Several large U.S. banks are hitting the brakes in auto lending, amid intense price competition and ongoing concerns that the sector’s rapid growth has brought new levels of risk.

JPMorgan Chase, Wells Fargo, BB&T and Ally Financial all reduced their auto loan originations by at least 10% in the fourth quarter from the same period in 2015, according to a new report from Autonomous Research.

For JPMorgan, auto loan originations dropped by 13% during the fourth quarter, marking the first quarter since mid-2014 that originations declined year over year. At Wells, car loan originations had increased in five of the six previous quarters prior to a 16% decline between October and December.

“To respond to conditions in the competitive landscape and to maintain our risk tolerances, we’ve tightened our underwriting standards,” Wells Fargo Chief Financial Officer John Shrewsberry said during the company’s fourth-quarter earnings call.

The pullback at big banks comes several years into a long run of rapid growth in the U.S. auto lending market. Total auto loans outstanding hit an all-time high of $1.14 trillion in the third quarter of 2016, a 61% increase from six years earlier, according to Federal Reserve Bank of New York data.

The question now is how long can that level of growth be sustained. Auto loans currently make up 9% of all U.S. consumer debt outstanding, up from 6% in 2010.

At several of the auto lending industry’s largest firms, losses have been rising since 2012, but they remain below their 15-year historical average, according to Autonomous.

In an effort to keep car buyers’ monthly payments affordable, many lenders have been offering longer loan terms. The risk is that if more borrowers do start to default, the vehicles that the lenders repossess will be worth less, since they already have a lot of miles.

In addition, yields on bank auto loans have been dropping. Yields fell from 7% in early 2010 to 3.5% in the fourth quarter of 2016, according to Autonomous. “Auto loan pricing has been brutal this cycle,” the report stated.

Executives at Fifth Third Bancorp and Citizens Financial Group have said recently that they see the opportunity to earn better risk-adjusted returns in other lending segments.

Citizens, based in Providence, R.I., had $13.9 billion in auto loan exposure as of Dec. 31, up 1% from a year earlier. Cincinnati-based Fifth Third had $10.2 billion in auto loans on its balance sheet, down 13% from the fourth quarter of 2015.

Banks, which typically concentrate more on prime auto lending than some of their competitors, only make up about one-third of the U.S. auto loan market. Credit unions and the financing arms of auto manufacturers each account for about one-quarter of the total loan volume.

Ally Financial CFO Chistopher Halmy said during a recent conference call that credit unions are keeping their prices low on loans to borrowers with prime credit scores. “They have picked up a little bit of market share,” he said.

Detroit-based Ally reported a 12% decline in auto loan originations during the fourth quarter, which marked the fourth straight quarter of negative growth.

Brian Foran, a partner at Autonomous, said that the simultaneous retreat by a number of large banks stands to help those lenders that are standing pat in a market that is suddenly less competitive. “That creates a little bit of a window of opportunity for those that have a little bit of dry powder,” he said.

Indeed, a couple of large banks are bucking the trend and increasing their footprint in auto lending.

Huntington Bancshares in Columbus, Ohio, reported an 8% increase in car loan originations during the fourth quarter. And Capital One Financial in McLean, Va., grew its auto lending business by a whopping 31%.

“We take what the market will give us,” Capital One CEO Richard Fairbank said during a recent conference call. “We’ve just found that this year, it’s got a little bit more to give us.”

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Kevin Wack

Kevin Wack

Kevin Wack is a California-based reporter for American Banker who covers the U.S. consumer finance industry.