Have you paid attention to the used-car market this year? Previously viewed as less desirable by some lenders, used cars are gaining some cachet. Unfortunately, credit unions appear to be missing the boat. According to the recently issued Experian State of the Automotive Finance Market Report for the second quarter of 2020, market share for credit unions in used car financing has declined precipitously since the same time last year. Experian’s report posted a 3.9 percent market share decline to 24.9 percent.
Why the decline? Several factors are likely at play. The market for used cars has grown exponentially. In June, franchised car dealers sold 1.2 million used cars and trucks, according to Edmunds, up 22 percent from 2019. It was the highest monthly total since at least 2007. Credit unions have lower market share with franchised dealers and so are missing the bulk of this sales volume.
New unit inventory issues are also creating a perceived demand for older cars, fed by a roughly two-month halt in production of new cars earlier in 2020. In the first seven months of the year, automakers produced 6.6 million cars and light trucks in North America – three million fewer than in 2019, according to Automotive News. Additionally, consumers are keeping their vehicles for up to 12 years and receiving a tidy sum if they choose to sell, slowing the revolving door of used car inventory.