Credit unions as a group reaped higher auto balance growth in the first quarter than any other lender type, according to Experian. Credit unions continue to improve their dealership relationships and support a diverse portfolio to stay competitive with banks and captives, experts said.
Combined, credit unions grew their auto loan and lease balance 15 percent in the first quarter to account for 26.4 percent of the total industry balance. The other lender types -- banks, automakers' captive lenders and independent finance companies -- as groups increased their balances 5.9 percent or less in the quarter. Banks still held the most share, at 33.5 percent. Captives had 23.3 percent share, and independent finance companies had 16.6 percent. All lender types except credit unions lost a bit of share from the year-earlier quarter.
"Some of the national bank players have slowed down their growth," Michael Cochrum, vice president of analytics and advisory services at CU Direct, told Automotive News. Some banks have tightened their subprime originations, which gives credit unions an opportunity to gain business from borrowers with lower credit scores, he said.
Credit unions also are capturing a large number of refinanced loans, said Karl Kruppa, senior automotive sales consultant for Experian.
But most important, in Cochrum's view, is credit unions' improved relationships with their dealership partners. "Over the last 10 years, credit unions have gotten better at working in the indirect auto space. I think they present a viable lending partner to the dealership," he said.
The 1,100 credit unions on CU Direct's platform work with 13,000 dealerships. In 2016, CU Direct credit unions funded $32 billion in auto loans, an all-time high for the network.