The auto show season is upon us. The L.A. Auto Show wraps up on December 9, the two-week North American International Auto Show kicks off in Detroit on January 14, and in Callahan’s headquarters of Washington, DC, the Washington Auto Show will pack the Walter E. Washington Convention Center for the first 10 days of February. After a couple of years of sluggish vehicle sales, automakers are coming on strong with their new models. Likewise, credit union auto loan performance shows the industry is capitalizing on auto opportunity.
Credit unions have increased new auto lending momentum throughout 2012 and have even picked up market share from the captive financers and banks. Outstanding new auto loans at credit unions increased 5.8% annually as of the end of September. That growth is nearly nine times faster than June’s annual rate of 66 basis points. Used auto loan growth is also strong. Credit unions posted a 7.9% annual increase as of September, up from 7.2% growth in June.
Forty-six states reported positive auto loan growth as of September 30, 2012. The industry’s overall outstanding auto loan portfolio increased 7.2% from September 2011, and credit unions now hold $177.7 billion in auto loans on their books.
Credit unions increased not only the amount of new auto loans on their books but also their year-over-year market share of new auto loan originations. Credit unions captured 11.8% of all new auto loans made in the first nine months of the year. That’s up two full percentage points from year-to-date figures in September 2011. Used auto loan market share was also up annually, rising 20 basis points to 20.2% as of September. In total, credit unions originated more than 2.3 million car loans and captured 15.2% of the market in the first nine months of 2012, according to AutoCount data from Experian Automotive. This is up 70 basis points from what they captured in the first nine months of 2011.
This accelerated auto loan origination growth will likely continue into the fourth quarter as the auto industry posts record sales in the wake of Hurricane Sandy. In November, auto makers posted their best monthly sales result in almost five years, selling 1.1 million new cars, according to AutoData.
YEAR-TO-DATE AUTO LOAN MARKET SHARE | DATA AS OF SEPTEMBER 30, 2012
© Callahan & Associates | www.creditunions.com
Source: AutoCount Data from Experian Automotive; Callahan & Associates
Credit unions are building relationships with auto dealers to establish indirect lending pipelines and attract new members. Surges in new auto sales, which were up 19.5% year-to-date in September, have made new member acquisition through indirect auto lending even more attractive. Indirect loans on credit unions’ balance sheet, a majority of which are auto loans, increased 8.1% annually to nearly $77 billion. Indirect loans now make up 43.3% of outstanding auto loans, up 40 basis points from September 2011.
Auto lending is a key loan product for many credit unions, particularly smaller credit unions that rely on consumer and auto loans. Third quarter performance data illustrates credit unions’ strength in the auto lending market, and the industry should be able to capitalize on the lending opportunity improving auto sales present in 2013.