Credit Acceptance Corp. reported net income of $84.9 million in the second quarter, compared with $74.2 million during the same a year prior.
However, while the company’s active dealer count grew to 7,181 in 2Q — from 6,087 in the year prior period — the company’s average volume per dealer was down 1,094. In 2Q, CACC reported an average volume of 10.7 loans per active dealer, compared with 6,087 active dealers at the same time a year ago.
This means that while the number of active dealers has risen 18% above last year’s 2Q, average volume has fallen 1.8%, a trend Chief Executive Brett Roberts attributed to a competitive market during the company’s earnings call Friday.
“I think, from an environment standpoint, [it’s] pretty much consistent with what we would have said last quarter,” Roberts said. “Volume per dealer is probably the easiest number to look at. Just to get a sense for the competitive environment, it was down this quarter, not down a lot, but 1.8%. So, looking at that number, I don’t think you conclude the environment got a lot easier.”
CACC has had greater success “than [it] thought it would,” penetrating the franchise dealer market with purchased loans this second quarter, a different lending model than CACC’s traditional “advance” model.
“We make changes where we see opportunities. There was a change in the mix of loans in the second quarter,” he said. “We did more purchased loans, which tend to be larger, and then both within dealer and purchased loans, we did a little bit larger loans, [and a] little bit longer term. Again, that’s just based on our pricing algorithms and where we think the best opportunities are.”
Currently, the Southfield, Mich.-based company’s dealer base is 70% independent, 30% franchise.1 - Reader Likes This Post