FT. LAUDERDALE, Fla.–One auto dealer is making no bones that she believes credit unions should not be selling ancillary products such as gap insurance and extended warranties.
As part of a panel discussion during the CUNA Lending Council meeting here, Mary Byrne, general manager with Bruce Titus Auto Group in Olympia, Wash., was asked for her position on the sales of such products, which are offered by numerous credit unions.
“This is a really bad one to discuss,” acknowledged Byrne. “I truly believe that is our customer. I believe I’m in the business of selling cars and you are in the business of lending money. I don’t think there is any confusion. I think we’re in the business of selling extended warranties—you are in the business of lending money.”
In a statement that will resonate with many credit unions, Byrne said dealerships’ margins have shrunk to “almost nothing,” adding that it’s a good month if the dealer can make 2% on gross sales.
“I had a deal about a year ago with a customer we sent to a local credit union through the CUDL system, and they were approved, and they bought an extended warranty and gap through us,” said Byrne. “Their credit union told them how much cheaper they could get that through the credit union. What did that make us? The untruthful, bad car guy. We had taken a loss on the front end of that deal in order to make our money on the back end. When that customer came in and cancelled everything, that made them almost a $4,000 losing car deal for me.”
In that case, Byrne said she contacted the credit union and it ended up cutting a check for the dealer to compensate for the loss.
“We’re in a partnership; is that how you treat someone, to throw them under the bus?” asked Byrne. “How much money can you really make on those kinds of sales compared to the overall relationship? You’re spiffing that person at the branch $25 for that warranty sale? Was that 25 bucks worth a $25 million portfolio at the end of the day?”