credit union auto loan volume

Credit union auto lenders received an early holiday gift in the form of Experian’s State of the Automotive Finance Market Report: Q2 2022. According to the quarterly report, credit unions’ auto lending market share increased to 25.81 percent, from 18.32 percent in Q2 2021. In comparison, captives decreased to 22.64 percent this quarter, from 28.47 percent the previous year. This was the highest increase of total market share credit unions have ever experienced. Whoop!

What prompted this exceptional gain? While captive lenders beat a hasty retreat from incentives, credit unions stayed flexible, offering lower interest rates to consumers seeking the best auto financing deal they could find. In Q2 2022, credit unions’ new vehicle market share increased to 26.69 percent, from 15.27 percent in Q2 2021, and grew used market share from 23.49 percent to 28.62 percent year-over-year.

Is this positive trend an anomaly – or do credit unions have the potential continue this growth into 2023? The answer depends on whether credit unions continue those practices which separate them from the competition as well as responding quickly to shifting consumer needs during these uncertain times.

Credit unions have seen many positive signs in the past couple of months. Interest rates continue to remain at record lows, cash deposits surprisingly have increased, loan delinquencies are down, the unemployment rate is improving, and auto sales are looking strong. For credit unions looking to increase their auto loan origination portfolio, the forecast for the coming quarters is bright. Let us unpack some of these details and ensure you get the greatest return on investment.

Credit union members added deposits faster than the institutions could lend them, resulting in a 19.1 percent YoY increase and a 12-month record. This influx in cash has prompted institutions to expand their loan criteria to capture a broader range of loan originations. Consider evaluating your loan approval process to consider those high-value customers who experienced a blip in their employment history, recently graduated from college but have a higher debt-to-income ratio, or thin-file clients who are adding a side gig and need a different type of vehicle. There are many strong indicators which can make these loans profitable and expand a credit union’s market share to new communities and demographics.