CENTENNIAL, Colo. — In a year when vehicle sales dropped and auto lenders stopped lending, indirect auto lending CUSO CU Direct Connect saw a 54.7% increase in its auto loans.For 2008, the CUSO averaged just over $100 million a month in loans, a 54.7% increase year-to-date over 2007. CU Direct Connect is owned by over 30 credit unions and links borrowers with 50 participating credit unions.According to state registration data, CU Direct Connect Marketing Manager Carrie Helmers said that credit unions' share of auto loans registered in the state of Colorado was 42.9% at the end of the third quarter, which was up from 32.1% at the end of the first quarter.Nationwide, data from Credit Union Direct Lending showed that credit unions gained auto lending market share over the course of 2008. In November, credit union market share did drop slightly though from 21.6% in October to 21.4%."Even though our loan volume has gone up, one very important point is that the quality of our paper is still very high. We have an average FICO score of 730," Helmers said.CUDL, which is owned by 80 credit unions and serves more than 580 credit unions, said that the CUSO averaged $1 billion in auto loans each month for 2008, which was on target with numbers from 2007. Also, 67.3% of borrowers were prime borrowers in 2008.Tun Wai, NAFCU's chief economist, said that one of the amazing things about credit union auto lending is the good quality of loans that are involved."I honestly believe that credit unions are very important lenders and auto mobile lending is very important to credit unions. I think one of the reasons behind the high quality of loans credit unions see is that they know their members and have a relationship with them," Wai said.In the third quarter of 2008, Wai said though that delinquency rates did climb a little, showing that credit unions are not immune to the current economy."I anticipate more delinquencies going forward, but I'm optimistic that we will see some sort of uptick in the second half of 2009 and some of the delinquencies will improve as the economy picks up."Helmers said they continue to see high application volume and that she predicts credit unions will continue to be very competitive and reliable auto lenders in 2009.In December, overall vehicle sales increased slightly, according to NAFCU, from 10.1 million annualized units in November to 10.3 million. However, 2008 vehicle sales were down by 36% from 2007."Even with incentives, vehicle sales are not shifting too much," Wai said. "The type of vehicles needed shifted with the rise in gas prices, but now that prices are declining, people are thinking they should hold onto their big cars."Looking into 2009, Wai said that he anticipates next year will continue to show low vehicle sales, around 12 million annualized units.In terms of the economy he is slightly more optimistic than others though and predicted that the economy will start to pick up in the third and fourth quarters of 2009."I don't think the government is going to stand by and let the economy go down the toilet. We need quick immediate medicine that will go straight to the problem, but we also need long-term solutions that will help bring change."The bailout package received by Chrysler and General Motors solves the temporary cash flow issue, Wai said. The long-term issues that need to be addressed are restructuring issues, such as what kinds of cars to produce and the quality and efficiency of the cars.Wai cautioned not to be disillusioned because some auto sale numbers will reflect the push that auto dealers make at the end of the year."Be careful about the factor of seasonality. Dealers are clearing lots at the end of the year and have a lot to gain from getting those cars off the lot so you will see an uptick because of that."–[email protected]