LANSING, Mich. — In a show of both moral and financial support for beleaguered automakers, the Michigan Credit Union League teamed up with CUNA, other Midwest leagues and General Motors Corp. last week to roll out a $10 billion package of discounts and lower-rate loans to purchasers of GM brands.
In detailing what was described as a "dramatic" announcement with nationwide impact, the Michigan league forecast 1,200 CUs in Michigan, Ohio, Illinois and Indiana would partner with GM in the Invest in America program to offer members lower rates on loans coupled with price discounts on new cars.
Under the pilot , which lasts through June 30, the Midwest CUs, operating in step with state leagues and CUNA, could cut loan rates by as much as one percentage point as part of the program to aid GM. CU rates, which now average 5.4% are already are well below the average bank rate of 6.9%.
In addition, eligible borrowers working under GM's Supplier for Friends discounts can receive a $250 cash bonus between now and Jan. 5 on GM vehicles.
Michigan league officials said they have been talking to the two other big car manufacturers, Ford and Chrysler, about signing on for similar programs involving Midwest CUs ready to lend up to $20 billion.
Eventually, the program, which has been in the works for four months, could be expanded nationally, they proposed.
In a conference call with reporters, David Adams, president/CEO of the Michigan league, stressed the importance of CUs having money to lend in a time of crisis. Many of the participating CUs, he said, also have single automotive sponsors or large numbers of employees in supplier plants and thus have a major stake in the fortunes of GM and the other auto firms.
These CUs, he said, are eager and willing to do their part to assist members with auto financing as they assist dealers and help bolster sagging economies in local communities.
Adams said individual CUs are under no obligation to lower rates, but CUs have the liquidity to offer them.
For its part, GM said the discounts on certain vehicle purchases could be as much as 5% to 10% for CU members who participate, and that is in addition to the $250 cash bonus.
Joining Adams in the media conference call was Mark LaNeve, GM vice president for North America sales, service and marketing, who lauded the league and CUs for their role "in doing such a great thing" at a time of crisis.
LaNeve recalled his family's fond ties with CUs "since my Dad in the steel mill relied on the credit union" for loans at a critical moment, and now GM is grateful for the industry's support through Invest in America.
In a separate statement from CUNA, President/CEO Dan Mica said, "In this period of severe economic stress, we are pleased credit unions can be part of a program that utilizes one of their primary services-auto loans-to make auto purchases more affordable for millions of consumers and, in the process, help energize our nation's economy."
The CU consortium includes four state trade associations and CUNA. The discount is available to credit union members in the four-state region "no matter where they choose to finance their vehicle purchase," said MCUL.
There are approximately 11 million CU members in the four states, and currently about 130,000 auto loans are outstanding in the region, a number certain to increase as a result of Invest in America, forecast Adams.
CUcorp, a wholly owned subsidiary of MCUL, will coordinate the program with GM as talks proceed with Chrysler and Ford.
–jrubenstein@cutimes.com

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Midwest CUs Lend a Helping Hand to General Motors With Lower Rates

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