Just a year ago, credit unions were in the midst of a 2.3% contraction within their auto loan portfolios.

Fast forward to July 2012, which showed for the first time in more than six years, annual growth for credit union auto lending activity reached 5%, according to CUNA Mutual Group's September Credit Union Trends Report.

The second significant milestone was new vehicle portfolio growth turned positive on a year-over-year basis for the first time in almost five years.

While new vehicle loans have increased in each of the past five months, they remain $30.1 billion (33.0%) below their peak at the beginning of 2007, the data showed.

The used vehicle portfolio growth rate continues to improve with the 7.0% annual gain translating into a $7.4 billion portfolio gain, according to the report.

Meanwhile interest rates for new and used vehicle loans continue to fall, wrote CUNA Mutual Chief Economist Dave Colby in the analysis. 

In total, vehicle loans now represent 29.2% of all credit union loans, according to the data.

“Reports from credit union lenders across the country indicate improving demand for all vehicle loans,” Colby said. “The question remains: Is this just a temporary release of replacement demand or is it sustainable, provided the economy doesn't falter?”