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Auto Lending Reveals Economic Environment

As Consumers Continue Spending, Credit Unions Gain Market Share

San Diego County— San Diego County residents continue taking out loans for new and used vehicles at a brisk pace according to the 2nd Quarter Credit Union Trends Report for San Diego County, published by the Ontario, CA-based California Credit Union League.

The report reveals how consumers are “feeling” about purchasing small cars, sedans, trucks, CUVs, SUVs and other large items given the region’s current economic climate, as well as the future of the local auto industry’s health.

For 16 locally-headquartered credit unions in San Diego County as of second-quarter 2017:

  • Loans for new light-weight vehicles hit a record dollar amount ($2 billion).  This translates to 90,260 individual auto loans (average price of $22,158 per vehicle).  This category quintupled (rising 405 percent) from the most recent low in 2013 of $397 million.  (The record peak was $1.03 billion in 2008)
  • Loans for used light-weight vehicles hit a record dollar amount ($2.3 billion).  This translates to 158,530 individual auto loans (average price of $14,508 per vehicle).  This category more than doubled (rising 152 percent) from the most recent low in 2012 of $923 million.  (The former record peak was $1.17 billion in 2008)
  • Combined loans for new and used light-weight vehicles hit a record dollar amount ($4.3 billion).  This translates to 248,790 individual auto loans (average price of $17,283 per vehicle).  This category more than tripled (rising 228 percent) from the most recent low in 2012 of $1.3 billion.  (The former record peak was $2.2 billion in 2008)

The report also gives a sense of credit unions’ rapidly increasing market share within auto lending compared to banks, finance companies, captive financing, and buy-here-pay-here entities.  Credit unions nationwide experienced the highest auto lending growth in second-quarter 2017 versus the same period one year ago according to the latest “State of the Automotive Finance Market” presentation by Experian.

Some experts question whether the current cycle of automobile purchases by consumers has run its course.  But it might take more than “just the end of a cycle” for annual sales at car dealerships to hit a noticeable slowdown according to Dwight Johnston, chief economist for the League.

“Local spending for major purchases continues to be bolstered by the combination of rising wages and job opportunities, which is keeping consumer confidence strong,” Johnston said. “Statewide year-over-year wages in California are rising above the national average—about 4 percent compared to 2.5 percent nationally. And even though growth in jobs has slowed compared to the past five years, many employers are having trouble finding workers. The available labor pool has tightened as job openings remain at an all-time record.”

For a yearly historical chart on national light-weight vehicle sales posted by the Federal Reserve, click here.

Additionally, the credit union report reveals how 965,000 credit union members across San Diego County are spending their money on homes, remodeling projects, higher education, life events, and other big-ticket items (see data on first-mortgages, second-mortgages, HELOCs, business loans, credit cards, and other consumer loans).  As consumers make money decisions in the current environment, local credit unions are at the center of these choices.

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