LAS VEGAS — Local car dealerships here have caught on to Members Auto Brokerage and some may not appreciate how it might be cutting into their profit margins.
The CUSO, a wholly-owned subsidiary of $560 million Clark County Credit Union, is a vehicle brokerage company that locates new and used vehicles for members. It offers one-stop shopping for the vehicle, including extended warranties and financing. MAB averages about 60 cars sold each month and brings in roughly $200,000 in net income each year, said Wayne Tew, CCCU president/CEO. In 2006, MAB added six new employees to keep up with the demand and this year, the CUSO has planned an ambitious goal of selling 200 cars a month.
CCCU is the only credit union in Nevada with a broker's license, Tew said. Surprisingly, it doesn't work with local car dealerships, choosing instead to get most of its cars from Phoenix. The out-of-state alliances have worked well given the antagonistic relationships that some Las Vegas car dealerships have with CCCU. As a result, the 11-year old CUSO has become a competitive thorn in the side of some of the city's car dealerships, Tew said.
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"Sometimes, they bad mouth us," he pointed out. "Most of the dealers [here] are not willing to compete on the price," Tew said adding that "historically, there's been an adversarial relationship" between credit unions and dealers. MAB literally becomes the middleman for the member. The process starts with a member contacting the credit union with the type of car being sought and the price range. The CUSO will find the vehicle, negotiate the best possible price on exactly the make, model, color and other options and bring the car to the credit union for the member to pick up. A .25% rate discount is given for using MAB with additional savings on guaranteed auto protection, extended warranty, credit life and disability insurance included in the monthly payment. The entire process can take up to three days. Tew said MAB can save members between $1,000 and $4,000, depending on the car. Despite its successes, 2006 was a year of adjustment as MAB altered its course to allow for expansion, Tew said, adding he's confident the additional six employees deployed to CCCU's branches and higher goals will pay off in 2007.
"We get most of our sales through our sales office but a lot of business is word of mouth. We're considering local newspaper ads this year," Tew said.
Meanwhile, the credit union recently ended its relationship with CU Direct Corp.'s Credit Union Direct Lending, or CUDL program, launched in 1994 by the California Credit Union League and The Golden 1 Credit Union. Tew said he felt CUDL was more targeted toward community-chartered credit unions and being a partner "wasn't a fair advantage." MAB is currently working with nearly a dozen credit unions and Tew is looking to build more alliances. Since MAB's launch, roughly 500 members have used the auto buying services. The CUSO will try to get a used car dealer license this year so that it can take in car trades and own them, Tew said. Nevada law prohibits credit unions from titling new cars, he pointed out.
Tew said offering MAB to members grew from his own car shopping experience coupled with the acrimonious relationship between credit unions and auto dealers.
"It was really strong when I came to Las Vegas 20 years ago," Tew recalled on the competition. "I worked with a brokerage dealer and I haven't been to a dealer in 18 years. People are recognizing that they just don't have the time or want the hassle of having to go into a dealership."
Tew said soon after, he recognized that there needed to be a mechanism so that members could finance with CCCU rather than deal with going to the dealer. But there's still that member who likes the hands-on approach to finding that special car.
"One of the struggles we've had is with those members who like to come in and kick the tires before buying the car," Tew said. "We understand that. We're helping those members who want the convenience and just don't have the time." –[email protected]
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