Credit Union Auto Market Monthly

U.S. auto sales reached 16.8 million units in 2002, the fourth-best year ever for automakers. A total of 8.3 million cars and 8.5 million light trucks were sold, the first time ever that light truck sales outpaced car sales. The high volume in 2002 was thanks in part to incentives that cost automakers an average of $1,830 per unit through the first 11 months of 2002, up 17.5% from 2001, according to Autodata Corp. The Toyota Camry was the king of cars in 2002, selling 434,145 units, while the Ford F-Series led the strong performance by light trucks with 740,817 uits.

 
 

2002 In Review

U.S. auto sales reached 16.8 million units in 2002, the fourth-best year ever for automakers. A total of 8.3 million cars and 8.5 million light trucks were sold, the first time ever that light truck sales outpaced car sales. The high volume in 2002 was thanks in part to incentives that cost automakers an average of $1,830 per unit through the first 11 months of 2002, up 17.5% from 2001, according to Autodata Corp. The Toyota Camry was the king of cars in 2002, selling 434,145 units, while the Ford F-Series led the strong performance by light trucks with 740,817 units.

Auto Sales Fell in January, but Ford Bucked the Trend

Auto sales softened in January from the pace set during December’s year-end sales blitz. Sales for the month totaled 1.087 million cars and light trucks, down slightly from last year’s 1.108 million total. Better bargains offered by some automakers in late January helped sustain demand in the face of war and the soft economy. The standout for the month was Ford Motor Co., which improved sales 4.3% from a year earlier and increased its overall market share to 22.0%. Ford, wrestling with a difficult corporate turnaround and a relative dearth of new models, credited the gains to 0% financing for 60-month loans and other incentives on top-selling vehicles like the Ford Taurus.

Auto Financing Market

Credit Union Auto Lending Market Share

December 2002 data provided by AutoCount USA from 27 states show that credit unions hold a 10.9% share of all new car loans. Credit unions hold a much higher share of used auto loans at 17.2%. In December, credit unions in these 27 states originated more than two used auto loans for every new auto loan. Compared to September numbers, the overall auto lending market fell 14% demonstrating the seasonality of vehicle sales. Credit union auto lending fell only 10% from September, which is how they picked up their small market share gain. Both Colorado and Texas credit unions performed well in December, capturing over 17% of all new auto loans. In addition, Colorado credit unions originated over 36% of the state's used auto loans in December.

 

CU Total Market Share (Loans & Leases)

CU New Loan Share

CU Used Loan Share

Jun-02

15.2%

15.3%

18.1%

Sep-02

12.9%

9.8%

17.2%

Dec-02

13.4%

10.9%

17.2%

State

Total CU Market Share

CU New Loan Share

CU Used Loan Share

Colorado

26.1%

17.1%

36.2%

Montana

21.4%

8.8%

27.0%

Minnesota

21.0%

11.4%

25.9%

Wisconsin

20.2%

9.6%

28.2%

Washington

19.7%

11.6%

25.1%

(Source: AutoCount data from 27 states)

To learn more about utilizing this information in your auto lending program, please contact John Marron at jmarron@creditunions.com or 800-446-7453.

Biggest Issues Facing Credit Unions

The credit union industry this past year has been affected the multitude of zero percent financing incentive programs; low buy rate financing and the aggregation of banks and major auto manufacturers on common lending platforms. Incentive programs are expected to continue since consumers have come to expect the offers and sales of new vehicles have dropped significantly when the offers are discontinued. Buy rate financing is at an all time low, with banks offering rates comparable and sometimes lower than credit unions. The following information compares the national average verses the credit union average for auto loan rates through October 3, 2002.

REGIONAL AND NATIONAL AUTO LOAN RATES-AS OF JANUARY 2003

NEW AUTOMOBILE RATES
USED AUTOMOBILE RATES
(One year old)
 
A+
A
B
Nat'l Avg.
4.36
4.48
5.38
5.41
Texas & Southwest
4.89
5.11
6.43
6.45
Western
4.52
4.87
6.09
5.91
Tier Avg. Rate
4.59
4.82
5.97
5.91
 
A+
A
B
Nat'l Avg.
Northeast
4.41
4.53
5.38
5.44
Texas & Southwest
4.80
5.04
6.32
6.38
Western
4.52
4.91
6.14
5.99
Tier Avg. Rate(Used)
4.58
4.83
5.95
5.94

Rates are for 60-month loans on 2002-2003 new autos and one-year-old used autos. For purposes of this survey, borrowers are considered to have A+ credit if their scores on auto-specific models of combined credit reporting bureaus exceeds 720; A if their scores fall between 680 and 719; B, 650 and 679; and C, 625 and 649.

To effectively compete with these factors at the point-of-sale, where most consumers are arranging for auto financing, credit unions must seriously consider aggregating on a common lending platform. Banks and auto manufacturers have begun this process with program such as Dealer Track and Route One. A program such as Credit Union Direct Lending (CUDL), which is the largest point-of-sale indirect lending program for credit unions, can provide the technology and services to help credit unions raise their visibility, differentiate their value proposition and effectively compete at the dealerships.

Looking Ahead

Dealers Say U.S. Vehicle Sales will Decline Slightly if Nation goes to War

This year's U.S. vehicle sales likely will decline 1.8% and possibly even more if the nation goes to war with Iraq, but should remain strong by historical standards, the National Automobile Dealers Association predicted. NADA chief economist Paul Taylor, speaking at the organization's 86th annual convention projected new car and light truck sales of 16.5 million in 2003, down from 16.8 million last year. If the U.S. goes to war with Iraq, Taylor says total volume likely will decline by another 200,000 vehicles as the conflict chills American's spending.
(Source: Associated Press)

Buyer's Market: Surplus of Used Cars Driving Down Prices
Strong new-car sales mean more trade-ins, boosting the supply of used vehicles. Discount financing lowers monthly payments for new cars, which means the price of used cars also has to decline to offer the price difference that buyers expect. According to ADESA Analytical Services, the average wholesale price for cars in December was 5% less than a year earlier. For light trucks, which include pickups and sport utility vehicles, the average was down 2.6%. This trend is leading consumers to hold on to the cars they already own. Paul Taylor, chief economist for NADA, said that there's been a steady rise in the number of vehicles per household. The strong economy of the 1990s led more people to own specialty vehicles, including classic cars, especially in suburban areas where there's room to store the extra vehicle.
(Source: Texas Star-Telegram)

ASAEF, NADA Publish Vehicle Financing Brochure for Consumers
The trade associations for the nation's auto lenders and franchised new car and truck dealers released a new brochure to help educate consumers on the basics of vehicle financing. ''Understanding Vehicle Financing,'' produced by the American Financial Services Association Education Foundation (AFSAEF) and NADA, and prepared in cooperation with the Federal Trade Commission, provides information to help consumers learn about dealership financing and evaluate their own financial situations before financing a new or used vehicle.
''We are pleased to join auto lenders in an effort to educate the public on one of the most important aspects of the vehicle-shopping process - financing,'' said H. Carter Myers, III, NADA Chairman. Consumers may obtain a free copy of ''Understanding Vehicle Financing'' by downloading it from AFSAEF's website, www.afsaef.org, or by calling the Foundation's toll-free number (888-400-2233). Organizations interested in bulk orders should contact the Foundation or visit its website for pricing information.
(Source: NADA Newswire)

 

 

 

Feb. 24, 2003


Comments

 
 
 

No comments have been posted yet. Be the first one.