Credit unions gain auto loan market share in declining market

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Credit unions improved their share of the nation’s auto finance market in the third quarter, with a surge in new auto loans, according to an Experian report on Thursday.

However, credit unions are increasing their market share in a shrinking market. Cox Automotive took the unusual step Thursday of lowering its monthly new car sales forecast just three days after it was released. He said he now expects new cars to be sold at a seasonally adjusted rate of 13 million vehicles a year in November, down from Monday’s forecast of 13.4 million SAAR. for the month.

This puts new car sales at the same pace as in October, and down from SAAR 15.9 million in November 2020.

“Based on our data and industry reports, it’s clear that November auto sales were well below year-ago levels. November sales were similar to October – slow said Cox Automotive in an online website update.

“The shortage of chips continues to limit the availability of new vehicles, and this month of November was no exception,” Cox Automotive said.

“The inventory crisis is going to be with us through 2021,” Cox Automotive said. “A broad market-wide breakthrough to a higher level of sales seems highly unlikely until the global supply chain for chips and other parts improves significantly.

Independent economist Elliot Eisenberg said Thursday that chip shortages for cars and other key goods may ease, but the improvement is expected to be slow.

“It looks like automakers have weathered the worst of this crisis.”

Elliot Eisenberg Elliot Eisenberg

Regarding the omicron variant of the COVID-19 virus, Eisenberg said it appears to pose less of a threat to the economy.

Speaking during a webinar sponsored by Origence, a division of CU Direct from Irvine, Calif., Eisenberg said early indications are that the omicron variant may be spreading faster, but doesn’t seem more likely to cause deaths.

Eisenberg said the economy has recovered from setbacks from other variants faster than the initial wave, and will likely recover from setbacks caused by this variant as well, unless evidence emerges that it is more deadly.

“We learn to live with these things,” he said.

Eisenberg also referred to the market share gain for credit unions shown in the Experian report.

Experian’s “State of the Automotive Finance Market” report for the third quarter showed that credit unions and banks were making gains at the expense of captive lenders.

Credit unions generated 20.2% of total auto loans and leases in the three months ending September 30, compared with 18.2% in the second quarter, 17.2% in the first quarter and 19.3% in November 2020. This was also higher than the pandemic pre-share of 19.6% in the third quarter of 2019.

For new car financing, credit unions generated 12.7% of loans and leases, down from 11.2% in the second quarter, 10.1% in the first quarter and 10.9% a year ago. The share of new cars from credit unions was 11.6% in the third quarter of 2019 and fell to a low of 9.5% in the second quarter of 2020, when the worst economic impact of the pandemic occurred .

For used car financing, the gain was small compared to a year ago, but also showed a recovery from the first half. Credit unions generated 25.5% of used car loans, down from 24% in the second quarter and 25.4% a year ago.

Credit unions lost share as the auto market rebounded from the summer of 2020 to the spring of this year.

CUNA senior economist Dawit Kebede said in a video presentation last week that credit unions need to be concerned about both their decline in auto loan market share in 2020 and early 2021, and by the aging of their members.

Dawit Kebede Dawit Kebede

Kebede cited Fed data that shows the average age of a credit union member in 2001 was 44, compared to about 51 for a bank customer. The latest data showed the average age was 51 for credit union members and 52 for bank customers in 2019.

“In 2001, credit unions had an advantage over banks with a younger population, but now that gap is narrowing,” he said.

While young people are a key segment for credit unions, Kebede said many are being lost to internet apps that not only buy cars but also finance online.

“Credit unions need to develop strategies to increase their market share and attract younger members,” he said.

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