With credit unions slowing the pace of originations, about 30% of the independent dealers on CU Direct Lending’s platform pulled out last year, CUDL President and Chief Executive Tony Boutelle told Auto Finance News.
“We’ve seen probably 1,000 independent dealers come off our program [in 2018] because our credit unions stopped doing financing for them,” Boutelle said. Independent dealerships account for about 25% of CUDL’s network, which now totals 12,000.
Despite the “good economy,” independents are “struggling to gain marketshare” because they are being outbid by franchise dealers at auction and are having a tough time securing consumer financing, Boutelle said. “Credit unions and banks are pulling back since they are full of loans in a good economy,” he said. “When lenders fill up with loans, the first dealers that [lenders] cut off are independent dealers.”
CUDL credit unions originated 1.3 million auto loans through November 2018, an 8.1% rise from the prior year period, but that growth is anticipated to slow in 2019. “I don’t think we are going to grow again this year because credit unions are pretty lent out and want to diversify their portfolios into other consumer loans such as mortgage,” Boutelle said, noting that credit union portfolios typically consist of 35% to 40% auto loans. “[Growth] is peaking, but I think [credit unions] will keep lending auto loans at the rate they are lending,” he added.
Despite the origination slowdown and the decline in independent dealers on the platform, CU Direct expects minimal impact to its business. “As long as there are cars to sell, we’ll be okay,” Boutelle said.
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