LANSING, Mich. — Michigan credit unions, doing business in one of the toughest economies in the U.S., showed a surprising 8.5% increase in new auto loans in the second quarter compared with the first three months of the year.
That equates to $2.2 billion in second-quarter auto loans, and represents a record 32% increase in new vehicle loans compared with the same period in 2008, according to David Adams, president of the Michigan Credit Union League. The record-breaking growth, Adams said, indicates that credit unions and their members are working together to support the struggling auto industry. He also pointed out that the growth is being helped along by Invest in America, the credit union auto-buying discount program.
"We would like to think that Invest in America has contributed to a great deal of that growth," said Adams, also citing the impact of the cooperative advertising campaign run by league subsidiary CUcorp to support Invest in America. "It's the largest voluntary credit union cooperative advertising campaign [$1.6 million] in the nation. For the first time we have changed our message, which has always been about trust and the advantages of credit unions, to focus on Invest in America."
According to statistics kept by the league, the close of 2008 and the results so far this year represent the first time credit unions in Michigan have shown significant growth in new auto loans since June 2006.
Other difference-makers, Adams surmised, are 200 of Michigan's largest credit unions jumping in quickly to promote Invest in America, the boost the auto-discount program has given to CU indirect lending relationships, and the pullback by the captive financing companies.
"The mix of new car loans as a percentage of total loans in Michigan credit unions has typically run about half of what you see from credit unions nationally - about 8% compared to 16%," Adams said. "Over the years, Michigan credit unions have had a much tougher time competing for new car loan business because of the prevalence of manufacturer financing." With the captives on the sidelines for now, Adams suggested that Michigan credit unions have had greater room for auto loan growth.
Adams said the spirit to support the carmakers is not limited to credit unions such as Central Macomb Community (see related story). "Credit unions across Michigan realize Invest in America isn't just about deals on new cars. It's about how the credit union is perceived by their field of membership, many of whom are tied to the automobile industry. I've heard from many credit unions who say their members have told them, 'I appreciate what the credit union is doing, because it impacts my job, my neighbor's job, and the Michigan economy.'"