Despite four consecutive years of vehicle loan portfolio declines at credit unions, used vehicle lending continues to be a beacon of light for the industry.

In 2010, used vehicle loans increased 4.1%, according to CUNA Mutual Group's February Credit Union Trends Report. This $4.1 billion gain added to bottom-line results as the average rate charged in 2010 was 5.4%, well above its investment alternative. Small growth improvements are forecast for 2011, the report's data showed.

Meanwhile, the new vehicle loan portfolio declined $1.1 billion in December with the total 2010 reduction coming in at $12.6 billion or 16.4%. This is four years of retrenchment for this portfolio segment, according to CUNA Mutual Chief Economist Dave Colby.

The 4.8% annual decline in overall auto lending translates into a net reduction of $8.5 billion in loans. At $168.3 billion, Colby said this key loan portfolio segment is down $14.4 billion or 7.9% from its peak in September 2007.

"January 2011 sales data and showroom traffic numbers are encouraging, but we continue to believe credit unions' near-term share of new vehicle financing will be limited," Colby said.