Credit union auto loan market share jumps in Q1 2022

Auto loans (Image: Shutterstock).

Over the past few years, we have seen the share of credit unions in the auto finance market decline, while that of captives has steadily increased, mainly due to the strong incentives offered at the start of the pandemic. That said, it looks like the tables turned in the first quarter.

According to Experian’s “Auto Finance Market Report: Q1 2022”, credit unions experienced their highest total market share in five years – reaching 22.06% in the first quarter of 2022, compared to 18.55% in the first quarter of 2021. This is significant growth for credit unions. , considering that their market share has been declining for a few years, from 21.15% in Q1 2018, to 20.21% in Q1 2019 and 19.28% in Q1 2020.

The gains for credit unions came primarily at the expense of captive lenders, who saw their market share fall to 25.38% from 29.75% in the first quarter of 2021. This is the first time that captives have experienced a decline in a few years, while their market share has increased. from 25.94% in Q1 2018, to 26.06% in Q1 2019 and 26.15% in Q1 2020.

Digging deeper into finance market share trends

Historically, credit unions have focused on used vehicle lending, but that could change. In the first quarter of 2022, the market share of new vehicle finance funds increased from 10.77% in the first quarter of 2021 to 15.79%. Additionally, credit unions continued to grow – more than expected – in the used space, with credit unions’ used vehicle financing growing from 24.45% to 26.48% year-on-year. on the other.

Similar to their total auto finance market share, captive lenders saw a decline in new financings from 56.79% in Q1 2021 to 49.56% in Q1 2022. And their market share used financing also decreased to 8.31% from 9.29% the previous year.

It will be useful to pay attention to data and trends to understand not only the market share but also additional factors and information.

Funding Trends to Primary Buyers

Looking at who is currently financing vehicles, prime and super prime borrowers remain dominant – accounting for just over 64% of total financing in Q1 2022, with prime increasing to 45.45% from 42.92% the previous year and the super premium comprising the remaining 18.96% this year. trimester.

While the prime segment has seen significant growth, the subprime market has seen a significant decline – the total subprime share fell to just over 17% overall in Q1 2022, with subprime declining to 15, 01% versus 16.01% year-on-year. Additionally, deep subprime fell from 2.5% to 2.12% over the same period.

Subprime mortgage issuance has declined steadily over the past few years for a number of reasons, such as overall credit becoming more preferential as more consumers actively manage their credit.

Financing of new and used vehicles

As the auto industry continues to experience inventory shortages, vehicle values ​​continue to inflate, leading to notable year-over-year increases in average vehicle loan amounts and monthly payments.

In the first quarter of 2022, the average amount of new loans increased by $4,155 compared to the previous year, reaching a high of $39,540, inevitably leading to an increase in the average monthly payment for new vehicles, from $577 at $648 year over year.

The average used vehicle loan amount saw a larger increase, from $22,378 in Q1 2021 to $27,945 in Q1 2022. As a result, the average monthly payment exceeded $500 for the first time – reaching $503 this quarter, compared to $414 the previous year.

With average auto loan amounts increasing so dramatically, consumers are looking to save wherever they can, and credit unions often offer the most competitive interest rate for auto loans when incentives aren’t available. which creates more short-term opportunities for credit unions in new and used financing.

Staying close to data and leveraging analytics to understand trends will enable credit unions to support growth within the automotive industry and make more informed lending decisions in the quarters to come.

Melinda Zabritsky

Melinda Zabritski is Senior Director of Auto Finance Solutions for Experian, headquartered in Schaumburg, Illinois.

Priscilla C. Carnegie