Credit Union Auto Lending May Regain Steam in Third Quarter

Preliminary 3rd quarter data shows that credit union auto lending, a struggling component of the loan portfolio, is back on the rise.


Credit union auto lending in the second quarter slowed practically to a crawl. Both new and used auto lending grew at a mere 1.1% for the twelve months ended June 2007. This made auto lending the slowest growing component of the lending portfolio, which increased 6.2% during the same period.

Although complete third quarter data has yet to be released, preliminary trends show credit union auto lending picking back up as of September. These trends are based on data collected through Callahan & Associates’ First Look program, which allows credit unions to examine call report data prior to the full release. The most recent data for the First Look program is comprised of 230 credit unions totaling $189.7 billion in assets (an estimated 25% of the industry).

Auto Loan Growth Outperforms Mid-Year Numbers

The data collected from this sampling of credit unions shows that annual auto loan growth for the period ended September 30, 2007 has increased to 4.6%. This number is up from the 4.0% annual growth that these same credit unions posted in the second quarter. Although both new and used auto loans grew during the year, used auto loans slightly outpaced their new counterparts. Used auto loans grew at a 5.0% annual growth rate during the third quarter. New auto loans were on a similar growth path, rising to a 4.2% annual growth rate. Although these credit unions tend to out perform the industry averages, the direction of the trends are usually similar.

This growth in credit union auto lending comes at a time when the auto market has seen marked slowdown. Vehicle sales declined consistently in July, August, and September, which amounted in fewer individuals seeking vehicle loans. Proactive credit unions and solid member relationships were able to help credit unions increase their auto loan balances and this has had a measurable impact on credit union market share in the overall auto lending market. Credit union market share increased to 15.3% in September of 2007, a 50 basis point increase from the 14.8% posted in June of this year.

Year over Year Comparisons and Looking Forward

Although credit union auto loan growth has increased from the previous quarter, it still is not growing as fast as it was in the previous year. Credit union auto loan growth for the credit unions reporting First Look data in September of 2006 posted a 6% growth in auto loans, above the 4.6% posted this September. Credit union market share also was higher in 2006 with September market share coming in at 15.8%. Unfortunately, things may get worse before they get better as October auto sales have continued to decline, Toyota has gained position as the number 2 auto maker in the U.S. and GM posted a $39B loss in the third quarter. Although credit union auto lending is picking up, credit unions are still fighting an uphill battle to increase the balance of their loan portfolio as the auto market continues to struggle.

Callahan & Associate's First Look program provides free preliminary data analysis for credit unions using Peer-to-Peer, the most comprehensive financial analysis software for credit unions. To find out how your credit union's performance compares to others across the industry, submit your 3Q data in XML format to .




Nov. 12, 2007



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