As economic pressures and digital disruption reshape the lending landscape, credit unions have a unique opportunity to grow by leaning into their strengths: personalized service, adaptability, and a member-first mindset.
Navigating market pressures
Rising negative equity is reshaping consumer behavior and placing added financial strain on many borrowers. These consumers are cautious about trading in or upgrading their vehicles. This dynamic presents a challenge—but also an opportunity—for credit unions to step in with thoughtful, responsible support.
J.D. Power reports an 11% increase in financially vulnerable borrowers since 2021, alongside a 13% decline in financially healthy borrowers. With this shift, credit unions have an opportunity to lead with flexible, personalized auto loan solutions that prioritize financial wellness and informed decision-making.
Captives continue to dominate the new car space with subsidized interest rates, prompting many credit unions to shift their focus to the used car market. This space presents a strong opportunity for credit unions to offer competitive rates, transparent terms, and service-driven experiences that help build trust and deepen relationships.
EVs: Where sustainability meets strategy
Electric and hybrid vehicles remain a key part of today’s auto market. With electric vehicles (EVs) projected to account for 25% of U.S. auto sales in 2025—and battery EVs alone expected to reach a 10% market share, according to Autobody News—credit unions need to evolve their offerings. By developing specialized products credit unions can lead the charge while protecting their portfolios.
Meeting members where they shop
As more auto purchases move online, credit unions must integrate lending into the digital shopping experience. Instant preapprovals, seamless applications, and platform visibility are now table stakes. To compete, credit unions need to be embedded where members shop—ensuring they stay relevant and top of mind throughout the buying process.
Leveraging technology as a competitive advantage
Automation and AI are key to driving growth and exceeding member expectations. By streamlining approvals and reducing friction, credit unions can deliver faster, digital experiences.
Selecting the right technology providers can help improve operational efficiency while improving accuracy in credit decisioning.
Success in 2025 will depend on several key strategies:
- Flexible lending solutions that address rising financial vulnerability and negative equity.
- Strategic partnerships with dealers, online marketplaces, and lending tech providers to extend their reach.
- Sustainable financing programs tailored for EV buyers to reinforce commitment to environmental responsibility.
- Frictionless digital experiences that streamline the car-buying and loan approval process.
Credit unions are well-positioned to lead in this evolving landscape if they continue adapting to consumer expectations and technological changes. Those who align their strategies with emerging trends will do more than keep up—they’ll accelerate ahead.
