eBrief: Credit Unions Finance One in Every Five Auto Loans in 2009


Credit union auto loan balances through the first quarter of 2009 were up 72 basis points from the previous March. This growth marks the first increase in auto loan balances that credit unions have reported since September 2007, and is particularly impressive in a year that has seen vehicle sales decline 36.5% year-to-date through May. A key driver of this increase in credit union balances has been the larger number of other financial institutions that have tightened their lending standards, or left the market entirely, helping credit unions gain additional footholds in the market.

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At the outset of 2008, credit union auto lending market share was struggling. This decline culminated in a 12.9% market share in March, a record low for as long as we at Callahan & Associates have been tracking this metric. However, beginning in April, the renewed credit union presence in the market began to translate to increased market share, and credit unions notched increases over the next 10 consecutive months before hitting a record high of 22.7% in January of 2009.

The strong market share levels that credit unions reported as we entered 2009 have held through the first quarter of the year. Through April, credit unions reported a year-to-date auto lending market share of 20.5%. This means that thus far in 2009 credit unions financed one in every five vehicles sold. Although finalized numbers are not yet available, this trend is showing no signs of stopping, with preliminary May market share figures coming in at 20.7% for the month.

In addition to increasing in balances and market share, credit unions are coming to the aid of a greater number of members that need financing during this difficult time. As credit unions look to serve an expanding membership base, many credit unions are adjusting their credit criteria to make financing available to a wider range of individuals than ever before. But with these relaxed credit criteria also comes a potential decline in asset quality. Join us on July 22nd for our upcoming webinar Driving Auto Loan Growth While Maintaining Portfolio Quality to hear from credit unions that have used proper risk management strategies to provide financing to members in need, without sacrificing the quality of their auto loan portfolio.