There are strong economic indicators suggesting 2015 will show solid growth potential for credit union automotive portfolios. As reported by Experian Automotive, auto loan portfolios increased by 11% in 2014. The year ended with $866 billion in outstanding loan balances compared to $782 billion in 2013.
A major part of this growth can be attributed to leasing. Taking that into consideration, GrooveCar, which provides leasing products to credit unions and their members, conducted a survey of its automotive dealers. Dealers were asked specific questions on the leasing market including, what percentage of purchases represented leasing? How does that percentage compare to sales a year ago? What reasons were lease options chosen? Customer demographics and dealer's objective in choosing a specific lender were also researched.
In our survey, which focused on New York, New Jersey and Massachusetts markets, we found 60% of business was derived from vehicle leases. When asked how this compared to the prior year, 38% reported they were seeing a higher demand for leasing.
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