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WESTLAKE VILLAGE, Calif. – Credit unions are making inroads on their relationships with auto dealers, but they need to spend more time cultivating those ties. That’s the word from Jim Lohmann, senior research manager/auto finance at J.D. Power and Associates. The marketing information firm recently released its 2002 Dealer Financing Satisfaction Study. The survey probed how happy dealer principals are with their finance providers, including the auto manufacturers’ own finance companies, banks, credit unions and independents. Forty-four percent of all dealers in the United States responded. Overall, 73% of the dealers indicated they were satisfied with their finance providers, tying a previous record high set in 1995. Credit unions earned a 78% approval. That compares to 71% in 2000, which rose to 76% 2001. “So credit unions are now rated the second best segment, second only to the captive finance companies,” Lohmann says. “Credit unions took the lead in overall satisfaction in our study from 1995, the first year we started recording dealer satisfaction with credit unions, all the way through 1999. “Then we saw a precipitous drop in overall satisfaction with credit unions. It went from 86 percent in 1999 to 71 percent in 2000. In 2000 captives surpassed credit unions for the first time in being able to satisfy their dealer customers.” What appears to be the driving force behind these statistics? A couple things, Lohmann says. He notes the J.D. Power study examines several factors affecting dealer satisfaction. “Credit unions do very, very well in retail credit, meaning extending credit or loans to buyers. Dealer satisfaction with credit unions for retail loans is the highest of the four segments examined in the study,” Lohmann says. “That is really related to credit unions’ strong value proposition. Dealers see that the rates charged by credit unions are very competitive for both new and used vehicles. They (credit unions) do okay in leasing – not great.” Another factor behind those statistics is the wave of 0% financing offers from the automakers. While credit unions observe only buyers with absolutely unblemished credit qualify for such arrangements, there seems little question the idea of paying 0% for a loan has brought traffic into dealerships. That makes dealers and salespeople happy. At the same time, because not everybody qualifies, “There were opportunities for credit unions, banks and independents to pick up the remaining business. So I think it had a positive effect for credit unions,” Lohmann suggests. But he believes credit unions need to build their relationships with auto dealers. That may mean spending more face time with dealers, visiting dealerships more often. “Most credit union business is done at the local level. What credit unions need to do is make a bigger effort in terms of establishing relationships with dealers, assisting dealers with training, realizing the value of sales visits, and commitment to the success of the dealer’s business,” Lohmann says. “The area where credit unions need to focus most is the quality and value of sales visits to dealerships, things like keeping the dealer informed about his performance and the frequency of sales visits. Frequency is a funny animal. A representative of the credit union may be going to the dealership once a week. That may be too much. Credit unions need to figure out exactly what their dealers want on an individual basis and market to them that way, finding out what they can do to make the dealer’s job easier.” Credit unions simply aren’t set up to serve a dealer like a bank or a captive finance company, Lohmann notes. However, they do focus on serving members. A member preapproved for a loan is certainly welcome at a dealership. It means the dealer faces less work to transform a prospect into a buyer. Credit unions also help members do their homework by checking invoice prices, auto writers reviews and other information before they ever walk into the dealership. With all the resources available on the Internet, credit union members aren’t the only car shoppers tapping away at a computer keyboard. “They’re definitely becoming more savvy,” Lohmann agrees. “As with just about any industry, the Internet has made consumers far smarter shoppers than ever before. They know a lot better than they have in the past what the price of the vehicle should be and what options are available.” In fact, the past couple years the J.D. Power survey has asked about Internet sales, that is leads that dealers got through their own Web site. The results showed about an 18% gain in the percentage of sales that came from Internet leads. Last year 5.4% of all dealership sales came from Internet leads. This year the figure was 6.3%. The implication for credit unions: you have to reach your members who are in the market for a car as early as possible. [email protected]

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