News & Events
By Mark Chandler, Vice President, Business Development
As we all ponder the challenges of our current environment, it is important to remember that this is not a “forever” scenario. Yes, the impact on our economy will be significant and we are already seeing a negative impact on the auto industry. That’s undeniable. Consumers are frozen in place as they physically distance and wait to see what happens next. Many auto dealerships are either closing temporarily or working with skeleton crews. But, as someone who has been in the industry for decades, I know auto dealers to be smart and shrewd survivors with businesses that are particularly resilient.
Already we are seeing news of auto dealerships that are finding ways to sell cars under lockdown. In New Jersey, for example, the governor has issued a directive allowing dealerships to sell vehicles remotely and online, allowing them to deliver the vehicles to the customer’s door or have buyers pick up vehicles at the dealership.¹ While the industry buzz about migration to new digital retailing platforms is deafening, we are seeing resourceful auto dealerships using what they already have: selling by appointment, using online credit apps, going over contracts via video conferencing, showing vehicles by YouTube, and delivering vehicles door-to-door.
But to whom are they selling cars with everyone frozen in place? For one, essential workers still need to get to their jobs. For people sheltering at home, many are spending their days online – so what better time to browse for that next vehicle? Of course, many consumer wallets are shrinking for now and growing uncertainty about the next paycheck is diminishing confidence, but that will not last forever. In addition, 1.8 million vehicles will be coming off-lease in 2020, and most of those consumers will want the security of a new vehicle. I am willing to bet a good percentage of them will start looking for their next vehicle lease during this new physically distanced reality.
Then, when we are out of this crisis, pent-up demand will surge into the vehicle market. But things will have changed: a cultural and economic shift will have manifested. Consumers will not only be in the habit of wanting to spend less time interacting in person during a transaction, they will probably be feeling more hesitant about committing to a lengthy auto loan or enduring high payments. New vehicle affordability was already an issue prior to the crisis and attitudes about ownership were changing with the influence of the usage-based economy. Post COVID-19, wary consumers will be looking for lower payments, with greater flexibility and shorter commitments. Auto leasing offers exactly that. And, with community support being more important than ever, I am guessing consumers will increasingly look to their trusted credit unions for help making smart financial decisions.
We are only a few weeks into this crisis and no one knows what comes next, but one thing we know is that nothing lasts forever. At CULA, our number one concern is the health of our employees, customers, and community, and we have adapted our business to work remotely and securely in this new reality. We know there is a light at the end of the tunnel and we have great faith in the grit and stamina of our industry.
When the crisis is over, it will be a new lease on life for everyone.
Mark Chandler is Vice President, Business Development, for CULA. Mark is passionate about making sure his clients have successful outcomes. A longtime automobile finance expert, he has over thirty years of experience serving credit unions and their members by assisting them with their car-buying needs. Before joining the CULA team, Mark was most recently an executive coach and consultant in finance technology. Before that, he spent nearly 20 years at Autoland, then the nation’s largest credit union car buying service, where he concluded his tenure in the role of company president.
¹ Arco, Matt. “N.J. car dealers, real estate agents, breweries get coronavirus clarification. But forget golfing, Murphy says.” NJ.com. https://www.nj.com/coronavirus/2020/03/nj-car-dealers-real-estate-agents-breweries-get-coronavirus-clarification-but-forget-golfing-murphy-says.html. Accessed 7 April 2020.