Banks dominate auto finance, overtaking captives

The shake-up among auto lenders touched off by the credit crisis in 2008 continued last year, with banks and credit unions emerging as winners, according to Experian Automotive's AutoCount ranking.

Lenders in the bank and credit union categories increased their share of outstanding auto loans, while captives and independent finance companies suffered steep declines, the AutoCount study shows.

As a group, banks increased their retail auto loan portfolio 2.7 percent to $236 billion, while the portfolio for credit unions jumped 1.2 percent to $149 billion.

Chase Auto Finance seized the spot as the nation's highest-volume retail auto lender, and Wachovia Dealer Services ranked third, according to the list. (See table below.)

Toyota Financial Services and America Honda Finance were the second- and fourth-ranked lenders. Rounding out the top five was GMAC Financial Services -- the top-ranked lender for many years. Experian includes GMAC among the captives even though it converted to a bank holding company in December 2008.

Frozen credit markets gave banks and credit unions the upper hand. Banks and credit unions in general had better liquidity than some of the captives and independent finance companies.

Leasing cutbacks

Cutbacks to vehicle leasing programs, typically the domain of the captives, also reduced market share for some captives.

While import captives such as Toyota Financial Services, American Honda Finance and Nissan Infiniti Financial Services continued to lease aggressively, GMAC and Ford Motor Credit -- longtime leaders in the leasing business -- de-emphasized leasing during the credit crisis.

AutoCount data show that Toyota Financial Services stepped up its lease programs during the fourth quarter and bumped Chase from the top rank during that period.

In the fourth quarter, Toyota Financial wrote one in five of all the vehicle leases, and leasing was 27 percent of its business, the data show.

Leasing is unlikely to be as strong a marketing tool for Toyota this year in the wake of its recall problems.

A lease's monthly payments are calculated using a vehicle's value when the lease expires. Strong residual values helped Toyota Financial offer attractive leases in 2009. But those values are sliding as perceived quality drops, Automotive Lease Guide has reported.

The residual value of Toyota cars and trucks will lose 1 percent over the next three years, which could depress the automaker's sales, Automotive Lease Guide said.

GMAC edged into third place during the fourth quarter, as federal aid improved its cash position and as it modestly cranked up its lease volume.

Top 10 auto lenders in the U.S. in 2009
 Market Share
1. Chase Auto Finance6.75%
2. Toyota Financial Services6.14
3. Wachovia Dealer Services4.3
4. American Honda Financial Services4.26
5. GMAC Financial Services3.7
6. Ford Motor Credit Co.3.46
7. Nissan Infiniti Financial Services2.29
8. Bank of America1.99
9. BMW Financial Services1.84
10. Capital One Auto Finance1.76
Source: Experian Automotive
* Rankings based on state vehicle registration data on retail loans and leases for new and used vehicles