February 2, 2026
After several years of turbulence, 2025 wrapped up with auto lending in a more stable (if still a little stretched) position.
In Q3, some $184 billion in new auto loans and leases was originated, and auto loan balances remained at historic highs—roughly $1.66 trillion outstanding. That represented just 0.7% growth year-on-year, however. High balances, decent origination, but essentially flat.
On the face of it, this is nothing to get too excited about but after years of market chaos, stability’s no bad thing. Sadly, no good news goes unpunished.
History repeats itself: Industrial loan charters approved for Ford and GM
In January 2026 the FDIC approved industrial loan charters (ILC) for Ford Credit Bank and GM Financial Bank. Just like that, the turbulence is back.
Of course, this is not a radical concept in isolation. Captive finance is part and parcel of auto-lending and ILCs are nothing new either. GMAC, the former financing arm of General Motors, operated as an industrial bank for years before being restructured during the financial crisis, and repositioned as the consumer-facing bank we now know as Ally.
What’s different this time, however, is the macroscopic circumstances.
Cost-of-funds as a competitive lever
Perhaps most pressing for credit unions is what this means for cost-of-funds. Just over the last few years, deposit competition and wayward Fed cycles rewrote the cost-of-funds playbook. These new charters allow the automakers to fund auto lending with FDIC-insured deposits that could significantly slice Ford and GM’s cost-of-funds and protect them both (somewhat) from market fluctuations.
Of course, with funding and distribution perfectly aligned like this, the embedded finance experience is frictionless too; exacerbating the fact that many credit unions already struggle to stake a claim in the point-of-sale experience.
History doesn’t repeat itself: Capital requirements in place
It’s not all free sailing here. The last time an automaker-linked finance company operated at scale as a bank (aforementioned GMAC-cum-Ally) it required sizeable federal support during the financial crisis, after heavy auto and mortgage losses. It would seem the FDIC are eager to avoid history repeating itself here and have obliged both banks to hold a minimum 15% tier 1 leverage ratio—some 3X the agreed “highly capitalized” standard.
That reduces risk on a lot of fronts, but it doesn’t reduce the competitive friction this all presents for credit unions.
In Q3 2025, banks led total automotive financing with roughly 28.9% market share, followed by captives at 26.2%. Credit unions brought up the rear with 21.1%. For used vehicles (traditionally a strong market for credit unions) the race was a little tighter: Banks held 29.7% of the markets with credit unions close behind at a flat 28%. But when market share differentials are this tight, cost-of-funds and controlling the point of sale become far more critical than just rates alone.
How credit unions can step up
The first thing for credit unions to do is acknowledge the news. Yes, ILCs have existed previously and do currently exist, too. But when two players with the size, scale and resources of Ford and GM step (back) into the ring, you can be sure they do so after reading the tea leaves. This is a growth opportunity for them, and one they intend to dominate.
It’s also worth accurately framing the situation. Ford and GM aren’t new lending competitors, they’re banks … with a wholly-owned distribution channel and preferential cost-of-funds. Yesterday’s strategies won’t work when competing against tomorrow’s banks.
For credit unions, this is as much a balance sheet conversation as it is a distribution one. If auto lending becomes more competitive at the point of sale, and more sensitive to funding economics, flexibility becomes a differentiator. The institutions that will hold their ground—or better yet, grow—are not necessarily those with the lowest headline rate. Instead, it will be the credit unions with savvy liquidity and capital strategies that come out on top.
Network lending and loan participations create that elasticity—that’s exactly what ALIRO was set up to do. Programs like ALIRO allow credit unions to scale into demand, shed exposure when necessary, and optimize their returns.
This is a challenge for credit unions, no doubt about it, but one that a cooperative system is uniquely able to overcome because while Ford and GM focus on what they can control, credit unions can look to one another, and partners like LendKey, to leverage scale and opportunity collaboratively. That, ultimately, will drive long-term growth.