Keep On Truckin'

2010 was tough on the credit union auto loan portfolio. These 10 credit unions bucked the trend.

 
 

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
Rk St Name Auto Loan Growth New Auto Growth Used Auto Growth Auto Loans / Total Loans Total Loan Growth Total Assets
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.
 

 

 

March 14, 2011


Comments

 
 
 
  • As I perceive the organizations purpose with these types of stories is to highlight CUs achieving good results in areas where industry trends may not be doing so well, and have those CUs act as a role model for the rest of the industry. The problem I have is that Callahan's focuses too much on simply growth percentages, without regards to asset size. I agree statistically, that when generalizing performance between all CUs the percentage of growth can, to some extent, equalize the comparison. But, this type of statistical analysis will not account for the anomalies, which are typically what the top examples in these types of stories represent. Is it really plausible to believe that the best example of successful auto lending in our industry increased their auto loan portfolio year over year by 307 loans for $2.4 million in loan growth? When larger CUs increased their auto loan portfolios by thousands of loans for $50 to $100 million in year over year loan growth during the same period. To represent an accurate picture of the best, more than simple growth percentages need to be considered, and the statistical anomalies must be eliminated. Then these types of articles will provide the industry with valuable information and insight.
    anonymous
     
     
     
  • I am the Manager of Chattanooga Federal Employees Credit Union and I would like to get a copy of this article in the magazine if you could possibly mail to me. Please call me at 423-892-3738. Look forward to hearing from you.
    Debbie Hornsby
     
     
     
  • Ladies and Gentlemen, We were among the top 10 direct lenders for 2010 and originated a far higher percentage increase in 2011. Our direct lending business is booming. We wonder if you will be releasing statistics or an article on direct lenders this year as well. Many thanks for your response, -Ed Lopes, CEO
    Ed Lopes