Dealers have been doing more retail finance business through credit unions for several years, and those relationships got even closer during the credit crisis. Credit unions, which for the most part avoided the subprime mortgage business, had money to lend when credit was tight.
However, 2010 data from research firm Experian Automotive show that as a group, the credit unions' share of the auto-lending business has dropped back down to pre-crisis levels.
I asked Joe Greenwald, vice president of marketing for CUDL in Ontario, Calif., about the decline. CUDL, a brand of CU Direct Corp., is an online portal and software provider that promotes credit union loans through dealerships.
Greenwald says credit unions are still actively making loans through dealerships, but competition for the business has increased as car sales rebounded and credit eased. The 900 credit unions affiliated with CUDL also are seeing a jump in their business through dealerships since January, he says.
So it's not that credit unions are shrinking from making auto loans. It's that banks, captives and independent finance companies are jumping back into the market.