In hindsight, the years 2021 through 2023 were boom years for credit union auto lending.
Experian's quarterly "State of the Automotive Finance Market" reports show credit unions originated just under 20% of loans and leases in 2019 and 2020 for new and used cars.
But their share jumped to close to 22% in 2021, more than 27% in 2022 and back to 22% in 2023.
For the last two years, the credit union share has again dropped just below 20% with banks picking up most of the gain.
Auto loans, which have been a core part of credit union lending for years, are now a shrinking part of the portfolio. NCUA data pulled from Callahan's Peer Suite show auto loans accounted for 34% of credit union loans at the end of 2019 but only 28% at the end of 2025.
The drop has been especially severe for new cars, where the balance fell 6.4% to $165.9 billion in 2024, and fell a further 2.4% to $162.0 billion in 2025.
Used cars fell 1.7% to $320.1 billion in 2024, and then rose 0.7% to $322.4 billion in 2025.
Slowing growth is common, but shrinking balances are rare – at least for auto loans. Like recession rare.
Something significant is going on.
Are credit unions showing a lack of ability to keep up with the competition for auto loans?
Or are they wisely retreating because more loans are underperforming than they expected?
Or a combination of those? Or something completely different?
CU Times brought in two of the usual suspects for interrogation, but they both had alibis.
The NCUA has been providing specific data for indirect auto loans since 2022, but the indirect portion of auto loans has been uncannily consistent at 55% to 56%.
What about the growing amount of auto loans sold to investors as asset-backed securities? Those ABS sales took $2.4 billion in auto loans off the books last year. But ABS sales only accounted for 0.5% of total auto loans and the balance still fell if they're added back to the tally.
Among remaining suspects, loan quality might get charged – at least as an accessory.
Measuring loan quality has been tricky since the pandemic when government subsidies to households drove delinquencies to record lows.
Using 2019 levels as a pre-pandemic baseline, total delinquencies surpassed 2019 levels in 2023 and grew to 0.61% by the end of 2025. Net charge-off rates surpassed the 2019 mark in 2024 and grew to 46% for 2025.
Used car delinquencies and charge-offs are naturally much higher than those for new cars. But even accounting for that difference, the credit quality has worsened much more for used cars.
CU Times also took its questions to the CEO of Palmetto Citizens Federal Credit Union of Columbia, S.C. ($1.44 billion in assets, 86,171 members).
The credit union fit the national model: Auto loan balances dropping for the past two years, credit quality worsening in the last three years and auto loans shrinking in the portfolio. In fact, the shrinkage matched the U.S. average with autos accounting for 34% of Palmetto Citizens' loans in 2019 and 28% in 2025.
President/CEO Robert Dozier said it was part of a plan to rebalance the portfolio with more mortgages and less reliance on consumer loans after he came to the credit union three years ago. It was the same thing he told CU Times after he came on board.
"We were so consumer driven, and, to me, we needed to mitigate that concentration a little bit, and we've added a little bit of commercial, and then mortgage."
And whatever else is going on with auto, Palmetto Citizens' earnings have risen for the past three years to levels well above the national average. Its return on average assets was 1.50% in 2025.
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