Severe winter weather causes slow start to auto lending in 2019

Rough start to 2019 for some

Severe winter weather hampered auto lending for credit unions in some areas of the country earlier this year, but a bright spring is bringing optimism. With many economists focusing on a decline in auto sales, Credit Union Journal asked attendees of CU Direct’s recent Drive conference in Las Vegas how their auto lending has been going year-to-date, and what they expect for the rest of 2019.

See here, here, here and here for more coverage of CU Direct’s Drive conference.

This story is part of Credit Union Journal's ongoing series on auto lending, which will run throughout the month of May. More coverage is available here.

Tammie Atoigue, director of consumer lending, $1.7 billion-asset Sound CU, Tacoma, Wash.

The Seattle area got hit by a big snow storm in February, which slowed down our market for a while. We pay a 1.5% dealer reserve, while everyone else pays 2%. We are still at $15 million in indirect loans booked per month, which is right where we want to be. Overall, our portfolio is about 43% in indirect, which is where we want to be. We expect it to be consistent through year-end. We want our other departments to catch up a little and get more loans on the books.

Anna Sandoval, indirect dealer rep, $1.4 billion-asset Arrowhead CU, Rancho Cucamonga, Calif.

We are growing year-over-year because of our focus on dealer relationships. We listen to how we can work together with dealers. We offer them free online marketing – our members can shop for cars from our home page. Our policy changed on terms: we now offer an 84-month loan, on new cars only, for the minimum amount of $25,000. This gives dealers an option to declining. We expect lending will remain strong through the end of the year.

Bob McKay, president and CEO, $1.7 billion-asset Anheuser-Busch Employees' CU, St. Louis

The year started slow for us because the polar vortex hit St. Louis hard. Loans are picking up now. We think the decline was exaggerated by the weather. We are working on our forecast for the rest of the year right now, but barring any disruption, our original forecast of a slight decline from 2018 to 2019 still holds. Our numbers are still healthy.

Trina Larson, dealer rep, $1.2 billion-asset CU of Colorado, Denver

We have seen an increase in indirect lending. We have a CUSO in Colorado that does third-party processing. Dealers like us because they can talk to us. In Colorado there are lots of small, independent auto dealers that other financial institutions won’t work with, but we do. The overall market in Colorado is slow, other than pockets where there is money from energy. Used inventory is really tight, thanks to a huge hailstorm two years ago that damaged a large number of cars. With low inventory, prices are high. Despite all that, we are near where we were last year. By the end of the year we will be down a little bit, but not much.

Monte Dickson, VP of member services, $100 million-asset University of Nebraska CU, Lincoln, Neb.

Our numbers are better than last year at this time. In Nebraska it was really cold the first two months of the year, but in the past two months we caught up. This is our fifth year with CU Direct, and our lending has increased every year. In the last two years we have been way up. It is hard to say what our lending will be like for the rest of the year.