Educators Credit Union divests auto dealership

2010-03-18T07:00:00Z 2013-12-18T11:47:15Z Educators Credit Union divests auto dealershipMICHAEL BURKE mburke@journaltimes.com Journal Times

MOUNT PLEASANT - Educators Credit Union is about to sell off its auto business, thus ending a long spat with the auto dealers association.

But the resulting business, Educated Auto Sales & Lease, may only look like a slightly newer model of the same operation.

ECU has directly been in auto sales and leasing for about eight years and opened its own $2 million retail auto dealership in fall 2005. The dealership, at 1300 90th St., has always dealt with both ECU members and nonmembers.

Now, following a complaint by an unnamed local auto dealer, a period of wrangling, and negotiations with the state, ECU will divest the business as of May 1.

ECU is selling it to Tim Stark, the operation's current manager, who will rent the approximately 100-car facility from ECU. Stark will take the entire ECU dealership staff with him; they will become his employees.

According to Stark and ECU, only the name and owner will change - not the operation.

"We wanted to keep it as close as possible" to the existing business model, said ECU Senior Vice President Jim Henderson. That model includes:

- "No-haggle pricing," with a set vehicle price after a modest mark-up. Henderson has said ECU's car prices average $3,000 to $5,000 below sticker price.

- A three-day return policy, which is not required by law.

- A 60-day "safety net" on repairs when there is no manufacturer's warranty.

Henderson acknowledged there will be nothing preventing Stark from altering those practices but said he expects they will not change.

"I will keep the same policies," Stark promised. "I want to keep it the same way."

The seeds of the divestiture were sown by an auto dealer's complaint, and the Wisconsin Automobile and Truck Dealers Association took up the fight against ECU.

"I believe all we were looking for is that they compete on a level playing field," Association President Bill Sepic said Tuesday. "They're going to have to follow what the law has laid out, and that meets with what our desires were."

The battle posed this seeming paradox: Auto dealers can offer financing to customers, but financial institutions may not sell cars to theirs.

The state Office of Credit Unions ruled the law prohibited credit unions from selling vehicles and ordered ECU to stop.

But because the state had previous approved ECU's dealership and plans, the state settled with ECU, the state's fourth-largest credit union. It ordered ECU to divest the business within 18 months - by this May 1 - or get the law changed.

Last summer Sen. John Lehman and state Rep. Cory Mason, both Racine Democrats, tried to grant ECU a grandfather clause through the budget bill. But Gov. Jim Doyle vetoed the provision, forcing ECU to divest.

Henderson said he was "disappointed it couldn't continue as it was. But we're happy that we will be able to continue to provide our members a similar service, though not something owned by us."

Copyright 2015 Journal Times. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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