With gas prices continuing to climb, members who got caught in the big truck mania years ago are probably regretting their purchases as they shell out hundreds of dollars for fuel each week.
The $465 million Greater Nevada Credit Union had that segment of the population in mind when it launched a marketing campaign that increased its direct auto loan volume by 30% over four months,
The effort was such a success that the Carson City, Nev.-based cooperative took home two Gold ADDY awards at an American Advertising Federation ceremony in Reno.
Dubbed the "Wrong Size Car" campaign, Greater Nevada CU tapped Reno-based firm Ding Communications to create a multimedia advertising venture that included two 15-second television commercials and a new, loan-specific website landing page.
Like many credit unions, Greater Nevada CU grappled with financial concerns brought on by the downturn, said Ronald Willard, vice president of marketing. A boost in its auto lending operations clearly has helped the bottom line. From September 2009 to February 2010, direct vehicle loans totaled $3 million, according to Marcus Wertz, consumer lending manager. That figure increased to $5 million in new loans between September 2010 and February 2011. In all, the CU has $24 million in direct used vehicle loans.
"We would not have been successful had it not been for the leadership of our executive team," Willard said. "They supported a fresh approach to what we had been doing in the past. All of the changes–they took a lot of moxie."
Willard said another reason why the campaign propelled vehicle lending was the October implementation of a new, centralized lending process. The credit union moved away from branch representatives trying to juggle multiple checking, savings and vehicle sales to loans captured at a website or via a phone call. Members receive a shorter application, which speeds the process and enables Wertz and his team to quickly follow up on every request, ultimately resulting in more booked loans.
"We’re still streamlining our processes, but we’re seeing a 65% increase in the same months over previous years," Wertz said. "Members feel confident that they are getting a great deal and are being treated fairly. The sky’s the limit."
Credit unions are in a four-year vehicle lending slump. Used vehicle increased 4.1% in 2010, a $4.1 billion gain, according to CUNA Mutual Group's February "Credit Union Trends Report." Meanwhile, the new vehicle loan portfolio declined $1.1 billion in December, with the total 2010 reduction coming in at $12.6 billion or 16.4%.
Greater Nevada CU is one of many in the industry keeping its focus on used car lending. Willard said competing with new dealer pricing is challenging given the incentives offered to car shoppers. The campaign revealed that there is an eight-to-one ratio of used to new cars.
"Really, it’s our bread and butter–the used cars," Willard said.
The turbulence occurring in and outside of the credit union .industry was a factor in Greater Nevada’s decision to focus on direct lending versus indirect lending. “We determined that indirect lending was not the best strategy for us during this period,” Willard said.
