Wednesday, September 21, 2011

That New Car Smell

By Margie Church

The fourth quarter always has that new car smell to it. Auto manufacturers ramp up their holiday advertising schedules for luxury cars and then set their sites on Super Bowl mania. Last January, a record number of auto manufacturers spent record amounts of advertising dollars on the "game of the year." They included social media for a brilliant cross-channel mix that reached buyers of all ages and affluence.

Manufacturers are demonstrating their confidence in bold strokes. American automakers and foreign-based firms in the U.S. are putting billions of dollars into building and refurbishing plants. Ninety-thousand auto manufacturing jobs have been added in the past two years. Dealers are making more money per sale this year than they have in years.*

The holidays and the Super Bowl are going to arrive. Auto manufacturers are cuing up their ad schedules and offering incentives to clear out 2011 models to make room for 2012 beauties. Some are offering 90 days no pay options that'll take buyers through the holidays' financial stresses. estimates incentives will rise 5% through year-end.

But low interest rates and manufacturer incentives aren't going to be the only hooks to get fence-sitters into your credit union.

Try a packaged offer using:
  1. Appended MCIF or DP information with other sources, such as NADA data, to target the offer.

    We always recommend using data to make offers personal, relevant and timely. Consider reaching out to a slightly younger buyer, aged 25 through 45. These people are in their prime earning years, and new vehicles are necessary for their growing family. They want good value. A pre-approved offer will have better impact when combined with a payment example, but pre-approved or pre-qualified offers don't hold the same appeal they did when the economy was stronger.

    People older than this group are more inclined to resist adding new debt. Their earning years are waning, and the economy makes them consider whether the new vehicle is a necessity or a luxury. Since they are more interested in reducing their debt, target them with refinancing offers first.
  2. A very competitive rate with flexible terms.

    The reality is that at any given time, a person could buy a car. They've been putting it off for any number of reasons, and today is that day. According to, average loan rates nationally are under 5% for new or used vehicles. Many credit unions are offering rates under 3%. A great rate for new, used, or refinanced from another lender, combined with excellent service will get their attention.
  3. Offer additional discounts for automatic payments or another time/money-saving service your credit union offers.
  4. Use branch-coding. The younger portion of this group may be buying a vehicle on their own for the first time. Reduce their anxiety by providing a name and contact information at the credit union. 
 What else can you do to bring loans in? 
   1.  Provide information they can use. Put it online. Remember this  generation is Web-savvy and uses mobile devices - smartphones and electronic tablets - with ease.
  • Online application
  • Electronic and mobile banking services
  • Highlight the benefits of pre-approval before shopping
  • Provide payment calculators
  • Describe the benefits of GAP insurance
  • If the credit union has a free car-buying service, promote that. These people are busy and if they can get a good deal in a stress-free way, that's appealing.
  • Explain and promote CUDL financing if you have it.
  • Provide information on refinancing benefits and savings.

2.       Offer a free car-buying seminar.

3.       Offer bi-weekly payments and show how much finance charges they could save.

4.       Offer 90-days no payment.

5.       Offer a prize or contest. Gas prices are still very high. If you decide to offer a gas gift card, it needs to be substantial and perhaps have only one winner. Consider a drawing for a payment holiday – the credit union makes the entire first payment.

We hope some of these ideas help you achieve your auto loan goals for Q4 and Q1.  

*Star Tribune, August 30, 2011.

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