicle continues to head skywards, members will look towards leasing to keep their average monthly payment at or below $410. The average monthly payment to finance a new car is $509, while leasing is at $410, according to Experian Automotive. The contrast between them can make a big difference during the decision-making phase, and swing members towards leasing. Credit unions need to be full-service lenders at the point of sale, at the dealership. This means offering diverse finance options to members, including leasing.

Give Members What They Want

It really is easy to give members what they want. The difficult part is sometimes knowing what the ‘wants’ are. When it comes to auto buying, don’t go it alone. Partner with a third party that specializes in providing the resources to make the connection with members looking purchase or lease a vehicle. Third parties don’t all offer the same programs so it’s best to do some homework to see what the features, benefits and risks are associated with each.

Vehicle leasing represents over 30% of new car sales nationwide, in more urban areas of the U.S. that number climbs to over 70%. Credit unions should include leasing to provide all the financial options to satisfy the member, if not, a credit union’s traditional financing program will be competing in a very crowded field. The point is, strive to be competitive 100% of the time.

Your auto buying members are very focused on obtaining a vehicle, each generation has the desire to get into a vehicle that is both safe and loaded with the latest technology. According to TransUnion, consumers from the age of 21 through 34 are taking out loans and leases at a rate of 21 percent higher than the generation that proceeded them, the Gen Xer. People still need cars, providing options will get them into one. Credit union online shopping tools will suit your members’ desire to research and shop, while keeping your message relevant along the vehicle buying journey. Not only is your credit union providing a service, it is providing a tool to obtain something a member wants, in a format they’re comfortable with.

The Big Picture

There are some very exciting opportunities for credit unions in 2018. The road to becoming a full-time service lender should be on a credit union’s radar by offering a leasing program to members. Here’s why. There will be more opportunity as manufacturers will not be supporting many of the popular vehicles consumers enjoy. The doors on vehicle leasing for credit unions have swung open for 2018. Leasing partners will be offering inventory on vehicles that were once out of reach. Competing at a higher level with a diversified inventory will put credit unions where they want to be, in the driver’s seat in 2018.