May 21, 2012


  • Our efforts for Credit Unions are directly inverted in typical concentration of portfolio new (67%) to used (33%). Dealers have many choices for new car financing and it is difficult for CU's to compete. Manheim indicates strong used values for the rest of the year. A softing of that will come as lease returns increase.
    Jeff Martin
  • Credit Unions should be prepared for a shift in the auto market; we've already have seen some signs of this happening in our market. New car sales are increasing faster than expected. The average age of a car on the roads is the highest level ever-10.8 years. As consumers start to buy more new cars, the supply of used cars will increase from trade-ins. Dealers have complained for 2 years that there aren't enough used cars to go around-and prices have skyrocketed.

    We'll probably see falling used car prices-driving losses higher (right now we're getting about 15% more for our repos than historical average) and increasing LTVs for new cars from people trading in their used car.

    If credit unions can respond by being more flexible on new car LTVs while perhaps charging more for higher LTV used cars to account for the risk, we can limit losses on used cars and capitalize on the market shift.

    This WILL happen. It's just a matter of time
    Bill Vogeney