Credit Unions Continue to Make Gains in the Auto Lending Marketplace
Credit union auto lending marketplace performance continues to shine through the mid-year point of 2015. With new car sales up 5%, 2015 is looking like a record year for the auto industry, with about 17.4 million projected new auto sales units by year’s end. Credit unions have been able to capitalize on the increase in car sales to grow auto loans and strengthen their presence in the marketplace.
During our recent quarterly State of the Credit Union Auto Lending Market webcast, we took a closer look at credit union performance in the auto lending arena.
The Case for Credit Unions
CU auto loan portfolios have grown 23% this year, outperforming the overall auto lending industry, which has experienced 13% growth. Credit unions’ performance is second only to finance companies, which grew at 27%.
Through the mid-year point of 2015, auto loans made up 32.9% of total outstanding balances for credit unions, up from 31.5% in Q2 of 2014. Further, credit unions continue to narrow the gap with both captives and banks, capturing 1 in 4 of all auto originations in Q2 of 2015 — $40 billion of the $160 billion in auto originations for the quarter. A year ago, credit unions captured $32.7 billion or 23% of all auto originations.
CU Direct’s credit unions continue to have a very strong presence in the marketplace as the number 3 auto lender in U.S., trailing only Ally (No. 1) and Wells Fargo (No. 2), while outperforming major marketplace lenders such as Chase Auto Finance, Capital One, Toyota Financial and Ford Motor Credit. CU Direct’s 1,000+ credit unions on the CUDL System have generated over 707,000 auto loans through the third quarter, experiencing 14.8% growth year to date. Since 2010, CU Direct credit unions have climbed from the nation’s 7th ranked lender to the number 3 lender in the country.
Credit unions as a whole have grown market share in 2015 (through August) to 19.8%, up from 19.3% in August 2014, and taking share away from banks and captives to become the industry’s number 2 lender type by market share. Banks have experienced a decrease in market share since 2011, falling from 40.6% market share to 37.2% in 2015. Similarly, Captives have seen their share of the auto lending pie decrease, going from 19.9% market share in 2013 to 18.6% share YTD in 2015.
Indirect Lending’s Increasing Value
The indirect channel continues to play a vital role in helping CU Direct credit unions not only grow auto loans, but also acquire new members. Through September of this year, 61.7% of auto loans through the CUDL System were to new members joining at the dealership, with 38.3% of loans going to existing members. New members financed 64.9% used vehicles vs. 31.7% new vehicles, while existing CU members financed 55.9% used vehicles, 30.4% new vehicles, and 13.7% non-vehicle loans, such as equity lines of credit, credit cards, retail loans, and holiday loans.
Credit unions have more than doubled their indirect lending over the last 10 years, jumping from $61.2 billion in loans outstanding in 2005 to $125.4 billion through the mid-year point of 2015. Year-over-year growth from Q2 ’14 to Q2 ’15 hit 21.9% for all credit unions. Credit union membership has grown to include 102.3 million members, with more than 1 in 4 members now having an auto loan.
At the mid-year point, credit unions saw total auto loan balances increase to $248.1 million from $214.9 million during the same period in 2014. This increase is paired with lower delinquency and charge-off rates, which are currently at historic lows and are better than those posted by competing lenders in the marketplace. Only .29% of CU loans were 60-days delinquent in Q2 of 2015, down from 0.31% through Q2 of 2014, and lower than the 0.38% and 0.50% rate posted by captives and banks respectively.
CU Direct’s quarterly State of the Credit Union Auto Lending Market webcast provides credit unions detailed insight to the latest industry trends, as well as an in-depth breakdown on credit union performance in the marketplace. Our next webcast is slated for Thursday, January 28th, 2016.