WEST PALM BEACH, Fla. - Despite credit unions' best efforts to garner members' vehicle financing, CUs' auto loan portfolios continued to show the effects by October 2002 of competing with record low mortgage rates and dealers' 0% financing offers. Data for all credit unions from CUNA's Economics and Statistics Department...
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WEST PALM BEACH, Fla. – Despite credit unions’ best efforts to garner members’ vehicle financing, CUs’ auto loan portfolios continued to show the effects by October 2002 of competing with record low mortgage rates and dealers’ 0% financing offers. Data for all credit unions from CUNA’s Economics and Statistics Department showed that at the start of the fourth quarter 2002, new auto loans accounted for 17.8% of CUs’ loans and used autos made up 20.9%. In October 2001, new and used auto loans comprised 19.1% and 20.6%, respectively, of CUs’ portfolios. In comparison, fixed-rate first mortgages increased from 19.5% to 21.0% share of the pie. New auto loans slice of credit unions’ loan portfolios has shrunk consistently since October 2001. The year 2000 closed with the loans comprising 20.1% of their portfolios, but that figure has slid ever since. Callahan & Associates new/used auto loan data for credit unions over $50 million in assets supports CUNA’s findings. Although the total value of new and used auto loans have increased over the past two years, the loans have shrunk as a percentage of these CUs’ loan portfolio. In 2000, CUs with $50 million or more in assets financed $33.8 billion in new auto loans and $44.0 billion in used. In 2001, the value of new and used auto loans grew to $48.2 billion and $49.3 billion. By September 2002, CUs financed $50.5 billion and $57.6 billion in new and used auto loans, respectively. But in terms of what percent new and used auto loans accounted for CUs’ loan portfolio, Callahan shows new auto loans at 17% and used auto loans at 21%, as of September 30, 2002. The data mirrors CUNA’s statistics. What do credit unions have to look forward to with auto loans this year? Auto executives at least are less confident than they were a year ago about the industry’s return to profitability. Results to a survey conducted by consulting firm KPMG, LLP from September through early November among 100 senior auto executives from leading global auto manufacturers and suppliers showed those interviewed expect lean times in the auto industry to remain until 2005. In the company’s survey last year, 36% indicated better profit in 2003, and 24% predicted improved profit in 2004. Most respondents see foreign automakers continuing to take market share from U.S. models. They also said they see less emphasis by the big three automakers – General Motors Corp., Ford Motor Co., and DaimlerChrysler AG’s Chrysler Group – on car buying incentives in the coming years. KPMG’s predictions were supported by an announcement from Fitch Ratings. The company said it expects 2003 will be one of the most important years in recent North American automotive history. Fitch predicts North American light vehicle sales volumes will be down 4 to 7%. -
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