LAS VEGAS — Tricolor Auto Acceptance is expected to “double in size” in the next two and a half years, thanks to recent investments in geographic expansion and digital marketing capabilities, Chief Executive Daniel Chu told Auto Finance News while attending SFVegas 2020 this week.
Dallas-based Tricolor is a niche, subprime lender focused on the sale and financing of vehicles to thin- and no-file Hispanic consumers. Since launching a refreshed car-buying website in the second half of 2019, 80% of Tricolor’s leads that walk in through the dealership are generated through digital channels. Five years ago, that number was below 20%, Chu said.
“The ability to generate leads digitally is much more conducive to scale, much more efficient and cost-effective,” Chu said. “We can use digital marketing to actually attract customers we want to finance in our dealership, so we use our risk model to market to the segment of the population we know has the best probability of good performance.”
The new car-buying website markets to consumers based on “personas” that are created with attributes gathered from loan applications, dealerships and call centers, Chu explained. Depending on the persona, Tricolor will present different financing options or vehicles based on what the lender thinks the consumer wants.
The digital lead generation and a $30 million equity investment earlier this month position Tricolor to enter the Nevada market and grow out its Southern California presence. Tricolor is slated to complete its Las Vegas roll out by April, Chu noted. The other focus area is Southern California, in which Tricolor has already identified “a dozen locations,” he said, adding that “we can easily put 25 dealerships in southern California depending on the size, so we’ll be busy there for two years.”
“California’s just an enormous market, there’s more Mexicans in Los Angeles than Dallas/Fort Worth, Houston, Austin and San Antonio combined,” Chu said. “We’ve been looking a little bit in Illinois — Chicago is the fourth-largest Mexican origin, Hispanic market in the U.S. — but I think it makes the most sense to build out Southern California.”
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