With a combination of used vehicles reaching their maturity mark for some car drivers and record financials from manufacturers that have emerged from a dismal scene, 2013 may shape up to be a solid year for auto lending growth.
Through September, the latest credit union industry data on record, vehicle loan growth at credit unions was estimated to be close to 9% with new vehicle loans up 8.3% and used vehicle loans up 9.4%.
The differences are stark for the same period in 2011 when credit unions were in the midst of a negative 0.1% contraction when a 9.3% drop in new vehicle loans was offset by a 5.6% increase in used vehicle loans.
Roughly 48% of all credit union loan growth since August 2011 has been attributable to vehicle loans. Currently, 29.5% of all credit union loans are vehicle loans, up from 28.8% at this time last year.
Those record stats bode well for the industry in 2013, as some may see a renewed focus on building dealer relationships and service particularly as independent dealers boost their efforts to form partnerships.
Indirect loans helped to boost credit unions’ overall vehicle loans in 2012. That trend is expected to continue next year as point-of-purchase financing is poised to help grow loan portfolios.
Industry experts have also said there may be continued pressure to make money on ancillary products, which could potentially favor lenders who allow higher carries.
Leasing is also expected to continue to grow with a large number of leasing customers return to the same dealership where they got their last car.
Despite the financial hardships that members and other experienced over the past few years, auto loan delinquency rate reached its lowest level since TransUnion began tracking the data in 1999. That trend may continue in 2013 as the demand for both new and used vehicles and higher used vehicle values is most likely to carry over into the New Year.