Vehicle loan originations continued to be a bright spot forcredit unions this year.

Through September, vehicle loan growth was estimated to be closeto 9% with new vehicle loans up 8.3% and used vehicle loans up9.4%,  according to Brian Turner, director and chiefstrategist at Catalyst Strategic Solutions, an investmentsubsidiary of Catalyst Corporate Federal Credit Union in Plano,Texas.

The differences are stark for the same period in 2011 whencredit unions were in the midst of a 0.1% contraction when a 9.3%drop in new vehicle loans was offset by a 5.6% increase in usedvehicle loans, the data showed.  

“October's results put the annualized volume of sales about300,000 units lower than the 14.7 million level the industry washoping,” Turner said. “Still, most car companies reported increasedsales for the entire month which could be an indication that theindustry remains on an upward track.” 

At the Auto Finance Summit held in late October in Las Vegas,John Flynn heard glowing reports about the state of the autoindustry. He is president/CEO of Open Lending LLC/Lenders Protection, an auto loan underwriterin Austin, Texas.

“Virtually everyone is predicting a solid year for auto lendinggrowth in 2013,” Flynn said. “Lenders will continue to tryand grow market share but not at the expense of loan quality and nomajor easing of underwriting criteria,” Flynn said. 

From a drop in gasoline prices to a bevy of lures rolled out bymanufacturers to woo shoppers, the auto industry is on track topost its highest volume since the year before the economy took aturn for the worse in 2008.

Sales growth are in the double digits, with domestic car andtruck sales increasing 25% since 2011, according to Auto NationInc., which tracked activity through June 2012. The sale of importsskyrocketed 56%, with more than 11,500 cars and trucks sold in Junealone.

For credit unions, the resurgence has helped to grow auto loan portfolios, particularly on the used vehicleside. Many have said they are in a more competitive position ascredit union loan rates continue to fall. As of April, the industryexperienced a 2.3% gain in auto loans, the best posting since 2009with $1.1 billion of the $3.9 billion annual gain directly tied togrowth occurring this year.

That revival has also brought out more aggressive competitionwith dealers touting 0% financing on new cars in a race to latch onto eager shoppers.

“We've had to adjust our strategy a bit. We're seeing thegreatest interest on used autos,” said Teri Rapp, chief creditofficer at the $1.2 billion NuVision Credit Union in Huntington Beach, Calif. “We'reoffering the same pricing on new and used for ourmembers.” 

The 0% financing has certainly changed the way NuVision iscourting potential buyers from continuing to adjust rates to carsale partnership promotions, which have proven to be successful. Agoal of $1.2 million was set for a May used car sale on the creditunion's property. NuVision surpassed that bringing in $1.7 millionand several new member relationships, Rapp said.

In addition to partnering with Autoland Inc., a vehicle buyingCUSO in Chatsworth, Calif., and using traditional advertising,which has yielded many pre-approvals, NuVision has installed loankiosks in its branches so that members can apply online, connectwith a representative and get approved in one swoop.

“We want to capture them before they go shopping,” Rapp said.

And in Texas, it's no secret that going big is the likely way togo in the Lone Star state.

Auto loans have helped the $6.7 billion Security Service Federal Credit Union to become the top creditunion indirect lender in the country.

It's here that one is more apt to find a cooperative such asSecurity Service that has a loan portfolio equal to the size of itsassets–$6 billion.

The San Antonio-based financial institution recently celebratedthat billion-dollar lending milestone with indirect auto loans being the clearleader making up 76% of the credit union's loan portfolio, saidJohn Worthington, senior vice president for Security Service. Thesplit between new and used vehicle loans is close at 55% and 45%,respectively.

“We were in the indirect business when credit unions wereaccused of being Communists for doing so,” Worthington joked.“Attitudes have changes. We have a business model that has workedsuccessfully.”

Indeed, in addition to being the nation's top ranked creditunion indirect lender in the country, according to Callahan andAssociates Inc., Security Service is also ranked first in autolending among all financial institutions in the San Antonio areaand in the entire state of Colorado, where Security Service has agrowing presence.

“Because of our unique home equity laws in Texas, our creditunions tend to focus heavily on automobile lending, and SecurityService has done a phenomenal job with indirect auto lending,” saidDick Ensweiler, president/CEO of the Texas Credit Union League.“Having reached the $6 billion mark, it's pretty clear that theyhave a system in place that works well for them.”