America's Car Mart is a car dealer that tends to sell to customers who have a harder time getting traditional financing. In this episode, they’re mentioned because the dealer may be running into serious money problems.
“Rescue funds” are emergency money put into a struggling company to help it keep running. In car retail, it’s often needed to cover the costs of having cars on the lot and paying bills.
“Subprime” means the financing is aimed at people with lower credit scores. Lenders and dealers take on more risk because it’s more likely those loans won’t be paid back on time.
Bankruptcy is what happens when a business can’t pay what it owes. For a car dealer, it usually means they’re short on cash and can’t keep up with bills and financing.
Dealers often borrow money to buy cars for their lots, and that borrowing is called a “floor plan.” A “floor plan cost estimator” helps figure out how much it costs to keep those cars sitting there over time.
Concept
curtailment
“Curtailment” means cutting back or limiting something. In the car dealer context, it usually suggests lenders are tightening credit or dealers are having to scale back operations.
The Ford Mustang Mach-E is an all-electric Ford. Here it’s mentioned as an example of a car dealers might be stuck holding, which matters because it affects how much money they need to keep the business going.
“Buy here, pay here” means the dealership sells you the car and also takes your payments directly. It’s often used by people who can’t get approved for financing elsewhere.
Creditworthiness is a lender’s assessment of how likely a borrower is to repay a loan based on credit history and other financial factors. In this segment, it’s used to explain why certain borrowers are rejected by many lenders and end up needing BHPH financing instead.
A capital raise is when a company tries to get more money to stay afloat. In this case, the company is trying to raise funds quickly to avoid going bankrupt.
A cash crunch means the company doesn’t have enough money on hand to pay its bills. When that happens, lenders may step in and the business can get into serious trouble fast.
“On the verge of default” means the company is close to missing required payments on a loan. If they can’t fix the problem quickly, it can lead to bankruptcy or other enforcement actions.
Fitch is a company that studies credit risk and publishes scores and data about how likely borrowers are to default. The episode is using their numbers as evidence.
Tricolor Auto Group is a dealer group mentioned as having gone into liquidation after allegations of major fraud. It’s an example of how things can go badly in this financing model.
Inventory management is how a dealer decides what cars to keep on the lot and how fast to sell them. If cars sit for a long time, it costs the dealer money.
Turning inventory means selling cars faster instead of letting them sit on the lot. The quicker they sell, the less money the dealer loses on holding costs.
These are locked key storage boxes that track which car keys get taken out. The dealer can use that info to see which cars people are actually interested in.
This is a Ford electric car (the Mustang Mach-E). The host is using its sticker price to show how expensive it can be for a dealer to keep a car sitting unsold for many months.
Dealers often borrow money to buy cars before they sell them. Floor plan assistance is help from the car maker that covers some of the interest cost for a limited time.
MSRP is the price on the car’s window sticker that the manufacturer suggests. The host uses that number to estimate the dealer’s financing cost while the car is unsold.
Invoice price is what the dealer pays the manufacturer for the car. The host is saying that if the dealer doesn’t make enough profit between invoice and the sticker price, the interest cost from holding the car can wipe out the benefit.
Spiffs are extra bonuses the dealership offers to salespeople to push certain cars to sell faster. The goal is to get cars off the lot before they become too costly to hold.
They’re saying Toyota dealers may still benefit from help that offsets some of the cost of financing cars on the lot. That support can make a difference when inventory is piling up.
A spiff program is a structured bonus plan tied to selling specific vehicles or meeting inventory-related targets. In dealership operations, it’s often aimed at accelerating sales of older or slower-moving stock.
Chapter 11 is a legal process for a struggling company to reorganize its debts. The company tries to keep operating while it works out a new plan to pay creditors.
Repossession is when the lender takes the car back because the loan payments stopped. It usually happens after missed payments and can leave the dealer/lender with a vehicle they still have to deal with financially.
It means the bank stops trusting the dealer with the money tied up in the cars. Then the bank can take the cars back and sell them to get its money back.
If a dealer can’t sell the cars normally, they may sell them at an auction. That can be faster, but it often means taking a loss compared to selling retail.
If a used car sits unsold, it usually becomes worth less over time. Dealers try to avoid letting cars sit too long because they’ll have to discount more later.
Concept
$300,000 underwater on our used car inventory
Underwater means the dealer has more money tied up in the cars than the cars are worth right now. If they sold them quickly, they’d still lose money—but the loss might be smaller than continuing to hold them.
Mitigate losses means try to make the situation less painful. In this case, the dealer sells the cars that aren’t working and replaces them with cars they think will actually sell for a profit.
A “transparency index” is a score meant to measure how open or informative a dealer is, typically based on what data they provide to shoppers. In this segment, it’s used to highlight that Ackerman Toyota scores 100/100, implying strong disclosure practices. The hosts then pair that with inventory-aging data.
“Aged inventory” just means cars that have been sitting unsold for a while. If cars sit too long, the dealer often has to lower the price to move them. The hosts use this to compare how well different dealerships manage their lots.
“Fresh inventory” means the cars on the lot haven’t been sitting there for too long. That usually makes it easier for a dealer to sell without cutting prices as much. The hosts use it to compare Toyota vs. Ford dealer behavior.
Cash flow is whether the dealership has enough money coming in to cover what it has to pay. If buyers stop paying, the dealer can run short on money fast.
In dealership sales, an add-on is extra, often dealer-controlled pricing for items like accessories or protection packages added to a car’s sale. When dealers are under pressure, these add-ons can become a negotiation point for buyers.
A captive lender is a financing arm connected to the car brand. Dealers may borrow through it to stock cars, and it can be the one that takes cars back if payments fail.
Dealer auctions are where cars get sold wholesale to other dealers. If a dealer needs to get rid of cars fast, they may sell them through these auctions.
Manufacturer repurchase means the car brand may buy back certain cars from a dealer. If it’s not eligible, the dealer may have to sell it through auctions instead.
“Fire sale territory” means cars are being sold fast, usually for less money than normal. It’s what happens when a dealer needs cash urgently.
LIVE
It's noon here in Venter City, New Jersey, and our nation's capital, which is hot as hell today.
And this is Car Angelive for Thursday, June 11th with your host, me, Ray, hanging out in my very
cool and comfortable living room, and Zach hanging out in his office in Washington, D.C.
And just to annoy some viewers, how the hell are you today, handsome? I don't know why people get
so worked up when I call you handsome, but they do. You've got good energy this morning, Dad. I'm
tired. I stayed up late watching that New York Knicks San Antonio Spurs game last night. What a
classic. That was incredible. But I'm doing well, Dad. Excited to talk about car dealers who are
running out of money. And man, oh man, are some challenges in the car business getting serious.
But before we jump into today's show, a friendly reminder, folks, caredge.com. Me,
my dad, and our incredible team, we are here to help you with all things car buying and then even
ownership related. What's that? I see the comments so often. It's my dad and I is the proper grammar.
Not that we're proper by any stretch of the imagination. I like me and my dad.
My dad and I, with our incredible team, provide car buying services, car shopping
tools, and all sorts of research stuff back at caredge.com. I encourage everyone,
if you haven't already, before click on buying service and learn more about our buying service
and importantly, get a free consultation call with our team and meet the team of incredible
concierges who work with all of our hundreds of customers every single month to help them have
great shopping experiences. Now, dad, the big story this morning, and there's a few
angles to it, but we're going to start here. We have a subprime car dealer, America's Car Mart,
seeking rescue funds. We've got a potential bankruptcy in the works here for a subprime
auto dealer. Now, at the exact same time, we have car dealers who continue to, we talked about this
actually went ahead and built a little floor plan cost estimator earlier today so that we can
actually look at this together. Car dealers are running out of money and it's at two very different
ends of the spectrum. One end of the spectrum would be subprime dealers like America's Car Mart
that we're going to talk about. The other dealer groups that are starting to face curtailment
payments from their floor plan companies would be dealerships like this one that are holding onto
2025 Ford Mustang Mach-E's with $57,000 MSRP's for a birthday for 345 days. We can plug that in
today, dad, over here in our floor plan cost estimator, and we can actually see how much in
floor plan costs these dealers are having to outlay. Now, to mention the fact they get curtailment
payments. Anyway, I'm going to be quiet for a second here. Many angles to this. Where would
you like to start? Buy here, pay here. Let's start there. Buy here, pay here.
Buy here, pay here. What do we mean when we say that? Those are dealerships like
American Car Mart that, well, they help the folks that nobody else will help.
They help folks that even the worst subprime lenders won't even consider. Santander won't
consider them. American Accentance Corporation or Credit Acceptance Corporation, I mean,
there are some people out there that are so terrible creditworthiness-wise that
many of the subprime lenders won't touch them. Their avenue to vehicles is buy here,
pay here dealerships. Some of these buy here, pay here dealerships are big corporate entities.
They're not mom and pop lots, and that's where America's Car Mart falls into it.
Exactly. You have this giant corporate entity that specializes in people with the worst credit
available. Your job is your ability to be able to buy a car from us. The concept is that you buy
and you pay here. You pay us directly. You come in every two weeks or whatever it is,
and you pay us. The problem is, well, I don't know why those customers are paying,
and well, America's Car Mart, for example, is out of cash.
This is a little bit of house of cards that is well beyond my pay grade and my dad's pay
grade. I guess I'll speak for myself. It's beyond my pay grade because the story here is,
I'm just going to read the first two paragraphs from the article, America's Car Mart Incorporated,
a used car seller in subprime lender is working on an 11th hour capital raise to
stave off a potential bankruptcy filing after a cash crunch put the company on the verge of default,
according to people familiar with the matter. Now, listen to this. The company's banker,
Hoolihan Loki, Incorporated, has been reaching out to investors to gauge interest in providing at
least a half of a billion dollars of fresh capital, said one of the people, asking not to be identified
discussing a private matter. Now, listen to this. New money would be used to help the troubled
borrower plug a liquidity gap and repay existing lenders that people set. So this buy here, pay
here dealership lends money to people that's not even their money. And now what the situation
they're facing is the people that they lent money to are paying them back. Now they can't pay back
their lenders, so they need more money. This is a cash crunch that's happening. And obviously,
the other big expense that is exacerbating why America's Car Mart is in trouble right now is
they also finance their inventory. And so they pay every single day interest to hold on to their
cars. So it's a little bit of a one-two punch here of not enough of their customers actually
paying on their auto loans, which you and I talked about on Monday. And then the cars that are sitting
there, it costs them money every single day it sits there. And again, today we'll quantify how much
that actually costs, but it's a lot of money. It is a lot of money. And the fact that they're looking
for a half a billion dollars today, which is on top of the 300 million
that they received, what was it in November? I think it was October or November. So if you're
telling me 300 million carries you for seven or eight months, oh my god, a half a billion dollars
not going to be enough either. And my guess is this is just a guess because I don't know enough
about them. But my guess is that everybody would be better served if they just failed.
Okay, I don't think they are too big to fail. I think they are the appropriate size to fail
and send a warning shot through the economy that at a certain point you just can't willy-nilly
be lending money to people that, well, you should never lend money to. And so this is one of those
cautionary tales of these folks got way out over their skis and we're looking at a major
hundreds of millions of dollars worth of bankruptcy potentially. Absolutely. And I think it's
indicative of some of the challenges that are going on in the auto industry right now more
broadly. I'm going to read three more paragraphs from the article and then let's switch gears to
the other reason why car dealers are running out of money right now and again why it's getting
so serious. These three paragraphs however, lenders in the subprime auto finance market
have been facing tough market conditions. High inflation and interest rates have eaten into the
savings of lower credit consumers undercutting their ability to repay debts. Delinquency rates
on car loans to subprime customers are near the highest on record hovering around 6% according
to Fitch ratings. America's car mart is one of the best known in the buy here pay here segment of
auto finance whereas you said a moment ago, dad, companies operate their own dealerships and also
provide financing to customers in house. The sector caters to quote deep subprime borrowers who often
can't obtain financing elsewhere. Buy here pay here has also experienced a series of
blow ups in recent years. Two lenders abruptly shut down in 2023 while another
tricolor auto group filed for liquidation last year after an alleged massive fraud came to light.
So that's one side of the car business right now and it's quite frankly one side of the car
business that's not so sexy to look at. It's very lucrative for those that operate in that space
but it's pretty onerous on borrowers and in a lot of ways takes advantage of people who need
mobility and can't get approved elsewhere. But we're seeing those dealers run out of money and
that is a serious concern because if those dealers run out of money their vehicles end up getting
taken back by their lenders. Those vehicles end up going to the auctions like there is a trickle
effect here of what can happen there. The other side of this equation dad are the floor plan
expenses that I'm going to say more normal like traditional franchise car dealerships
are experiencing right now. You and I have been talking about this ever since we started Car Edge
and it's rooted in the work that you did as a sales manager at car dealerships. It's all about
inventory management and when you are a dealer and you've had cars sitting for 345 days
that eats at your bottom line. That is very expensive for your dealership.
Oh absolutely. One of the first things I learned in the automobile business was how important it is
to turn your inventory. To look at your inventory, know which vehicles people aren't interested in,
aren't expressing and interested. If you have electronic key boxes that you keep the keys
for each vehicle in. You need to run the report to see which keys have been taken out and which
keys have not. The reason you run that report is that will give you an indication as to which
vehicles customers are looking at and which ones they are not. That's all part of inventory
management and when you don't properly manage your inventory, you end up with the proverbial
poop ton of aged cars, aged inventory and that aged inventory costs you a lot of money to finance
on a monthly basis. Now let's talk about that finance cost because we speak about it often
but it's a good reminder for folks. The automaker in this case, we're going to talk about, we're
going to harp on Ford and the reason we're going to harp on Ford is because I went to caredge.com
slash unsold and in my area, the first page results are all these Fords that have been sitting for
a year. In the instance of this 2025 Ford Mustang Mach E premium that had an original $57,255 MSRP,
Ford pays the dealer floor plan assistance. That typically covers $45,60 maybe all the way up to
90 days worth of floor plan expense on that vehicle. After that, the dealership is the one
incurring the cost of holding on to that vehicle. This particular dealer, dad, when they've had
this vehicle for a birthday coming up, 345 days, if we just start to plug this into my floor plan
calculator, again, the MSRP on that vehicle is $57,255. That means the floor plan amount
would probably be somewhere around $57,000 because it's a Mach E and their invoice price to MSRP.
Last time I checked the dealer, the dealer's not making money from invoice to SRP on Fords.
I put a low interest rate of 5%. I think that's crazy low, but we'll stick with it
just for the demonstration purposes and then 345 days.
Yeah, but let's be generous and let's say Ford on the Mach E covered floor plan for the first 100
days. Okay, so let's change this from 345 to 245 and let's see what it's cost them for 245 days.
So just look at this for a moment here. We're talking $2,000 and floor plan cost to date.
Cost as a percentage of the floor to mount. They've got 3.5% of the vehicle's value tied
up in just interest payments they've made on it. Think about that for a second. That is insane.
And again, this little chart here will show you if the manufacturer is offsetting the first 90 days,
that makes sense. $747, 1 to 1.5% of the floor to mount is typically what manufacturers offset
in floor plan expense, which to be clear here, during the pandemic was a huge profit center
for dealerships because they sold cars very quickly and they had extra profit. Now dad,
with the 131,000 leftover new cars that are sitting on dealer lots right now nationwide,
this is another piece of the cash crunch where dealers could run out of money and already are
running out of money. There's 131,757 unsold new 2025 vehicles right now that if I just scroll down
here, 262 days, 345 days, 368 days. This is burning a hole in their pockets and that floor plan
calculator starts to quantify it. This is the perfect example as to why a new car manager
is supposed to keep his eye on the inventory, know what's getting aged, know how long his vehicles
have been there, start putting spiffs and bonuses on certain vehicles much earlier than this in
order to move them off the lot and off the floor plan. When a new car manager fails to do that
and the general manager fails to remodeling these, they've both failed at their main task,
which is cash flow and inventory management. It's incumbent upon all the managers in the store
to be aware of what their inventory positions are and to make adjustments as necessary so that you
don't find yourself in that position. We know during the pandemic that yes, floor plan assistance
became a profit center for many dealers. Today, floor plan assistance is probably still a profit
center for most Toyota dealers. We know through the public filings of the large publicly traded groups
that over the last few years, floor plan went from a profit center to a huge expense,
hundreds of millions of dollars that they pay to carry their billions of dollars worth of inventory.
That's a huge swing whether it be for a mom and pop store or for a corporate store.
I remember a couple of years ago, we were looking at some of the numbers and I think
for the Penske organization, it went from a profit center to a $230 million expense.
Here's a headline from 2023. This is from three years ago. What has happened to new car inventory
over the last three years? It's been sitting even longer. Penske Auto Floor Plan Interest
expense jumps 242% year over year. Retailer had $3.2 billion in floor plan
outstanding. Humor me for a moment here. I don't even know if I can put $3.2 billion in this,
but let's try. That's a bunch of zeros. What's that get me to? 12345
678 Nope. Yeah, 3.2. That's $3.2 billion. Let's say they're holding cars for 90 days.
I mean, they've got half a million dollars in carrying costs per day.
Per day. Yes. It just puts it into perspective here. This is either a massive profit center
or a massive issue. Right now, it's a massive issue for these dealerships. In particular,
the dealerships who dad to your point have done a poor job with inventory management.
In this little calculator, it's nothing too complicated, but it helps quantify
how big of an impact this is. Then you can start to look at a particular dealership and you know.
The Monday morning or the sales team meeting, you use the word spiff before,
which I think you need to explain to everyone what a spiff is. You can't spiff it enough.
You just got to get rid of these things. They are burning a hole in their pockets.
Yes. A spiff is industry jargon for a bonus that is placed or awarded to salespeople who sell
certain units, certain vehicles, aged units. How does a sales manager incentivize his staff
to sell the cars that are sitting the longest? Usually, that is through some form of bonus
or spiff program in order to get their attention. Because let's face it, if you're in sales,
the thing that motivates you is the fact that if you do your job, you can make some money.
If you do your job selling the aged inventory, you can make even more money. That's what
motivates these folks. Sales managers, general managers, they put special bonuses on just about
anything, but in particular, moving aged inventory. 100%. Now, there's so many angles that we could
go here, but I want to pull up from Paul. Compare floor plan cost of used cars versus new cars.
I think the biggest difference here is on the used car, there is no floor plan assistance
from the manufacturer. None at all. Yes. There is no offset or potential profits.
Used cars are even more if they're not paying cash. Again, most dealers don't pay cash for
inventory. The other thing is on used cars, most lenders will definitely be looking at curtailment
charges after a certain period of time. Used cars depreciate much more quickly than the new car
that's still sitting on the lot. If you're an independent used car dealer, I don't know how
many months your lender will give you before they say, okay, time to pay it off.
Pay down the principal. Let's connect these two stories, because what essentially has happened
over at America's CarMart? Again, let me pull that back up on the screen for those of you that are
joining late to today's show. Car dealers are running out of money and it is getting very serious.
We've got two angles for today's topic. Subprime auto dealer, America's CarMart seeks rescue funds.
Company also began laying groundwork for potential chapter 11 filing. When you read this article
and you really intimately understand this, it's pretty simple what's happening there. The people
that they gave vehicles to and provided financing to are not paying off their auto loans. They've
run out of money or on the process of running out of money. At the same time, we've spent time during
today's show talking about dealerships who have had vehicles sitting on their lots for over a year
now, 345 days, and we've gone ahead and we've quantified what financial impact that has at
the dealership. We built a nifty little floor plan cost estimator that shows you that even
when offsetting floor plan assistance from the manufacturer, that one vehicle we were just looking
at has cost that dealer $2,000 just to sit there. Now, what happens then? Keep me honest here,
what happens when a consumer who bought a vehicle through America's CarMart no longer makes payments
on that vehicle? What happens to that vehicle? Well, America's CarMart comes and takes the vehicle
back. Gets repossessed. Now, what happens, and you just brought this up a second ago, when car
dealers have inventories sitting for so long that isn't selling. It's not like the bank can come and
necessarily take the vehicle from them, but they can demand a curtailment payment, which is to pay
down the principle of that loan. And in some cases, Dad, the dealer actually can get upside down on
their inventory, and the bank can. Absolutely. From Mike here, you guys talk about customers
being upside down a lot. Well, it's now a problem for dealers to be upside down with their inventory
problems. A bank can come in and repossess the dealer inventory, and we have seen that happen.
It's called going out of trust and having your inventory sold at auction. Listen, I know of
dealerships where used car managers got crazy and said, okay, we're going to really adjust the types
of vehicles we sell, and we're going to start bringing in some more high-line stuff. And they
brought in a poop ton of high-line stuff, and it's sat. And it depreciated
as it sat. And suddenly, that used car manager gets fired. They bring in another used car manager,
and he looks at it and he goes, oh my god, we're $300,000 underwater on our used car inventory.
What does that mean? Well, if we were to take all these cars to auction, we would only lose about
$300,000 if we sold them there. Now, the dealer principle has a choice to make here. He's got to
bite that $300,000 bullet and start over again and replace those vehicles
that he's losing all that money on with vehicles he might make money on,
or he can continue to sit on this losing proposition. It is not a good position to be in.
I have known dealerships that have been in it. I have known used car managers who have gotten
fired because of it. So it all goes back to what I said at the beginning. It's inventory
management, stupid. I watched the basketball game last night, much like you did.
Great game.
Charles and Charles Barkley try to say it's a simple game. Well, the car business,
it's a simple game. It's all about inventory management. It's not that hard. You look at
your inventory, you decide whether it's working or it's not, and if you decide it's not, you dump
it sooner rather than later because it's not going to go up in value if you wait. You have to make
choices when you're in the dealership and you have to make those hard calls.
I think we made a mistake on this car. Let's take our loss, let's bite the bullet,
let's get whatever cash we can get for it. Let's replace it with one or two vehicles that we
think we can make money on so that we can mitigate these losses. But it is all about
understanding your inventory, understanding your customers, what it is that they want to buy,
and if you take your eye off of that ball and have a lot of dealerships they do,
they find themselves in trouble.
Let's put this to the test, Dad. This is one of my favorite things that we've built back at
Par-Edge. Under dealerreviews, caredge.com, and then click on dealer reviews, the ratings overview.
I want to do a little experiment. You made a comment earlier that Toyota dealers
likely are still making a lot of money selling their Toyotas. I'm interested in this. I'm going
to come here to Ackerman Toyota right here. Ackerman is one of our caredge certified dealer
partners for 100 out of 100 on our transparency index. That's great to see. But what I'm interested
in, Dad, is if I scroll all the way down here, they're on the lot right now. This chart is what
I was interested in seeing. What percentage of their inventory is aged? It's not a lot,
9%, 7%. We're talking about less than 20% of their inventory is aged. Their inventory is fresh,
and that's a Toyota dealership that we're seeing is managing their inventory incredibly well.
Now, let's go back here. Instead of Toyota, let's now do a Ford dealer. We'll do another
A-rated dealer. I'll click on this one right here. Let's come all the way down on the lot right now.
Very different, Dad. We've got 12 and 16, so what's that? Almost 30%.
Yeah, 28%.
28% of their inventory is aged. Let's go back again. More A-rated Ford dealers. That's fantastic,
but I'm just curious. Let's keep going down here. Wow, look at this one, Dad. We're at 35%.
33%. 33%. Thank you, Math. Let's do one, Dad, that's not in California. That's Arizona. Let's go here.
Here we go, Pennsylvania. Harrisburg, okay.
We don't have their inventory hooked up. Let's try Michigan. Here we go.
Okay, much better, actually. There you go. In Michigan, a little bit better, but it's
interesting to do a bit of a juxtaposition here between what's going on with Toyota dealers
and what's going on with Ford dealers. That last Ford dealer you clicked on, that purrs my point.
There's a management team at that store that is looking at their inventory and how quickly
it turns. They are making sure that the vehicles that they have on the lot are the types of vehicles
that their customers want to buy. That is just the key. The two things that are most important
to a dealership are cash flow and inventory turn. It is incumbent upon the management
on the front side, the general sales manager, the general manager, the new car manager,
the sales manager, to actually have their fingers on the pulse of what's going on with
their inventory at the very least a weekly basis. This is to be clear, leverage for savvy consumers.
If a dealership says, oh, we add that add-on to every car, can't help it. Okay, if it's been
sitting there or you know their inventory in general's age, you've got more leverage to say,
I'm not paying for that. I know you are desperate to get rid of this vehicle. For mine, the drift
debt. If a bank repos cars from a dealer, then they just sell it at an auction for more of a loss.
Yes. Well, and if they're new cars, okay, let's say a dealership that's gone out of trust,
a new car franchise that's gone out of trust, and the floor plan, which is usually the captive
lender for the brand, takes back the cars. Well, guess what? They can get those cars shipped to
other same branded dealers. But the point is, they don't want to be in that position.
They want to be in the lending business. They don't want to be in the car business.
Yeah, you mean the companies that provide the floor plan next year, for example,
doesn't want to sell cars. They want to sell financing to people who want to sell cars. Yeah.
Yeah, you can see here from Dan. Yeah, new vehicles might be eligible for manufacturer
repurchase, but new vehicles, no, they get bought up and they're going to the dealer auctions.
Yeah. This is like the fire sale territory. And your point is well heard, at least by me, Dad.
It's cash flow management and inventory turn. And again, the two stories today are so interrelated.
You've got consumers no longer paying their auto loans, but you've got dealers no longer
paying their auto loans. It's the same bad outcome for everyone involved.
Yeah, it's a wake up call, especially for the deep, deep subprime car retailers out there,
those who specialize in those type of customers. And it's a wake up call that says,
I get why you specialize in those type of customers, but maybe, just maybe,
there needs to be some slightly tighter guidelines as to who it is you say, okay,
yeah, you can buy here and pay here. Perhaps maybe even you can't do that.
Yeah, seriously. All right, folks. Again, a friendly reminder of me and my dad.
If my dad and I and our incredible team can help you out with anything, check out caredge.com.
We have the car search. We've got our buying service. This thing will say ask car edge
sooner than later. I don't know what's going on there. Research, dealer reviews, and so much more
back at caredge.com. Please spend some time back on the website. Share your feedback with us. We
are always trying to make things better for you. We appreciate everyone tuning in. If you enjoyed
today's show, subscribe to the channel. We're back tomorrow with more Car Edge Live a Friday
episode, which I don't know about you, dad. I'm looking forward to. Well, I always look forward
to feisty Fridays, but then again, my understanding is that just about every day is a feisty day for
me. So I'll do my best to bring the energy again tomorrow. And you, young man, get some rest this
afternoon. You stayed up way too late. Nixon 5, baby. See you guys back here tomorrow.
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About this episode
CarEdge Live breaks down why car dealers are “running out of money,” using America’s Car Mart as a central example. The hosts connect subprime stress, missed payments, and rising floor-plan costs to shrinking dealer cash flow—especially when inventory sits for hundreds of days. They explain how buy-here-pay-here financing, curtailment charges, and inventory “going out of trust” can lead to repossessions, auctions, and “fire sale” pricing. The episode also highlights how dealers track aged inventory and why cash flow and inventory turn decide survival.
Today on CarEdge Live, Ray and Zach discuss the latest on news of car dealers going out of business. Tune in to learn more! Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com
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