Credit Unions make gains in auto lending

The latest quarterly State of the Credit Union Auto Lending Market from CU Direct suggests that credit union (CU) auto loan portfolios have grown 23% this year, outperforming the overall auto lending industry, which has experienced 13% growth. Credit unions’ performance is second only to finance companies, which grew at 27%.

U.S. Lender Rankings by Auto Origination: Year to Date

CU Direct Credit Unions Registering Top Line Loan Growth in the Market

Through the mid-year point of 2015, auto loans made up 32.9% of total outstanding balances for credit unions, up from 31.5% in Q2 of 2014. Further, credit unions continue to narrow the gap with both captives and banks, capturing one in four of all auto originations in Q2 of 2015 — $40 billion of the $160 billion in auto originations for the quarter.

A year ago, credit unions captured $32.7 billion or 23% of all auto originations, according to analysis provided by Bill Meyer, CU Direct’s head of corporate communications.

CU Direct’s credit unions continue to have a very strong presence in the marketplace as the number 3 auto lender in US, trailing only Ally (No. 1) and Wells Fargo (No. 2), while outperforming major marketplace lenders such as Chase Auto Finance, Capital One, Toyota Financial and Ford Motor Credit.

CU Direct’s 1,000+ credit unions on the CUDL System have generated over 707,000 auto loans through the third quarter, experiencing 14.8% growth year to date. Since 2010, CU Direct credit unions have climbed from the nation’s seventh ranked lender to the number 3 lender in the country.

Credit unions as a whole have grown market share in 2015 (through August) to 19.8%, up from 19.3% in August 2014, and taking share away from banks and captives to become the industry’s number 2 lender type by market share. Banks have experienced a decrease in market share since 2011, falling from 40.6% market share to 37.2% in 2015. Similarly, captives have seen their share of the auto lending pie decrease, going from 19.9% market share in 2013 to 18.6% share YTD in 2015.

The indirect channel continues to play a vital role in helping CU Direct credit unions not only grow auto loans, but also acquire new members. Through September of this year, 61.7% of auto loans through the CUDL System were to new members joining at the dealership, with 38.3% of loans going to existing members. New members financed 64.9% used vehicles and. 31.7% new vehicles, while existing CU members financed 55.9% used vehicles, 30.4% new vehicles, and 13.7% non-vehicle loans, such as equity lines of credit, credit cards, retail loans, and holiday loans.

Credit unions have more than doubled their indirect lending over the last 10 years, jumping from $61.2 billion in loans outstanding in 2005 to $125.4 billion through the mid-year point of 2015. Year-over-year growth from Q2 2014 to Q2 2015 hit 21.9% for all credit unions. Credit union membership has grown to include 102.3 million members, with more than 1 in 4 members now having an auto loan.

At the mid-year point, credit unions saw total auto loan balances increase to $248.1 million from $214.9 million during the same period in 2014. This increase is paired with lower delinquency and charge-off rates, which are currently at historic lows and are better than those posted by competing lenders in the marketplace. Only 0.29% of CU loans were 60-days delinquent in Q2 of 2015, down from 0.31% through Q2 of 2014, and lower than the 0.38% and 0.50% rate posted by captives and banks respectively.