Auto sales rebounded in 2010 to 11.6 million vehicles, up from a 27-year low of 10.4 million in 2009, but auto lending proved to be a tough business for most credit unions. Used auto loans increased throughout 2010 by 3.4%, but that was not enough to offset the 16.5% decline in new auto lending the industry, in aggregate, posted last year.
All of the major brands, with the exception of Toyota, increased their sales last year. This challenged credit union market share, as most automakers have captive financing alternatives. In 2009, credit unions captured almost 20% of the new auto market but returned to normal levels in 2010, posting slightly more than 15% for the full year.
This year could prove better for credit unions as consumers come out of the cold and into the showrooms. February’s auto sales jumped more than 20% to roughly 1 million vehicle sales. The rise in auto loans marked the sixth consecutive month this category has increased.
Challenges still remain in the form of 0% financing, which many major brands are pushing in March to continue their sales momentum. Only Hyundai, which was one of two brands to grow in 2009 (the other was Kia), didn’t feel the need to offer a 0% financing inducement in March.
Action item: do you have “off brand” dealers in your local market, like Hyundai and Kia, that need financing options for new buyers?
Leaders In Direct Auto Lending
Some credit unions, including the 10 leaders below, bucked the trends in 2010 and posted solid loan growth. This list, culled from credit unions that do not participate in indirect lending, shows that credit unions can be successful in growing their loan portfolios even when the captive financiers raise their game. In fact, half the leader list posted growth in both new and used auto lending.
| Top 10 Credit Union Direct Auto Lenders in 2010 |
| U.S. Credit Unions With $20M+ in Assets; Auto Lending Portfolio $3M+; Does not participate in indirect lending | Data as of 4Q 2010 |
| 1 |
WI |
Enterprise |
95.04% |
-25.48% |
186.20% |
29.26% |
-4.07% |
$30,820,383 |
| 2 |
HI |
Kauai Government Empl. |
84.40% |
35.26% |
138.13% |
24.29% |
70.47% |
$77,504,884 |
| 3 |
RI |
Alliance Blackstone Valley |
80.02% |
-23.92% |
148.63% |
36.65% |
17.23% |
$41,523,518 |
| 4 |
TN |
Southern |
70.50% |
30.57% |
97.14% |
28.47% |
1.14% |
$20,658,495 |
| 5 |
MA |
Grafton Suburban |
63.21% |
-24.18% |
90.06% |
9.33% |
-2.62% |
$127,008,581 |
| 6 |
CO |
Pueblo Horizons |
59.86% |
-10.42% |
88.00% |
42.66% |
-7.42% |
$27,291,629 |
| 7 |
FL |
University |
52.06% |
-24.29% |
103.61% |
43.03% |
19.01% |
$175,560,724 |
| 8 |
TN |
Chattanooga Fed Empl. |
48.94% |
50.62% |
48.17% |
43.01% |
24.86% |
$38,686,806 |
| 9 |
WV |
Wv Air National Guard |
48.93% |
36.51% |
69.19% |
46.32% |
32.87% |
$29,177,727 |
| 10 |
MI |
Education Plus |
47.41% |
20.02% |
69.56% |
41.81% |
17.35% |
$68,352,971 |
| Source: Callahan & Associates' Peer-to-Peer Software. |