Since Texas-based Tricolor’s Chapter’s 7 bankruptcy filing on Sept. 10, the company’s bond prices have plummeted, signaling that investors believe there is an increased risk of losses, particularly in riskier tranches.
Meanwhile, third-quarter sales among auto makers climbed as OEMs pushed incentives and consumers pulled ahead their EV sales prior to elimination of the $7,500 federal tax credit on Sept. 30.
The powersports industry has long been overlooked by regulators, with a fraction of complaints the Consumer Financial Protection Bureau received since 2011 directed at the powersports industry.
But with the pullback at the CFPB and state regulators and other agencies like the FTC ramping up enforcement, it’s imperative that lenders and dealers don’t do anything to garner enforcement actions.
In this episode of the “Weekly Wrap,” Auto Finance News Editor Amanda Harris, Senior Associate Editor Truth Headlam and Associate Editor Aidan Bush discuss Tricolor proceedings, OEM third-quarter sales and powersports compliance for the week ended Oct. 3.
Auto Finance Summit, the premier industry event for auto lending and leasing, returns Oct. 15-17 at the Bellagio Las Vegas. Learn more about the 2025 event and register here.
This episode is sponsored by The Work Number by Equifax.
Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain.
Amanda Harris 14:00:56 Hello everyone, and welcome to the roadmap from auto finance news since 1996 the nation’s leading newsletter in automotive lending and leasing. It is Monday, October 6, and I’m Amanda Harris. First, I’d like to thank our sponsor for this week’s podcast, the work number by Equifax Last week marked the official end of the third quarter, and most OEMs reported an uptick in sales year over year. The sales boost was partly influenced by manufacturers’ decision to hold off on passing tariff related price increases on to consumers. And by the end of the EV tax credit, which expired on September 30.Aidan Bush 14:01:31There’s also been some movement in the sub prime auto lender tri color saga. And for more information on that, I’ll turn it over to Aiden. So Aiden, take it away. Thanks, Amanda. So there was a court hearing for tri color holdings bankruptcy on Friday, and one of the major kind of takeaways there was that in it, lawyers for tri colors trustee confirmed that there appears to be systemic fraud, and they also confirmed that the lender is under government investigation. Chuck Gibbs, one of the lawyers who represents tri colors trustee, said that they were gearing up to work alongside government agencies who were investigating what he called a pervasive fraud of rather extraordinary proportions. His statement did seem to mirror some public reports we’ve had earlier that the Department of Justice was investigating tri color for fraud. But it should be noted, he did not name what government agency was investigating them, at least in the court hearing this meeting really kind of came after we’ve seen tri colors bond prices plummet, and the days following its chapter seven bankruptcy filing a signal that investors could see a sudden increase in the risk of non payment and losses. And that meeting was really held in part to determine whether Ann Burns, who is the trustee for tricolor, it’s really there to determine whether or not she can operate the business in limited ways, to secure sort of all of tri colors assets, so their cars, their property, their outstanding loans and wind down the business you know, kind of as they’re sorting out what creditors, you know, kind of get out what collections, both burns and vervent, which is kind of the party that took over Loan Servicing for tricolor after it went bankrupt, have had trouble accessing tri colors headquarters. They couldn’t for more than a week, according to what gives said during the hearing and when they did get in. He said the office was vacant and had 1000s of car titles drawn across, strewn across the desks, excuse me, leading to a lot of difficulties with their servicing and sort of collections from here on out. For more sort of continued tri color coverage, we are we’re not giving up on it anytime soon. I’ll have another story out today, kind of looking at the outlook of that hearing and sort of the decision the judge made as far as Anne burns control on tri colors operations. So that is it for me, but I will pass it over to truth from here.Truth Headlam 14:03:44Thanks Aidan so in some power sports and compliance related news as a regulatory environment overall, is going through a sort of seismic shift between the CFPB pulling back enforcement and state legislators and other agencies picking up the baton of where their previous CFPB administration left off, lenders and dealers in the power sports industry are now tasked with making sure they continue to fly under the radar of regulators, as the industry has done for quite some time now. At the power sports finance Summit in September, compliance experts laid out a few best practices for members of the power sports industry to take to ensure that they continue to be both compliant and off the radar of regulators.The first and most stress practice was to manage complaints proactively. Several panelists emphasized that complaints will draw the attention of regulators, and noted that social media complaints like those found on platforms like Tiktok or Reddit can be just as harmful as negative headlines from traditional news and media publications. Keeping compliance teams in the loop on developments and new products and tracking regulatory changes are two additional things that panel panelists stressed. Another note on tracking changes includes being aware that the future administrations of the CFPB and other regulatory agencies can look back in accordance with their respective statutes of limitations. So planning ahead for future administrations is just as important for lenders and dealers and other players in the power sports industries as planning for this current administration is Lastly, properly training folks at every part of the sales process, including lenders and dealers and other sales team members. Is super important to make sure that everyone is accurately distilling information to customers. Is it’s also imperative so that during the process you can avoid possible issues like improper disclosure accusations, hidden fee accusations and misalignment with advertising. Now back to Amanda with more economic and broad view. Takeaways from last week, great. Amanda Harris 14:06:07Thank you. Truth and Aidan and Yes, lots of great insights there is on the compliance side. Basically, don’t think just because they pull it back now that you can’t get in trouble later. I think that’s a really strong message to send everyone, both in power sports and in auto and I’m sure it will come up in our auto finance Summit coming up as well. Come other headlines. Last week, we have a navy, federal credit union’s cost of car ownership index came out, and it did reveal that the cost of ownership surged alongside the cost of vehicle repairs and auto insurance. Nothing too surprising, but it is definitely something to take note of, as consumers are already struggling with affordability and higher car prices. Also last week, sub prime auto lender, our finance secured over $100 million in warehouse finding fan, excuse me, financing from Goldman Sachs and in more EV related news, automakers are extending the 7500 discount EVs in an effort to continue to drive sales, even without the tax credit in place. Ford. CEO, however, did say that US EV sales could be halved to about 5% in the market on the heels of the current administration’s policies. So I guess we’ll just see how that plays out, and that’ll be all for today. Thank you for joining us on the roadmap. Be sure to follow us on x and LinkedIn, and registration is open still for our upcoming auto finance summit 2025 which comes up next week. And as always, we will see you online at auto finance news.net, and here next time and again. Thank you to our sponsor, Equifax, lenders who leverage income and employment verifications through Equifax as a work number see about a 48% higher likelihood of loans closings. Thank you to them. You.
