ONTARIO, Calif. — Credit unions on the CU Direct Auto Lending Network represented the fourth largest auto lending segment during the first quarter 2014, growing their origination count by 25.4% from a year ago to 282,741 loans, CU Direct recently reported.

The segment did this despite the harsh winter weather that hampered sales during the first two months of the year. They also did this despite feeling the effects of the leasing boom. As one analyst noted during CUDL’s June 26 webcast, 70% of lease customers were buyers with a prime score of 680 or higher — a core customer segment for CU Direct credit unions.

“We may have reached the peak penetration among lease customers,” said Jose Torres, a market research analyst for CUDL. He did note, however, a 10-point decline from a year ago in the average credit score for leases.

“The key takeaway here is the lease option is reaching further down the credit quality ladder,” Torres added. “In the process, I think they are minimizing loan demand for credit unions and other noncaptive players.”

Including credit unions not on the CUDL network, the lending segment captured 23% of the $125 billion in auto loans originated in the first quarter, Torres reported, citing data from Experian Automotive. That’s an improvement of 200 basis points from the year-ago period and the largest year-over-year change in origination balances among all other lending segments.

“Their 19.2% increase [year-over-year change in origination balances] far exceeded the 8.7% increase for the entire industry,” Torres noted, adding that credit unions grew their share of the market from 17.9% in the year-end 2013 quarter to 18.3% in the first quarter.

Credit unions also financed a larger percentage of subprime borrowers during the opening quarter, accounting for 31% of subprime originations. Leading the way were finance companies, funding 64% of subprime deals in the first quarter. Subprime-funded applications among CUDL credit unions, however, accounted for only 9% of funded loans in the first quarter — only a third of what the entire credit union segment did during the opening quarter.

Looking at total loan portfolios for credit unions, auto loans accounted for 31.1% of the segment’s more than $594.9 billion loan balance in the first quarter, second only to first mortgages. But auto loans represented the fastest growing credit type in the segment’s portfolio, growing 12.9%, or $23.4 million, in the first quarter.

Credit unions also recorded the lowest 60-day delinquency rate among all lending segments in first quarter at 32 basis points, a slight increase from a year ago. Industrywide, 60-day delinquencies fell two basis points from a year ago to 63 basis points.

Credit unions also grew their membership counts by 3.2 million individuals from a year ago, with Torres noting that auto penetration grew 90 basis points to 23.5%. The indirect channel has also served as a great generator of new membership, with new members accounting for 63.7% of loans originating through the CUDL platform.

Torres also provided a summary of vehicle sales in the first quarter, noting that one in three vehicles purchased in the first quarter being new, the highest new-to-used ratio in 17 years. And while winter storms slowed the industry’s performance during the first two months of the year, new-vehicle sales rebounded in March, April and May, increasing 5.6%, 7.7.% and 11.3%, respectively, from a year ago.

The CUDL market analyst also noted that May’s seasonal adjusted annual rate of 16.7 million was the highest since February 2007. And with an improving job market, historically low interest rates and the Conference Board’s Consumer Confidence Index improving from 80.7 in January to 83 in May, Torres said he believes the sales pace continue to pick up steam.

“Minus any unforeseen events, all indicators point to car sales accelerating in the second half of the year and continuing the momentum we’ve seen in the last three months,” Torres noted.