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Fueled By Economic Growth, Auto Sales Expected To Stay Strong In 2017

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BY BILL PRICHARD

Is your credit union poised to capitalize on the auto selling momentum that will continue humming along in 2017? CUs should be doing everything they can to take advantage of this driving force. As luck would have it, one of the key factors in leveraging auto loan volume is something that is completely within a credit union’s control.

Fueled by several years of strong growth, even the Federal Reserve’s increase in interest rates and the rough-and-tumble presidential election should not dampen 2017 auto sales and lending, which are expected to stay strong through the new year. National Automobile Dealers Association (NADA) chief economist Steven Szakaly predicts sales of 17.1 million new cars and light trucks in 2017, a slight decline from 2016 sales of 17.4 million new vehicles.

“We are headed toward a stable market for U.S. auto sales, not a growing market,” Szakaly said last November in advance of the Los Angeles Auto Show. “The industry has achieved record sales, and pent-up demand is effectively spent…. It’s important to recognize that there are some political unknowns, but the economic outlook for 2017 looks extremely positive for auto sales, particularly light trucks.”

NADA also forecasts that dealerships will sell 15.3 million used vehicles in 2017, compared to an expected 15.1 million used car sales in 2016. The total used vehicle market will exceed 40 million retail sales in 2017, according to the association.

Szakaly said that auto sales momentum should be maintained by the overall positive economic outlook for 2017, with a projected gross domestic product growth at 2.6 percent, employment growth between 150,000 to 180,000 jobs per month and the price for regular-grade gasoline staying at less than $2 per gallon. Also, the Fed’s rate increase is expected to have little effect on auto loan rates, at least in the near term.

Credit Union Industry #2 Auto Lender

John Caddell, lending manager at CO-OP Member Center (CMC), a wholly-owned subsidiary of CO-OP Financial Services, points out that increasing auto sales means growing loan activity for credit unions. The credit union industry is already the nation’s second largest source of auto loans behind banks and ahead of finance and captive companies, such as those lenders dedicated to a specific auto manufacturer or dealer.

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