Even as car sales are expected to stall this year, credit unions might pick up lending share this year.
John Toohig, head of whole loan trading for Raymond James in Memphis, Tenn., told CU Times Tuesday he expects 2026 to be the year credit unions start to get back some of the share of the auto lending market they lost in the past two years.
Credit union market share peaked in 2022 and 2023 because as the Feds raised rates, credit unions hesitated.
Toohig said he recalls around 2023 telling a credit union audience that they weren't just 50 or 75 basis points off the market; they were 200 basis points too low.
"I thought they were going to start to throwing tomatoes and staplers at me," Toohig said. "They thought they were beating banks at their own game. The truth was they were giving their money away."
At the same time, credit unions were lending for used cars that had skyrocketed in price because of pandemic-related shortages. Those prices would soon decline, leaving loans that had started off with 110% loan-to-value ratios rising to 150% LTVs. And the era of stimulus checks was ending.
"As they started to collect on those loans, they got crushed," he said.
And credit unions saw their charge-offs rise, they pulled back from the market.
That soured 2022 vintage is rolling off the books and credit unions now are pricing closer to rates for two-year Treasury bonds.
"They're far more disciplined," he said. "By the end of this year, you'll see credit unions have taken back some of the market share they've lost."
Meanwhile, banks and credit unions will be competing for loans in a market not much different than last year.
Cox Automotive forecasted Wednesday that new car sales will fall 2.6% to 15.8 million and used car sales will fall 0.9% to 38.3 million. Sound familiar? It's the same forecast it issued in December.
Chief Economist Jeremy Robb said the forecasts showed little change because the U.S. and Israeli war against Iran hasn't had time to change consumers' behavior – or at least show up in the data.
"We're not seeing a big slowdown from what has happened with the Middle East conflict yet," Robb said.
This might be a breakout year for electric vehicles as more come off leases and the price of gasoline rises, Cox Automotive analysts said.
Also, incentives for EVs are trending higher than for gasoline-powered cars.
"Consumer behavior takes some time to shift," Robb said. "They're clearly watching the price of oil and gasoline."
Contact Jim DuPlessis at Jim.DuPlessis@arc-network.com.
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