Tuesday, December 16, 2008

America’s Car-Mart Caters to Riskier Borrowers

Whereas competitors, such as AutoNation and CarMax, currently face difficulty in moving trucks and sport utility vehicles off their lots, due to changing consumer buying patterns and/or restricted access in obtaining auto financing, America’s Car-Mart (CRMT-$12.08) is finding success in selling basic and affordable transportation. Against a backdrop of rising unemployment, Car-Mart’s decision to not focus on luxury or sports cars is paying dividends. The average car sold in 2008 cost $8,690, and was between three and ten years of age with 80,000 to 130,000 miles on the odometer.

Lending money to sub-prime borrowers, however, is not without challenges. For the three months ended October 31, provision for credit losses was 22 percent of net sales….
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Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

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