Despite a 7.5% increase in auto sales over the past 12 months, credit unions are not enjoying the uptick in related lending activity.
Brian Turner, director of advisory services at Catalyst Strategic Solutions, an investment subsidiary of Catalyst Corporate Federal Credit Union, said credit union vehicle loans have increased a modest 0.2% so far this year. An 8.3% drop in new vehicle loans has been offset by a 5.5% increase in used vehicle loans, Turner added.
In October, U.S. auto sales increased to an annualized pace of 13.2 million units, the highest level in more than nine months, according to Turner. Light truck sales fueled much of the increase as stability in fuel prices met with both consumer and commercial demand to replace older vehicles, he added. Sales of trucks rose about 9% with SUV sales increasing 8%.
Turner cited Edmunds.com data that showed since 2007, the average age of vehicles nationwide has climbed from 9.8 years to 10.7 years.
“In fact, the auto industry has not experienced a robust sale of new vehicles since 2005 when manufacturer incentives were paired with a stronger economic environment and open wallets,” he said.
NAFCU Chief Economist Tun Wai said vehicle sales have shown strong growth during the past two months owing to pent-up demand, increased manufacturer incentives and the release of new models.
“October provided a second consecutive encouraging report for vehicle sales, but the market still sits below what analysts consider to be a healthy sales figure, and further improvements are expected to be gradual,” Wai said based on NAFCU's latest Macro Data Flash report.
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