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A large shift in the auto industry that compares to the days of the Model T coupled with an economic environment not seen in 40 years has resulted in an auto lending industry that is rapidly changing and full of unknowns.
“For all of the challenges, this is one of the most exciting times to be in auto lending,” Jason Tepperman, chief lending officer at Caribou, said during a breakout session at the 2022 CUNA Lending Council Conference Thursday in San Diego.
Even with the changes, Tepperman says credit unions are well-positioned to be competitive in the auto lending market—either direct, indirect, or refinancing. However, consumer behavior is also changing. They are:
While consumer behavior is changing, the state of the auto industry is also changing in a way that will impact future auto lending, Tepperman says.
Electric vehicles are beginning to take hold. In 2020, electric vehicles accounted for 2% of the auto vehicle share and increased to 6% in 2022. However, Tepperman says that by 2030, electric and hybrid vehicles are expected to make up the majority of vehicles on the road. This will mean credit unions may need to rethink auto lending, including determining new ways to serve members and the new risks electric vehicles present.
Tepperman says three factors will impact the residual value of an electric vehicle: