Credit Union Auto Loan Market Share Down in 2006

Can indirect lending activity result in credit unions’ capturing a greater percentage of the auto loan market?

 
 

The average credit union auto loan market share in 2006 closed out at 16.3%, 1% below 2005’s total of 17.5%, a record average according to AutoCount.  In the summer of 2005, employee pricing was the manufacturer promotion that set off a sales blitz for domestic auto makers.   As consumers enjoyed the lower vehicle prices at dealerships, they shopped around for the best loan rate.  As a result, many people turned to credit unions for financing.  With fewer major manufacturer incentive programs in 2006, auto sales slowed and credit union market share stayed in a more typical range.  Credit unions ended the year with four consecutive months of increasing auto loan share.

Since individual state performance varies, it can be a dramatic contrast to compare 2006 national auto loan market share with state by state market share.  In some states, credit unions are well above the national auto loan market average, like Utah, which holds 40.7% of the state’s auto loans.  Conversely, looking at the states with the lowest auto loan market share, like Arkansas (1.6%) and New Jersey (3%), there is a significant disparity from the national average. What accounts for the difference?

Factors may vary, but when you consider that 9 out of 10 financing decisions are made at the dealership, it makes sense to compare credit union auto loan share with credit union indirect lending activity. 

States: Highest auto loan market share

Rank

State

Auto Loan Share (12/06)

Indirect Loans/ Total Auto Loans (9/06)

1

Utah

40.0%

11.8%

2

Hawaii

38.6%

4.0%

3

Washington

35.4%

20.1%

4

Oregon

33.4%

19.6%

5

Colorado

27.5%

27.1%

Average
of top 5 states

35.1%

16.5%

(Percent based on total state sales reported.  Not all states report to AutoCount)



Rank

State

Auto Loan Share (12/06)

Indirect Loans/ Total Auto Loans (9/06)

1

Arkansas

1.6%

1.0%

2

New Jersey

3.0%

1.0%

3

Mississippi

7.8%

2.5%

4

Georgia

8.3%

2.3%

5

W. Virginia

9.9%

3.0%

Average
of top 5 states

6.1%

1.9%

(Percent based on total state sales reported.  Not all states report to AutoCount)

Analysis shows that on average the top five credit union states in auto market share hold an average of 16.5% of their auto loan portfolio in indirect loans.  This contrasts with the profile of the bottom five states in auto loan market share. On average, the bottom five credit union states in auto market share hold just 1.9% of their auto portfolio in indirect loans. 

There may not be a perfect correlation, but states with more indirect lending activity seem to have led credit unions to capture greater market share. As credit unions endure loan share fluctuations, reviewing lending programs can bring to light new thoughts on auto marketing strategy. 

 

 

 

Feb. 19, 2007


Comments

 
 
 
  • They get more loans, but are these quality loans?! That is the constant problem/question with indirect lending... Good analysis though, thanks.
    Anonymous
     
     
     
  • A leasing program for credit unions would enhance what they have to offer dealers and increase the indirect share.
    Anonymous
     
     
     
  • Quality is in the eye of the beholder. Prime loans are the highest quality. If the loan is priced correctly even non prime loans have quality and vallue
    Anonymous