Credit unions see record auto market share in Q2 2022

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With the onset of the chip shortage, captive lenders began to move away from the strong incentives that kept sales going at the start of the pandemic. Coupled with rising vehicle prices and interest rates, this has created a unique opportunity for credit unions to achieve their highest market share in history, as they remain one of the few lenders to offer even lower interest rates.

According to Experian’s “State of the Automotive Finance Market Report: Q2 2022”, credit unions’ market share increased to 25.81% from 18.32% in Q2 2021. In comparison, captives declined to 22.64% this quarter, compared to 28.47% the previous year. .

This is the largest increase in total credit union market share ever – from 22.38% in Q2 2018 to 19.97% in Q2 2019 and 18.63% in Q2 2020.

Breaking down the data further, credit unions saw the strongest growth in market share for new and used vehicles. In the second quarter of 2022, the market share of new vehicles from credit unions increased to 26.69%, compared to 15.27% in the second quarter of 2021 and increased from 23.49% to 28.62% year on year on the other for the market share of used vehicles.

At the same time, the captives’ new vehicle market share increased from 44.88% in Q2 2021 to 36.29% in Q2 2022 and their used vehicle market share stood at 7.89% this quarter. , compared to 8.51% the previous year.

Even as inventory shortages and other economic hardships remain pervasive in the auto industry, captives are forgoing traditionally onerous incentives and apparently continuing to offer higher interest rates than other lenders, driving down of their market share. This contrasts with credit unions, which have always been known to offer lower rates.

Lower interest rates allow for potential gain in market share

As vehicle prices continue to rise, consumers seem to be looking for financing options that can mitigate the increase in average monthly payment, making it important for lenders to analyze these trends and better understand why the market could change.

For example, comparing lender types in Q2 2022, credit unions offered an average new loan rate of 3.72% and an average used loan rate of 5.24%. Meanwhile, captives had higher rates, reaching 4.18% for an average rate of new loans and 8.18% for an average rate of used loans.

Analysis of past lending rates from lenders shows that captives have increased their rates year over year, while credit unions have remained fairly flat. In the second quarter of 2021, the average new lending rate for captives was 3.44% and their used lending rate was 7.48%. During the same period, credit unions had an average new loan rate of 3.87% and an average used loan rate of 5.21%.

As consumers turn to different lenders when looking to finance a vehicle, it is important for professionals to know whether they are interested in a new or used vehicle, as interest rates can have a major impact. on average monthly payments.

Auto Finance Trends

While credit unions generally focus on the used car space rather than new cars, the sharp increase in their new vehicle market share this quarter indicates that they could also turn their attention to the new car space.

Although consumers continue to opt for used vehicles as they seek the most economical option, credit unions have a number of opportunities to support growth in new market share and used – since used vehicle financing accounted for more than half of the total financial market.

In the second quarter of 2022, used vehicle financing stood at 61.78%, compared to 58.48% the previous year. While new vehicle financing accounted for 38.22% of the total financial market, down from 41.52% in Q2 2021.

It’s not unusual for consumers to prefer used vehicles, as there was a noticeable difference in average monthly payments this quarter. For example, the average monthly payment for a used vehicle increased from $440 in Q2 2021 to $515 in Q2 2022 – compared to the average monthly payment for a new vehicle, which reached an all-time high of $667 this quarter. , compared to $582 the previous year. .

While increased used vehicle financing can have a positive impact on credit unions gaining market share, analyzing multiple data points will allow the lender to properly help consumers find a vehicle. that meets their financial needs and create more opportunities for continued market share growth. .

Melinda Zabritsky

Melinda Zabritski is Senior Director of Auto Finance Solutions for Experian, headquartered in Schaumburg, Illinois.

Leslie M. Gill