Experian: Credit unions capture a bigger share of the auto loan market

The 22% of the auto finance market controlled by credit unions during the first quarter represented a 3 percentage point increase from a year earlier, according to data from Experian. In contrast, captive financial companies saw their share drop to 25% in the first quarter, down 5 percentage points from a year earlier.

Incentive spending by automakers fell to $1,640 in the first quarter, down $1,836 or 53% from a year earlier, according to data from Motor Intelligence.

“Credit unions tend to focus on the used vehicle market and given ongoing inventory shortages that are reducing the availability of new vehicles and increasing demand for used vehicles, it makes sense to see this type of increase in market share,” Zabritski said.

Used vehicles were involved in 59% of all financings in the first quarter, up from 57% a year earlier, according to Experian. However, that’s less than the 60% reported in the first quarter of 2020 – a period well before the effects of the COVID-19 pandemic in the United States.

Credit unions held 16% of the new vehicle finance market in the first quarter, up 5 percentage points from a year earlier, and 26% of the used vehicle finance market, up 2 points compared to the previous year.

Lenders were “definitely taking a slice of the new lending side,” Zabritski said.

Captive finance companies played a role in 50% of the new market, down 7 points, and 8% of the used market, down 1 point from the previous year.

Experian’s tallies include direct and indirect auto financing. Zabritski said his company doesn’t have a way to disentangle these individual segments from the aggregate data.

“For the record, however, I hear more and more [bank and credit union] customers…that there is a marked increase in emphasis on direct lending,” she said.

Credit union share in the first three months of 2022 was the segment’s best performance since the third quarter of 2018, which rose about a quarter of a percentage point.

Credit unions were particularly strong that year, to the point where they nearly reached a 30% share and nearly beat banks as the No. 1 segment for used-vehicle financing, said Zabritsky.

This period also saw more customers with prime or better credit seeking used vehicle financing — two aspects of the market that credit unions are focusing on, Zabritski said.

“It was a really, really good time for the credit union goal,” she said.

Priscilla C. Carnegie