ONTARIO, Calif.—New data from CU Direct shows that Millennials have now become the largest car-buying segment among its client credit unions.
Millennials now represent 32% of all loans coming through the CU Direct platform, which goes a long way toward allaying any fears CUs may have had that Millennials may not be as enamored with owning their own cars as are their Boomer parents, turning more to ride sharing services, public transit and carpooling.
“Our credit unions continue to see strong auto loan growth, and the majority of it is coming from Millennials,” said Bill Meyer, public relations and corporate communications lead. “This year Millennials have become the largest segment of car buyers on our platform, passing Baby Boomers.”
The finding, Meyer emphasized, bodes well for the future of credit union auto lending, and he further noted that credit unions are doing better than other lender types in attracting the young car buyers. Among all car buyers nationwide, Millennials comprise 20% of the market.
“So you can see, credit unions are beating that handily,” said Meyer.
Passing Boomers Soon
Nationally, Millennials are the fastest-growing new-car-buying segment, and are expected to surpass Boomers within the next four years to become the largest car-buying group.
VP of Sales Marci Francisco acknowledged that two to three years ago most lenders would have been surprised to see the current pace of Millennial car buying, having concerns over Millennials being more frugal than their parents, with different needs.
“Millennials, too, had concerns coming out of the Great Recession,” said Francisco. “They saw what happened to their parents and what happened to themselves. That raised concerns for new car purchases from this demographic.”
Francisco said that it is no surprise that CU Direct data shows that Millennials are buying smaller cars that are loaded with technology.
“We see a lot of Millennials purchasing cars like the Honda Civic and the Chevy Cruz—reasonably priced cars with tremendous technology,” said Francisco.
To serve Millennials, Francisco emphasized that credit unions must provide interactive car-shopping sites that are optimized for mobile, and focus on providing fast answers to car-buying and auto loan questions.
That means analytics on the back side to understand what Millennials are shopping for in cars and loans and creating web content around what they learn, she said.
“Millennials expect to get their information a certain way—much of it on their smartphone—and they want it instantaneously, on demand and on the go,” Francisco said. “They also expect to have a great relationship with a brand—and one that provides value.”
Francisco stressed that credit unions are well positioned to appeal to Millennials’ desire to associate with a trusted brand, but emphasized that the credit union must clearly convey what that brand is.
“The credit union philosophy is great, but what makes your credit union different? What does it stand for? How are you unique?” said Francisco. “Make it clear to Millennials what you are about. They like that.”
Meyer emphasized that speed in providing loan decisions and funding can be as important to Millennials—as it is to most car buyers—as a well-performing car-buying service. “Provide the content. But you also have to be strong on the back end.”