Auto loans remained credit unions' financial sweet spot forgrowth in 2016. Over the past year, vehicle loan balances increasedby $37.6 billion (14.3%), beating mortgages as the leading sourceof growth. All indicators point to auto loan growth remainingstable and a perfect climate that will provide continuedopportunities for credit unions to succeed. To take advantage ofthese strong market conditions and build out auto loan portfolios,here are some tips to jump start the process.

Identify sources of auto loan growth. Yourcredit union can draw members' attention through many channels.From utilizing traditional traffic coming into the branches,digital traffic online, cross-marketing, preferred dealer networksand auto leasing, many fruitful resources exist to take advantageof. But often, we spend time promoting a message that reallydoesn't hit the mark. Don't assume you know what they need.Instead, look around at what you offer and position it better. Inaddition, make sure you are using all the marketing channels youhave at your disposal and do so effectively.

Know your member. Providing great rates may nottranslate with many members of your audience. Step back and look atthe message of “great rate.” Why should they do business with you?For instance, you can teach them how to get into a vehicle or takeout a mortgage. Walk them through the steps, educate them, providereal-life numbers and tell them how your credit union is different.Take for instance that 92% of millennials choose their financialinstitution based on its digital services. By promoting the rate,you may not reach this market, so it's important to give them whatthey want. The goal is to attract and serve.

Don't make assumptions. Boomers are very loyalto their financial relationships. Millennials and Gen Xers are lessso. For millennials, loyalty comes through the dependence on mobilebanking more than it does for other generations. Here's what allthe generations agree on when it comes to a financial partner:Honest communication, feeling the credit union has their bestinterests at heart, financial dealings that are reliable and aboveall accurate, knowledgeable credit union staff members and ademonstrated appreciation for members. Is your messaging checkingthe boxes off on this list?

Use preferred dealer networks. This is one ofthe best ways to increase loan volume. There's revenue to be foundin relationships with dealerships that return business to you.Consider these steps:

• Identify the dealerships sending business to you.

• Ask yourself: When was the last time you had conversations withdealers in your preferred dealer network? Did you let them knowabout the marketing your credit union is doing to send business tothem?

• Concentrate on dealers who will send business your way andreward them by promoting them on your auto resource.

• Remain consistent with communications.

Leverage leasing trends. In certain regions ofthe U.S., leasing accounts for upwards of 70% of auto loantransactions. Credit unions without a lease program in theseregions are fighting over the remaining 30% of business. Whileleasing is extremely popular and profitable, credit unions alsoneed to be aware of the potential risks. Here are someconsiderations:

• Does your credit union possess the ability to predict residualvalues on autos?

• If a third party is determining residual values, shouldn't italso own the residual risk?

• If your credit union owns the residual risk, how much are yougoing to reserve for losses?

Ultimately, leasing makes sense for capturing volume, but youneed to have a strong understanding of what happens when the leasematures. A clear picture of how growth is derived and areas thatcould drive more opportunity will have your credit union on thepath to riches.

Robert O'Hara is VP, Strategic Alliancesfor GrooveCar & CU Xpress Lease. He can be reachedat 631-454-7500 Ext. 124 or [email protected].