Credit Unions Make Large Auto Lending Gains in March

Credit unions made another large gain in automotive lending in March, but their gains slowed in credit card lending.

CUNA’s Monthly Credit Union Estimates showed credit unions topped the half trillion mark in automotive loans at March 31 with a $500.5 billion balance. The credit union balance represents a 35.1% share of total automotive loans shown in the Fed’s G-19 Consumer Credit Report for March.

Comparing the two reports released Friday shows that credit unions’ share of automotive balances rose from 31.8% a year earlier and 34.8% on Dec. 31. Credit unions’ share was 25% in March 2015, and rose to 32.6% by the end of 2018. Their share slipped to 31% by June 2021, but has been rising since.

Experian, which measures automotive originations by quarter, also showed gains by credit unions against banks and other lenders last year. Experian expects to release its State of the Automotive Finance Market report for the first quarter in early June.

The U.S. Bureau of Economic Analysis shows new car sales sold at a seasonally adjusted annual rate of 14.8 million in March, up 9.5% from a year earlier and up 11% from Dec. 31. They also showed a surprisingly strong 7.2% gain from March to April.

Cox Automotive reported that dealers sold used cars at a 35.4 SAAR in March, down 3.6% from a year earlier and up 1.1% from Dec. 31. In April, it estimated used cars sales fell 8%.

“The used retail market has lost momentum as the new market has gained. As the retail market has slowed, wholesale vehicle value trends have also turned,” Cox Automotive Chief Economist Jonathan Smoke said Monday.

Smoke said pricing power for new cars has declined “but remains strong relative to pre-pandemic comparisons.”

Meanwhile, the Fed’s G-19 report showed 12-month growth in credit card balances starting to subside from the peak catch-up rates from mid-2022 through January. Balances fell sharply during the peak pandemic period, but began recovering in the summer of 2021.

On a seasonal basis, March typically shows month-to-month declines as consumers use tax rebates to help pay down debt built up during the holidays.

Credit unions held $74.2 billion in credit card debt March 31, up 14.4% from a year earlier. The drop from February to March was 0.1%, matching the average February-to-March drop from 2016 through 2022.

Banks held $1.1 trillion in credit card debt on March 31, up 15.7% from a year earlier. Unlike credit unions, banks outperformed from February to March with a 0.9% gain. Their average over the previous seven years was a 0.7% monthly drop.

Credit unions’ share was 6.3% in March, basically unchanged from a year earlier and a month earlier. Banks’ share was 91.1% in March, up from 91.0% in February and 90.6% in March 2022.