florida pilot program
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Florida Pilot Program. Ford Purchase Pilot & Ford/GM Leasing Pilot. Agenda. Invest In America (IIA) Overview Mission/Vision Program Overview Results Florida Pilot Program IIA Lease Program Program Overview Lease Process Roles and Responsibilities Benefits Partner Opportunities - PowerPoint PPT PresentationTRANSCRIPT
Florida Pilot Program
Ford Purchase Pilot
&
Ford/GM Leasing Pilot
Agenda
• Invest In America (IIA) Overview– Mission/Vision
– Program Overview
– Results
• Florida Pilot Program• IIA Lease Program
– Program Overview
– Lease Process
– Roles and Responsibilities
– Benefits
• Partner Opportunities– Credit Union Leasing of America (CULA)
– GrooveCar
• Q & A
• To develop and promote exclusive credit union member discounts on products and services offered by American owned corporations to provide a stimulus for stronger financial results for the U.S. economy, increase credit union membership and member satisfaction– Develop an extensive program with domestic automakers that
generates incremental vehicle purchases and credit union loans– Identify and expand member rewards by partnering with larger
Fortune 1000 companies
Mission
IIA Vision
Invest in America is our brand for credit union membership enhancements in order to drive
growth and retention
IIA Scorecard
Objective Metric Program to Date
40 League Participation 45
1000 # Supporting Credit Unions 1,648
80% % CU membership Opt-Ins 42.5%
400 # of Top 500 CU Opt-Ins 217
75,000 New CU Members TBD
300,000 # CU Loans 81,648
360,000 # Vehicle Sales 102,061
25 League Participation 21
600 # Supporting Credit Unions 406
As of 5/15/09
Aut
omot
ive
Spr
int
Chrysler
• Contract extension anticipated through year end• May 6 – June 1, 2009 Up to $1,000 discount on top of
the members best deal on the following 2009 models:$500 Incentives
•Dodge Journey
•Dodge Grand Caravan•Dodge Ram (1500/2500/3500/4500/5500)
•Dodge Dakota
•Chrysler Town and Country
•Jeep Grand Cherokee (inc. SRT8)
•Jeep Commander
$1,000 Incentives
•Dodge Nitro
•Dodge Charger (inc. SRT8)
•Chrysler 300 & 300C (inc. SRT8)
•Chrysler Sebring Convertible
•Jeep Liberty
• Supplier pricing continues through year end
• GM Total Confidence extended through May 31, 2009
• GM Private Offer ($500 discount)– April 1 – May 31– Credit Unions were required to enroll
GM
GM Lease Pilot
• 90 Day Pilot Program
• Leasing Pilot in NY, NJ, FL and MI markets July 1 through September 30, 2009
• Pilot will start with select 2009 models from the four core brands and expand as 2010 models are launched
2009 Models 2010 Models
Malibu Equinox
Traverse Terrain
Acadia LaCrosse
Enclave SRX
CTS
Ford
• 90 Day Pilot Program
• Purchase pilot program in Florida providing members with $500 discount on top of member’s best deal on the purchase of new Ford, Lincoln or Mercury vehicles
• Leasing pilot program in
FL, NY, NJ and MI
market areas
Sprint
• Member Discounts– 10% off most regularly priced service plans– Waived activation fee on new accounts– Waived upgrade fees
• Business Discounts– 15% discount on most corporate recurring charges– Waived activation (new accounts) and upgrade fees– Equipment discounts– 20% off accessories
Florida Pilot Program
• Credit Union Member Purchase Offer– $500 discount on Ford, Lincoln or Mercury vehicles on top of the
member’s best deal.– Credit Unions must enroll and agree to the following in order to
offer this incentive:• Offer an interest rate 50 bps lower than the standard rate their member qualifies for on
a 60 month loan.
• Market the offer and IIA through website and lobby posters.
• Credit Union Member Lease Offer– An attractive lease payment on a 39 month lease on Ford,
Lincoln or Mercury vehicles.– A subvention to offset residual risk of $750 per vehicle leased.
Leasing Pilot Overview
• Ford/GM is offering a “Low Risk” leasing program pilot
• Credit unions serving the FL, MI, NJ, NY & Philadelphia markets will be eligible to participate (Markets defined by Ford/GM)
• July 1 – September 30, 2009
What:
Where:
When:
Leasing Pilot Overview (continued)
• Ford/GM and Lease Partner will fund a residual escrow account equal to 10% of ALG (Automotive Lease Guide) residual value to cover end of lease losses
• Lease Partner will obtain residual value insurance to cover losses exceeding 10% of the ALG residual value
• League and credit unions establish advertisable APR rate• Credit unions promote to their members all leasing offers on
eligible models• Ford/GM will market lease payments to general public to
increase dealership traffic• Dealers will turn to participating credit unions for lease
financing on all eligible models
How:
Lease Process - Origination
• Dealer directs current or potential member to participating credit unions via Route One, DealerTrac, AppTrac or other systems
• Credit Union makes credit decision, if necessary, sends Adverse Action letter to lessee
• Credit Union charges member the established acquisition fee• Dealer prints lease agreement from their Dealer Management System
(DMS) or Lease Partner web site• Dealer closes the lease and processes the title• Credit union charges dealer for manufacturers lease subvention as an
“administrative fee”• Dealer is reimbursed by Ford/GM for “administrative fee”• Credit union forwards “administrative fee” and acquisition fee to lease
partner• Lease Partner deposits “administrative fee” along with Lease Partner
contribution into escrow account
Residual Value Escrow Account
Ford/GM & Lease Partner
deposit into escrow
account (= to 10% of ALG value)
RVI Lease Partner
pays claims on losses exceeding
10% of ALG
Per each vehicle returned
If a residual loss occurs, the Escrow Account is used to cover loss (-)
If a gain is realized, the excess is deposited into the Escrow Account (+)
Escrow account performance reviewed quarterly
Who is the RVI Group?
• RVI Group is the world’s largest specialist in residual value insurance
• Specializing in the passenger vehicle, commercial real estate and commercial equipment markets
• Current clients include many of the world’s leading financial institutions, leasing companies and equipment manufacturers
• A.M. Best Company rating currently B++• Residual value insurance:
– Protects against a decline in market value of tangible assets– Provides a critical tool for asset risk and lease accounting
Lease Process – Life of Lease
• Credit union receives and posts payments to principle, interest and sales tax
• Credit union remits sales tax monthly to Lease Partner
• Lease Partner files sales tax reports and remits tax to government entities
• Credit union provides normal collections and repossession activities for non-payments
Lease Process – Lease End
• Lease Partner manages member education at lease end and remarketing (vehicle disposition) process– Member has first opportunity to purchase the vehicle– Originating dealer has second opportunity to purchase the
vehicle– Vehicle sold through national network of dealers– Credit union has no responsibility to dispose of returned vehicles
• Lease Partner sells the vehicle and uses the sales proceeds plus the Residual Escrow Account (If applicable) to pay off the ALG residual with the credit union.
CUcorp/Manufacturer’s Role
• Ford/GM will market the leasing program to consumers through TV, radio, print ads, etc.
• Ford/GM will promote an attractive lease offer on a 39 month lease on selected models
• CUcorp will develop turn key marketing materials for credit unions to use in marketing to their members
• CUcorp will solicit credit union participation and enrollment• CUcorp will ensure Ford/GM dealer network in pilot market
areas can be properly serviced by participating credit unions
• If adequate credit union participation is not reached in a market area the pilot will be cancelled for that market area
Lease Partner Role
• Provides forms and documents that comply with Federal, State and NCUA requirements
• Provide accounting and remittance for Federal and State income tax
• Provide necessary insurance coverage (GAP, residual, contingent liability, contingent physical damage, garage, etc.)
• Provide training for credit union staff and dealerships
Lease Partner Role (continued)
• Provide all vehicle remarketing services including contacting and educating members on options, vehicle inspections and sales
• Third party vendor management with ALG, insurance companies, vehicle inspection services, auctions, lease tracking services, etc.
• Establish and manage government backed secured escrow account and provide Ford/GM & RVI with quarterly accounting and reviews
Credit Union Role
• Determine credit criteria
• Decision each loan
• Rate setting – use standard rate or reduce for competitive purposes
• Funding the dealer
• Billing and collecting payments– Collect acquisition fee from member as established by Lease
Partner– Collect administrative fee from dealer– Forward acquisition and administrative fees to Lease partner– Collecting lease payments from the member during the lease
term
Credit Union Requirements
Enroll in and agree to program terms:
• Complete enrollment form on www.lovemycreditunion.org
• Offer leases on all eligible models from Ford/GM
• Offer 39 month lease with advertised payment or lower
• Offer a lease rate that is not higher than any other lease rate offered to other manufacturers
• Collect acquisition and administrative fees and forward to Lease Partner
• Accept new qualified members through the dealership
Benefits to Members and Credit Unions
• Member receives lower monthly payment than on a purchase
• Member is able to drive new car with latest features and safety equipment
• Lower cost of ownership since warrantees generally cover the lease period
• Credit unions will not be competing with captives and banks for lease business
• Credit union earns a higher rate of return than on auto loans
• Credit union assumes a credit risk that is similar to auto loans
• Ford/GM promotes to the general public providing opportunity for membership and auto loan growth
• Dealers will direct consumers to participating credit unions
Similar Credit Risks as Auto Loans
Payment # Balance Payment # Balance
12 $26,425.14 12 $24,858.00
24 $20,400.01 24 $19,330.86
36 $14.002.98 36 $13,463.37
39 $12,342.95 39 $12,000.49
60 Mo Loan$579.84
39 Mo Lease$572.17
Assumptions:$30,000 loan amount, 5.99% APR, 7% sales tax, $12,000 Residual
Lower Payments for Members
LoanLoan
LeaseLease
48 month payment
$638
$428
MSRP $28,945Factory Invoice $26,102Cap Cost $27,897
Higher Return for You
MSRP $28,945Factory Invoice $26,102Cap Cost $27,897
Loan – 60 mosLoan – 60 mos
Lease – 36 mosLease – 36 mos
Gross Interest Marginnet of Lease Partner Expenses
$3,585
$3,360
CULA (Credit Union Leasing of America)
Bringing proven performance, experience and security to our credit unions
Who is CULA?
• Credit Union Leasing of America (CULA) is the nation’s largest provider of indirect leasing services to credit unions.– 21 years in business– 65,000 vehicles leased exclusively through credit unions– $2 billion– 25,000 vehicles successfully remarketed
• Corporate office located in San Diego, California– 19 employees with over 100 years combined leasing experience– 1/3 of employees have been with CULA longer than 10 years each– Member of National Vehicle Leasing Association– 3 employees with CVLE designations through the NVLA
Who is CULA?
• Alliances– Cary Boyden- legal counsel
• 35 + years in lease industry
• Counsel for NVLA
– Paul Doyle- CPA • 35 + years in lease industry
• NVLA tax & accounting counsel
CULA Map
CULA ROLE
• Lease Accounting
• Sales Tax Filings and Remittance
• Complete Document Packages Customized for your Credit Union
• Residuals
• Residual Risk Management
• Lessor - related Insurance– GAP– Residual Value Insurance– CL/CPD – (state minimums acceptable)– Garage Keepers
CULA Role
• Insurance Tracking Service
• Member Education at Lease End
• Remarketing Services
• Repossession Assistance Program
• NCUA State and Federal Program Compliance
CULA Role
• End of Term Process Management
• Initial and On-going Staff Training
• Dealer Training
• Dealer and Member-friendly Website
• On-line Origination System
• New and Used Vehicle Leasing
• The Seamless Lease Connection
The Seamless Lease Connection
• Proprietary Lease Management Software– Internet Based– Real time– Complete lease portfolio management tool
• Validates lease at origination• Provides reconciliation at lease end• Manages sales tax changes, updating, reporting automatically• Connectivity to core DP systems• Connects to CULA Online Origination System• Lease Validation Worksheet for funding ease• Numerous ad hoc reporting features• Archived images
Roles
The Credit Union Lease
• Simple Interest
• No Security Deposit
• No Prepayment Penalties
• Can Convert to a Loan at any Time
• Insurance – State Minimums
• GAP is Included
• Numerous Options at Lease End
• $500/$1,000 Wear and Tear Waiver
CULA Remarketing Services
• Lease End Member Education– 120- Day Brochure & Inspection Template are sent– 90 day- member education about lease end & their vehicle specifically– 60 day- order inspection and finalize lease end decision– 30 day- review inspection results & coordinate turn in at originating dealer (if applicable)
• Turn In– Member- friendly process is coordinated through lease end consultants and third-party
vendors– CULA requests lease end fees prior to turn in
• Dispositions– Member given first right of refusal– Vehicle remarketed to originating dealer, or– Vehicle remarketed to national network of dealers, or– Vehicle sold at auction
CULA Report Card
65, 488 total leases – 7 complete lease cycles• 52,088 leases with NO RESIDUAL loss
– CULA cash reserve– Great American Policy
• 11,798 leases with minimal risk – most CU’s will have no loss– RVI Group Policy A– CULA’s cash reserve– 0 to 55 basis points estimated loss
• 1,602 leases with NO LOSS LIKELY– RVI Group Policy B– CULA’s cash reserves
Summary
• The Credit Union Lease opportunity mirrors your existing indirect lending product. You:– Set rates– Underwrite– Fund dealer– Post payments– Service member
• CULA manages all lease-related functions, so you do not have to add staff to add the lease product
• Risk is minimized through successful business practices– Credit union rate setting and underwriting– CULA residual risk management
CULA (Credit Union Leasing of America)
Bringing proven performance, experience and security to our credit unions
CU XPRESS LEASE
The Life of a Lease
Full Service Leasing ProductSpecializing in all three components
Point of Sale Servicing Remarketing
(Fundamentals)
Servicing &Remarketing
The Life of a Lease
• Relationship Management
• Accountability
• Motivating dealers
• Providing credit unions with a competitive edge
• Drive incremental business
• Provide key technology
• Protect the interests of credit unions and & their members
• Maximize resale opportunities
• Wholesale/Retail Multi level approach
• Including national online retail sales
• Credit union is made whole
• Key nationwide strategic partnerships
• Allow credit unions to gain & win through legacy loan program
• Manage portfolio growth
• Leverage technology and location
Point of Sale Remarketing
• Official Invest In America Partner
• #1 CU Automotive Buying Resource in the NY Metro Region
• A decade of experience working with the nations largest CU’s
• Auto Dealer relationships throughout the nation
• Servicing over a million CU members throughout North East
• Provides complete indirect lending solution
• Our credit unions will fund nearly $500 million in 2009
• The nations #1 originator of new credit union leases
The Right Experience
Compete at the Highest Level
• Maximizing dealer cooperation through communication, training, and technology (Yours or ours)
• Keeping your credit union relevant in dealers daily business
• CU lease specials advertised in local print/electronic media
• Presence in dealer lease quoting systems (i.e. LeaseStar, LeaseProfit, R&R, ADP, etc.)
• Offering off lease vehicles directly to your members… first!
Technology & Support
• Works seamlessly with current credit union/dealer interface
• No Interface? Our plug & play interface is ready to go
• Credit union & dealer training
• Cross Selling program
• Credit union marketing – essential for SEG based credit unions
• Member toll-free phone support
GrooveCar Business Alliances
We currently offer leasing and indirect lending to over 100
GM and Ford dealers in New York
• Industry leader in lease-end management
• Developed Mercedes Benz lease-end remarketing process
• Critical - High quality lease-end experience
• Adopted “No-Surprises” excess wear/tear program
• Primary/secondary remarketing vendor for $billion lease portfolios
• Strategic partnerships with largest fleet leasing companies
• The nations #1 owner and servicer of new credit union leases
Focused Expertise
Maximizing Resale at Every Level
• We utilize layers of resale opportunities before ever going to auction
• Fully engaged lessees will purchase their vehicle with CU support
• National online auto sales via GrooveCar with exclusive access
• CU Xpress Lease Vehicle Center – 40,000 sq ft autoplex in NY
• Utilize GE Fleet – largest seller of off-lease vehicles in the world
• Business alliance with ADESA – nationwide transportation system
Managing Value Risk is our Business
• Our capital investments indicate our commitment to success
• Wear-and-tear and mileage are part of Fusion’s value risk, not yours
• Credit Union partner is paid 100% of residual value, period.
Leasing Success
• The nations #1 credit union leasing product
• Stable and successful long lasting credit union relationships
• Vast knowledge of credit union indirect lending
• Critical knowledge and expertise of your market
• Leadership with over 200 years of leasing experience
• 2 companies as experts in their field - offering 1 dynamic product!
• References that will support every claim we make
CU Xpress Lease
The Next Generation in Auto Leasing
Q & A
Florida Pilot Program
Ford Purchase Pilot
&
Ford/GM Leasing Pilot