Auto companies saw mixed results in the second quarter related to sales and finance volume, as Carvana’s originations surged, Ford Credit’s earnings rose and Credit Acceptance Corp. and Penske Automotive faced declines.
Carvana’s originations soared 51.1% year over year in Q2 to $3.1 billion, while Credit Acceptance Corp.’s originations plummeted 14.6% YoY on a unit basis to 86,486, according to the lenders’ earnings reports.
Captive Ford Credit saw an 88.1% YoY increase in earnings before taxes to $645 million in Q2, though its finance penetration rate of U.S. Ford Motor sales fell to 33% in Q2, compared with 51% a year earlier, according to its earnings report.
Retailers Asbury Automotive and Penske Automotive faced declining finance and insurance profits. Asbury Automotive’s F&I revenue fell 5.4% YoY to $182 million, while Penske Automotive’s F&I revenue dropped 3.9% YoY to $200.5 million, according to the retailers’ earnings reports.
Retailers also saw mixed new- and used-vehicle inventory in Q2. Asbury Automotive reported new-vehicle inventory down 13 days YoY at 49 days’ supply, while used inventory fell one day YoY at 37 days’ supply. Penske’s new-vehicle inventory hit 57 days’ supply, up YoY from 49, while used vehicles fell YoY to 44 days from 47.
Also last week, asset management firms KKR & Co. and Pacific Management Co. agreed to purchase a stake in Harley-Davidson Financial Services and buy more than $5 billion in existing loan receivables, according to a July 30 Harley-Davidson announcement. The announcement came days before Harley-Davidson appointed Artie Starrs, chief executive of Topgolf, to be its new chief executive starting Oct. 1.
In this episode of the “Weekly Wrap,” Auto Finance News Editor Amanda Harris, Senior Associate Editor Truth Headlam and Associate Editor Aidan Bush discuss trends across second-quarter bank earnings for the week ended Aug. 1.
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Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain.
Hello everyone, and welcome to the Roadmap from Auto Finance News. Since 1996, the nation’s leading newsletter on automotive lending and leasing. It is Monday, August 4th, and I’m Aidan Bush. First, I’d like to thank our sponsor for this week’s podcast, The Work Number by Equifax. This week, more lenders, OEMs and retailers reported mixed second quarter earnings across both powersports and auto. In powersports, manufacturer Polaris’s sales slid about 5.5% year-over-year to 1.9 billion in the second quarter, down but exceeding Polaris’s sales guidance offered last quarter. To dive a little bit deeper on that, Polaris’s chief executive, Mike Speetson, attributed those declines to higher promotions from competitors and said that instead of focusing on incentives, Polaris is focused on long-term positioning. He also mentioned that Polaris gained market share across all segments in quarter 2.
Meanwhile, RV dealer Camping World hit record finance and insurance revenue and record total RV sales in quarter two, according to their earnings release. F&I revenue a little bit over 14% year over year in Q2 to around 201 million and total RV sales rose over 20% to 45,602 units. Chief Executive Marcus Lemonese said Camping World is focused on driving competitive pricing in all segments rather than prioritizing just those affordable kind of entry-level units, Lemonese added. Camping World is one of several power sports players expecting to see minimal tariff induced price hikes just due to their heavy domestic presence presence rather, excuse me.
And any increase in pricing would actually help Camping World’s margins thanks to its contract manufacturing relationships, Lemony said. Similar to kind of the power sports world, auto retailers Asbury Automotive and Penske Automotive also faced kind of mixed results in quarter two as far as their earnings. So Asbury Automotive’s F and I revenue fell just a little bit over 5% year-over-year to 182 million. And they also reported that used vehicle sales dropped around 6% to about 36,233 units in part from some of that sort of constrained supply issues we’re seeing. The industry. That being said, new vehicle sales for Asbury rose 4.1% to around 44,437 units. Similarly, Penske Automotive’s F&I revenue also dropped just around 4% to 200.5 million year over year and while they did see sales slow down. Those came across both new and used, kind of unlike Asbury in that sense. That being said, the gross profit per unit of new and used vehicles both jumped up 2.7% and 27.7% for new and used vehicles respectively, coming to about $5400 for your new vehicles.
And $2326 for your used vehicles. For more updates on quarter two, I will turn it over to Amanda. So Amanda, please take it away. Great. Thank you, Aidan. Great overview there. So I’m just going to take us through some of the other earnings that reported last week. So first up with Carvana, their originations rose about 51% year over year to $3 billion. Available inventory was also at 50%. Year over year sales were up 41%, finance and insurance gross profits per unit were up 4% and total revenue was up 42%. So you can see a little bit of a trend of positives pretty much across the board. Their stock kind of reflected that as well, went way up on the heels of their earnings. So look at a quarter for them in terms of sales revenue. And origination. So we’ll we’ll keep an eye out on them. Now turning to Ford Credit, the captives earnings before taxes rose 88% year over year to $645 million in Q2 and Ford Credit paid a $500 million distribution to Ford Motor US and Canada consumer outstandings were up about 5% year over year and lease volume was also up. But Ford Credit’s finance penetration rate of Ford U.S. sales fell to 33% from about 51% a year earlier, and Ford Credit does not break out originations, but their overall book did grow. Now, turning to credit acceptance, their originations were down about 15% year-over-year to about 85,400 consumer loan assignments. And that’s on the heels of a scorecard change back in Q 3/20/24. And the number of active dealers also declined in the quarter along with the portfolio, which fell about 6% year over year to $9 billion. And last but definitely not least, Harley-Davidson also reported, and I’ll just start with some news today, Harley-Davidson announced Rd. Stars. The head of Top Golf will be their new Chief Executive Officer and that is effective as October 1st. And this comes after the company, on its second quarter earnings, announced that asset management firms KKR and Company and Pacific Investment Management Company have each agreed to purchase a stake in Harley-Davidson Financial Services and buy more than 5 billion. in existing loan receivables. This move is expected to lower the captain’s existing debt and generate cash. Revenue, shipments, and inventory all declined during the quarter. And of course, you can look at our site for more details on all of those earnings. Now back to you, Aidan, for some additional takeaways from last week. Yes, thank you, Amanda. Very insightful, especially as it comes to the kind of larger round up for Q2. Some other news we kind of noticed last week, one in the sort of more fraud space, fraudsters are trying a new strategy to see if they can commit synthetic identity fraud. By submitting hundreds of identities within minutes to auto pre-qualification web apps, fraud prevention fintech Flexpath DXP told us that a large Ohio based auto dealership saw around 120 pre-qualification requests in just 13 minutes, four times what the dealership usually sees in one day. All of these requests triggered credit Bureau inquiries and may have been AI driven, Flexpath’s Terry Shabista said. And the idea is kind of once they’ve tested all of these identities, not only could that potentially open up the auto dealer for legal trouble, but it could also, you know, provide a kind of proven point that these identities work in other loan originations. Kind of increasing that chance of fraud. In other Power Sports news, Honda inked an agreement agreement with Power Sports lender Octane July 30th, which gives non prime financing options to Honda Power Sports customers for the first time while Honda’s captive America Honda Finance will continue to offer prime tier Power Sports loans. Octane will finance non prime loans the captive otherwise wouldn’t, Octane’s John Vestal told AFM. Honda also just launched Honda Insurance Solutions through an agreement with insurance brokerage firm VIU by Hub. You can read more about that on our website along with all of these other stories. So thank you for joining us on the road map and be sure to follow us on. X and LinkedIn registration is also open for our upcoming Auto Finance Summit 2025 and Power Sports Finance Summit 2025 in the fall. And again thank you to our sponsor Equifax. Lenders who leverage income and employment verifications through Equifax’s the work number see a 48% higher likelihood of loans closing.
As always, we’ll see you online at autofinancenews.net and here next time. Thank you.