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- Subprime Comes Home to Roost for Specialized Auto Dealers, Lenders & Investors: Car-Mart Was Next to Confess
Subprime Comes Home to Roost for Specialized Auto Dealers, Lenders & Investors: Car-Mart Was Next to Confess
by Wolf Richter Wolf Street
Subprime is the mother lode of profits – until it isn’t.
Subprime is re-getting into trouble, after having somewhat gotten out of trouble during the free-money pandemic, when folks used some of the free money to catch up with past-dues.
In the auto industry, subprime is largely confined to older used vehicles. Less than 5% of new vehicle sales are financed with loans or leases to subprime-rated customers (more in a moment). The sweet-spot is 8-to-12-year-old vehicles, only a corner of the used vehicle business. But in that corner, several subprime-specialized dealer-chains – owned by PE firms – have already filed for bankruptcy this year, and we covered a couple of them here. Others are struggling.