Auto Lending In A Tightening Market

In the second quarter of 2017, the credit union auto market share and portfolio expanded despite declines in auto production and sales.


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Aug. 17, 2017


  • I disagree with the author on the root cause of why automaker performance has declined. It has been well-known for a long time and well-documented that there was a lot of pent-up demand in the economy after the housing crisis. People held on to their vehicles during the recession, and once the economy was on the way to recovery people went out and bought new cars at record levels. In over 30 years in business, I have never heard that a business has been punished by doing things well as stated in this article. The auto manufactures are making adjustments in their factories to provide more electric and hybrid cars that are still in demand. Of note is the continued demand for light duty trucks and SUV's. Sales are moving towards a normalized level given the demographics across the nation. Lenders usually lag behind the market and this is no different. Lenders traditionally have not been quick to adjust portfolio strategies based on their own forecasts until it shows up in their earnings reports. Lenders, in general, typically react and are not proactive and this is what the data shows. Otherwise, it is good that you brought attention to the issue.
  • Thank you for reading and your input. I concur with your statements and believe there are numerous underlying reasons to the auto sales decline. The three reasons listed above are by no means an all-inclusive list and were directly sourced from Bloomberg. The article doesn’t specifically imply the auto industry is being punished, rather, it mentions the industry is in a predicament due to the slowdown partially caused by a reduction in the vehicle replacement rate. Again, I think your analysis builds on an array of contributing factors and provides another viewpoint on this issue, and I really appreciate you taking the time to share your thoughts!
    Ian Melhorn