Q&A

Credit unions’ 36% auto share is ‘significant’

Schenk: Credit unions are working more closely with dealers.
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Credit unions’ share of total auto loans outstanding reached 36.2 percent last year. That’s due in part to better relationships with auto dealers and growing membership ranks, said Mike Schenk, vice president economics and statistics for the Credit Union National Association in Madison, Wis.

He said as of the end of 2013, credit unions had about $72 billion in new-vehicle loans outstanding, an increase of about 13 percent from a year ago. For used-vehicle loans, credit unions had about $128 billion outstanding, up 10 percent.

Schenk discussed the gains with Automotive News Special Correspondent Jim Henry this week.

Volume is up, but did credit unions gain share in 2013?

Our market share did increase in 2013, from about 36 percent to 36.2 percent of auto outstandings. It’s pretty significant, not just that share went up but that credit unions have 36 percent share in the first place. If you look at credit unions overall, they collectively control only about 7 percent of the consumer financial assets, but they have a 36 percent share of automobile.

Are auto loans on the front burner for credit unions?

At the end of 2013, December 2013, used cars made up almost 20 percent of total credit union loans. New-vehicle auto loans were about 11 percent of the total. That’s a significant increase over a fairly short period of time. At the beginning of the downturn, new and used were about 17 percent each of total credit union loans.

So most of the increase is in used vehicles?

Starting with 2007, credit unions collectively lived through substantial declines in new automobiles on their portfolios, reflecting the general focus on used in the consumer sector. So we suffered through portfolio declines in 2008, 2009, 2010 and 2011 in the new automobile portfolio. But now we are experiencing a very healthy increase -- in 2012, up 9 percent; in 2013 up almost 13 percent in the new auto portfolio.

Is the new/used mix changing for credit unions?

The new-auto portfolio is the fastest-growing segment for credit unions. The used-automobile portfolio is the second-fastest.

How are credit unions gaining share? Credit unions gained share in the downturn when captives and banks were hurting. But they have hung on, in the recovery. Is it partly an increase in indirect lending at dealerships?

No. 1, credit unions are working more closely with dealers. ... It’s safe to say you’re right about the prevalence of indirect lending, although we’ve been involved with indirect lending for quite some time.

No. 2, membership is up. In 2013, credit union membership was up by 2.4 million [to about 97 million], a 2.5 percent increase. Never in history did credit unions add 2.4 million in a single year. That broke all records. And we haven’t seen a 2.5 percent increase in 15 years.

The third leg of the stool is that because of the difference in structure -- credit unions are democratically controlled by depositors and borrowers -- the deal the average consumer can get would be substantially better than they would get at commercial banks.

You can reach Jim Henry at autonews@crain.com.

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