CU to sell auto business attacked by dealers
RACINE, Wis. (3/19/10)--Educators CU has decided to divest its auto dealership, Educators Auto and Lease, and is in the final stages of a purchase agreement.
"We hope to finalize it in the next week," Jim Henderson, Educators CU senior vice president, told News Now.
The dealership is being divested after the Wisconsin Automobile and Truck Association filed a complaint in 2008 with the Wisconsin Office of Credit Unions (OCU), saying that the state's credit union charter statute does not allow credit unions to offer the service. Educators said it believed the complaint was filed to prevent competition--each year, more than 700 individuals purchase used vehicles from the credit union (News Now Nov. 4, 2008).
The OCU initially ruled that the State of Wisconsin Credit Union Statutes allowed credit unions to only lease cars, not sell them. The credit union appealed the ruling, and had 18 months to have the law clarified or divest the business.
The credit union worked with state legislators to add an amendment to the state budget bill that would allow the credit union to continue its business, but it was vetoed by Gov. Jim Doyle. The credit union then looked into a separate bill on the matter, and while legislators were more than willing to work on it, after talking to the governor's office, Educators realized that it had no desire to change the law, Henderson said.
With the sale of the business in process, Henderson said he doesn't expect the business to undergo any material changes after the purchase. The new owner, Tim Stark, has said he plans to keep the program the same. The dealership offered consumers no-haggle pricing; a 60-day safety net, which covers the cost of most mechanical repairs for two months after the purchase; and a three-day return policy.
The goal of Educators' auto business had always been to provide consumers with a no hassle car buying experience, and help them find the right car for their needs instead of just selling them a vehicle, Henderson said.
Stark currently manages the dealership and will rent the 100-car facility from the credit union. The entire dealership staff will become his employees (Journal Times March 18).
"We're not totally satisfied, but happy the program is continuing," Henderson said. "The new owner is planning to keep it the same ... and we think it's going to be successful for him, too."
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