Vehicle Sales Keeping The Foot on the Gas; Plus, CUNA Releases Inaugural CU Auto Lending Monthly Report Findings

 ARLINGTON, Va.—Total vehicle sales saw robust growth at the beginning of 2023 rising from 13.9 million annualized units in December to 16.2 million units in January, with monthly sales levels rising 7.2% year-over-year. Meanwhile, CUNA has released its inaugural Credit Union Auto Lending Report, which offers insights on trends in auto lending among credit unions.

Noah Yosif

“Auto sales are off to a strong start in 2023 given subsiding supply-related headwinds,” said NAFCU Economist Noah Yosif. “This should foster a migration in demand toward new vehicles relative to used vehicles. However, recovery in the new vehicle market may not enable a similar increase in overall spending.”

According to the new data, car sales rose to 3.1 million annualized units last month along with light trucks sales which increased from 10.6 million to 12.6 million annualized units. Domestic production, however, declined 3.9% in December, while inventory rose to 0.68 months of sales, the data show.

“Whether these newfound gains become long-term trends will depend on suppliers’ ability to sustain demand as rising interest rates, higher commodity costs, and general economic uncertainty enlarge retail prices facing consumers,” added Yosif.

CUNA Releases First Monthly Auto Lending Report

Separately, CUNA has released its inaugural Credit Union Auto Lending Monthly Report. The report, which shows data through September 2022, shows consumers on the lowest end of the credit score spectrum average $13,204 in life-of-loan savings compared to other lenders.  

“Access to reliable transportation is a foundational aspect of financial well-being for consumers,” said CUNA Chief Economist Mike Schenk. “The significantly lower average monthly auto loan payments result in substantially higher levels of financial resilience among credit union members compared to non-members.” 

Key Trends

According to the report, national trends in credit union auto lending in September 2022 include: 

• Credit unions’ market share reached 31% in September up from 28% same period last year  
• Credit union balances grew by 17.4% over a 12-month period ending in September and 16.5% year-to-date
• Credit unions’ market share of new loan originations reached another peak in September 2022 at 42.5%, making these member-owned depositories the top auto lender in the county. Credit unions captured 30.0% of the market same period last year.
• Credit unions’ performance in new loan origination has been strong this year while other lenders generally experienced declines in balances. The year-to-date growth rate in origination for credit unions as of September was 28.2% higher compared to the previous year
• Credit unions extended more loans to nonprime credit score borrowers compared to other depository institutions. Non-prime borrowers account for 23% in September 2022 compared to only 14% at banks
• Credit union loan pricing is generally very favorable across the credit score spectrum. In September, the typical consumer with an average credit score who financed a six-year $40,000 auto loan at a credit union would pay an annual interest rate of approximately 5.45% — below the 6.86% bank average rate and well below the 7.64% average rate at a finance company
• The payment performance of all nonprime borrowers is substantially higher at credit unions than at banks. This is due in part to lower interest rate at credit unions which makes loans affordable to members. The 60+ days delinquency rate in September 2022 for credit unions at 0.24% is the lowest in the industry (0.1% for prime borrowers and 0.7% for non-prime borrowers)