Over the past few years, credit unions have seen the largest percentage growth rate in the auto lending space, Michael Cochrum, vice president of analytics and advisory services at CU Direct, said during a webcast yesterday. However, it does not mean that credit unions have increased their direct marketshare.
In fact, many credit unions are tightening their lending programs because sales are down overall and the “auto market is shrinking,” he added.
Credit union marketshare dropped to 20% in the second quarter, decreasing from 24% in the first quarter. Meanwhile, captive marketshare rose to 29% — from around 20% in the previous quarter.
“While credit union originations continue to increase, captives took back some marketshare over the last quarter,” he added.
New- and used-car originations mix at credit unions remains consistent, Cochrum said, adding that lenders should develop “more dynamic pricing strategies” if they want to “ensure continued growth and strong presence.”
“I am not going to offend anyone, but indeed the indirect lending programs at credit unions before 2007 were immature,” Cochrum said. “Credit unions started to improve bit by bit after the recession cycle, I would say.”
Additionally, efficiency and technology adoption can help credit unions meet member needs in the long run, he advised. “Credit unions should lead with service, not with price.”