New dealer enrollment at Credit Acceptance Corp. has experienced a “fall off” in the fourth quarter, Chief Executive Brett Roberts said during the company’s Jan. 30 earnings call. CAC signed 753 new dealers last quarter, compared with 1,032 in the prior-year period.
The Southfield, Mich.-based lender expected dealer sign-ups “somewhere in the 900 to 1,000 range,” during the fourth quarter, Senior Vice President and Treasurer Doug Busk said during the earnings call. New active dealers represent the number of dealers who enrolled in CAC’s program and have received funding for their first loan from CAC during the period.
Additionally, loan unit volume from new active dealers declined during the quarter to 2,720 units compared with 3,854 units during the fourth quarter of 2018.
“Our field sales force gave us feedback that they have standards that they have to meet for new dealer enrollments,” Busk explained. “They thought those standards were too harsh. They thought it was causing them to spend more time enrolling dealers when they would like more discretion to spend their time with the existing dealers. So, we relaxed those standards.”
Last August, CAC eliminated its $9,850 dealer-enrollment fee in an effort to expand its dealer network, according to its third-quarter SEC filing. CAC had 951 new dealer sign-ups during the third quarter of 2019.
“We immediately saw a reduction in new dealer enrollments and whether that [will] change or payoff long term, we don’t know at this stage,” Busk said.
Despite the lower-than-expected dealer sign-ups, CAC’s active dealer network increased by 4.7% to 9,255 during the quarter.
By year end of 2019, CAC had 13,399 active dealers.
Credit Acceptance’s stock (NYSE: CACC) was trading at $435.02 per share at press time. The company has a market capitalization of $7.98 billion. CAC declined to comment.
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