First Financial CU Creates In-House Auto Team to Increase Market Share
To combat this period of slow auto sales and loans, First Financial Credit Union came up with a way to increase its market share.
The credit union launched an in-house auto-buying service to persuade more members to finance their auto purchases with the credit union and to help match members with the best auto deal possible.
"Out of 100 auto loan applications, we were lucky if 15% to 20% of those members came back to finance with us," President/CEO Carlton Musmann said. "By having an in-house team we've increased that ratio to 80% to 90%. Even though sales have come down we're getting more market share."
For years, the credit union would pre-approve members for auto loans and then lose them at the dealership, where the member would get swayed to finance with the dealer, Musmann said. The member would not necessarily get the best deal possible and the dealership would make a lot of money off the member, he added.
In the first month of the auto-buying service, the credit union delivered more than 30 vehicles to members, saving them an average of $1,700 to $2,000. The credit union does not mark up the price of the vehicle and there are no broker-dealer incentives, so the discounted pricing on the purchase of the vehicle is passed on to the member.
After the credit union pre-approves a member for a loan, he or she is referred to the auto-buying group. The group then works to find the best deal on the member's desired car and will even deliver the vehicle to the credit union or the member's house.
In choosing the leader of the auto-buying group, Musmann called on a former owner of a dealership to level his experience and expertise. Musmann said the credit union is proud to offer members a secure way to buy a new car.
"With many consumers concerned about being tricked or deceived at a dealership with their purchase and financing, we're happy to help many of them save thousands of dollars on both. Our members know they can trust their credit union with this major purchase."
Despite slow auto sales, Musmann said now is the perfect time for the credit union to launch this service.
"In a few years when auto sales do come back we'll be in a good position."
For the first month, Musmann said approximately 20% of the credit union's auto loan volume has come from the auto-buying service, and July has been the credit union's best month in auto loans in the past year.
Two weeks ago the credit union held its first auto sale event with the new auto-buying service. The two-day new and pre-owned sale resulted in nearly 50 cars sold and $500,000 in auto loans funded.
The event was for members only and included a no-hassle price on each of the vehicles.