Used Auto Lending Increases By 7.4%

Credit unions help more members buy cars as they increased outstanding auto loans and auto lending market share in the first quarter of 2012.


Credit unions’ auto loan portfolio increased 3.3% annually in the first quarter of 2012 from the first quarter of 2011, driven by strong used auto lending growth, as reported by Callahan & Associates’ 7,035 FirstLook credit unions.

Used auto loans increased 7.4% at these credit unions, which increased the overall auto loan portfolio despite a 3.4% decline in new auto loans.

The decline in new auto loans slowed to less than half of the 7.4% annual decline in the fourth quarter of 2011. The first quarter of 2012 was the second consecutive quarter that credit unions posted positive annual growth in the auto loan portfolio. Prior to the fourth quarter of 2011, credit unions had not had positive growth in auto lending since the third quarter of 2009.

New car sales through March 2012 were up 19.5% year-to-date from the same period in 2011, according to Motor Intelligence. Dealers sold 1.84 million cars during the first quarter of 2012, and the increased sales came despite the average price of gasoline continually rising. This is even more impressive, considering the number of automaker incentive programs was substantially higher during the first three months of 2011, according to Ally Financial.

In spite of the increase in the new vehicle market, new auto loans outstanding at credit unions fell 3.4% annually as credit unions faced tougher competition and ongoing 0% financing offers by competitors. Increased indirect lending is also contributing to credit union auto loan growth as it accounted for 30.7% of annual auto loan growth, which is a decline from the 56.0% of annual auto loan growth posted in March 2011.

FirstLook credit unions in six different states had annual auto loan growth of more than 10%. Oklahoma credit unions led the pack with 14.8% auto loan growth, as they added $424 million in auto loans to their books. Credit unions in New Mexico were a close second with 13.2% growth generated by an additional $228 million in auto loans.

The largest dollar increase in auto loans was at Texas credit unions with an increase of $1.1 billion in auto lending, increasing their auto lending market share by 40 basis points from a year before to reach 15.8%.

Year-To-Date Auto Lending Market Share
Data as of March 31, 2012
Callahan & Associates' Year-To-Date Auto Lending Market Share
Source: Callahan & Associates' FirstLook.

Auto lending market share for credit unions was strong during the first three months of 2012, as credit unions captured 14.6% of all auto loans and leases. During this time, they made 11.1% of all new auto loans and 19.1% of all used auto loans, which is one of the higher market shares through March in recent years.

But even with renewed competition in new auto lending, credit unions continue to be strong used auto lenders and provide solid rates for members who don’t qualify for those 0% offers.




May 21, 2012


  • Our efforts for Credit Unions are directly inverted in typical concentration of portfolio new (67%) to used (33%). Dealers have many choices for new car financing and it is difficult for CU's to compete. Manheim indicates strong used values for the rest of the year. A softing of that will come as lease returns increase.
    Jeff Martin
  • Credit Unions should be prepared for a shift in the auto market; we've already have seen some signs of this happening in our market. New car sales are increasing faster than expected. The average age of a car on the roads is the highest level ever-10.8 years. As consumers start to buy more new cars, the supply of used cars will increase from trade-ins. Dealers have complained for 2 years that there aren't enough used cars to go around-and prices have skyrocketed.

    We'll probably see falling used car prices-driving losses higher (right now we're getting about 15% more for our repos than historical average) and increasing LTVs for new cars from people trading in their used car.

    If credit unions can respond by being more flexible on new car LTVs while perhaps charging more for higher LTV used cars to account for the risk, we can limit losses on used cars and capitalize on the market shift.

    This WILL happen. It's just a matter of time
    Bill Vogeney