The good news is that the auto loan market continues to surge in a big way.

The better news is that credit union market share has increased over the past year, according to new numbers released by Experian Automotive.

Total credit union auto loans outstanding in second quarter 2014 topped $191 billion, a $25 billion increase over the $167 billion posted for the same period in 2013. Only banks posted a higher increase, rising to $299 billion in loans outstanding, a $31 billion increase from $267 billion posted during second quarter 2013.

Finance agencies climbed to $126 billion in second quarter, a $24 billion increase over $103 billion the previous year and captive automotive finance companies grew to $223 billion in loans outstanding, a $9 billion jump from $267 billion the year previous.

Auto loan portfolios continued to grow across all financial segments for both new and used vehicle, said Melinda Zabritski, Experian senior director, in a Thursday webinar, State of the Automotive Finance Market Second Quarter 2014.

The growth is fueled in part by an increasing demand for auto loans, with as many as 85% of all car-buying consumers now relying on some form of financing to make their vehicle purchases, she noted.

Loan amounts and length of terms also have inched forward, helping increase auto loan income for credit unions, banks and finance agencies, according to Experian. Despite the challenges, categories of subprime loans continue to increase in many lenders' portfolios.

Zabritski categorized credit unions and banks as conservative lenders that currently hold the smallest amount of subprime loans.

In the second quarter of 2014, credit unions held 28.6% in super prime loans, which Experian defined as those with a credit score of more than 740, 24.6% in prime loans (680-739) and 28.4% in nonprime loans (620-679).

The aggregate industry portfolio included on 14.2% in subprime loans (550-619) and 4.2% in deep subprime (less than 550). Bank numbers were very similar to those of credit unions, Zabritski said.

Year-to-year changes showed credit unions declining 39.4% in the highest risk loan categories, compared to a 34% decline by banks and significantly less by other finance companies over 2013.

Overall, credit unions held 16.69% of the total loan market share in second quarter 2014, at 9.1% the highest increase over the same period in the previous year, according to Experian.

Captives came in second with a 7.8% market increase, while all other categories posted declines of between 3.4% and 9.6%.

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Credit Unions Gain Auto Loan Market Share: Experian

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