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Telesis Acquires Auto Service

In an effort to boost a slowing auto loan business, Telesis Community Credit Union has acquired an automotive vehicle buying service, one of only a few of its kind for credit unions. The acquisition gives Chatsworth-based Telesis full control of AutoSeekers, a credit-union owned and operated service Telesis previously shared with California Bear Credit Union. Terms of the deal were not disclosed. AutoSeekers, a three-year-old service that provides new and used car buying services, wholesale and indirect lending services, provides representatives who search out different dealers to find both new and used cars that meet the buyer’s specifications and who negotiate the price with the dealer. “It gives our members the ability to not have to haggle with dealers and have our new entity look for cars for them,” said Grace Mayo, president and CEO of Telesis. Potential buyers can go directly to any dealership to test drive or research the car they want to buy, but once they have made their choice, they provide the details to AutoSeekers, which then searches dealerships to find the desired vehicle. At the same time, AutoSeekers can help Telesis boost its vehicle lending at a time when growth in that segment has slowed for most credit unions. With sales weakening, auto dealers have stepped up programs such as zero financing, making their lending services seem more attractive and capturing loans that may otherwise have gone to credit unions. Mayo contends that dealers may bump up the price of the vehicle to compensate for the lost financing revenues, but customers are not always aware of the strategy. “Zero financing has definitely made a big difference,” Mayo said. “It’s hard to get past that.” New vehicle loan funding at Telesis as of Dec. 2006 was virtually flat compared with Dec. 2005, with about $15 million in new vehicle loans financed. Used vehicle lending was down in the most recent period at about $25 million, compared with about $30 million in 2005, according to the credit union’s financials. “I would say it’s stable,” Mayo said. “We would like to go back and see some growth in the area.” The situation is the same for many credit unions. According to CUNA, the Credit Union National Association, new auto loans provided by credit unions increased 5.8 percent. “That’s off quite a bit from 2005 when the increase was 18.4 percent,” said Mike Nutt, a spokesman for California Credit Union League. “That’s because 2005 was a strong year anyway.” Until gas prices began to rise and other economic factors pushed dealers into more aggressive financing programs, credit unions had been steadily increasing their share of the auto financing market, thanks in part to trade groups that have actively sought to include credit unions in the list of financiers offered by dealerships. But after rising steadily through since 2000, in 2006, credit unions financed 18 percent of all auto loans, down slightly from 2005 when the credit unions financed 19.3 percent of all auto loans, according to data from AutoCount and Credit Union Direct Corp. (CUDL). AutoSeekers gives Telesis the opportunity to capture the loan business for the members who use the service. The credit union also hopes it can offer the service to other credit unions. “Increased marketing and development of proprietary software will continue to make the AutoSeekers operational platform more robust for credit unions and CUSOs (financial services groups that work with credit unions) of all sizes as we roll this service into other non-contiguous markets,” Mayo said.

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