Americas Carmart Inc (NASDAQ: CRMT)

America’s Car Mart, Inc. is one of the largest publicly held automotive retailers in the United States that operates exclusively in the Integrated Auto Sales and Finance segment of the used car market. The company conducts its business through two operating subsidiaries America’s Car Mart of Arkansas and Colonial Auto Finance Inc which together are referred to as Car‑Mart. It primarily sells older model used vehicles and provides in‑house financing for substantially all of its customers many of whom have limited credit histories or past credit problems and would not qualify for conventional loans. As of April 30 2025 the company operated 154 dealerships located mainly in small cities throughout the South‑Central United States. Its strategy centers on maintaining a standardized operational framework while empowering local management to respond to community needs and on expanding through disciplined organic growth and selective acquisitions.

Revenue is generated from two principal sources the sale of used vehicles and the financing of those sales. The company sells vehicles at an average retail price of approximately nineteen thousand three hundred ninety eight dollars per unit and extends installment contracts to nearly every buyer. Financing terms include down payments ranging from zero to twenty percent with an average down payment of five and a half percent and contract lengths averaging forty eight and three tenths months. The portfolio weighted average interest rate is seventeen point six percent with rates varying from twelve point nine nine percent to twenty three percent based on credit scores and state usury limits. In addition to vehicle sales and interest income the company earns revenue from ancillary products such as service contracts and the Accident Protection Plan which cancels the outstanding loan balance if the financed vehicle is declared a total loss or stolen. Collections activities also contribute to revenue recovery as the company works to minimize delinquencies and charge offs through in‑house servicing of installment contracts and through centralized texting phone call and mail payment options.

The company operates through the following segments:

• Integrated Auto Sales and Finance. This segment encompasses the core business of selling used vehicles and providing in‑house financing to customers with limited financial resources. Activities include vehicle procurement from wholesalers auctions new car dealers rental and fleet companies and the general public. Vehicles are typically between five and twelve years old with mileage ranging from seventy thousand to one hundred forty thousand miles and an average purchase price of about nine thousand five hundred dollars. Each vehicle undergoes a quality inspection and test drive before sale. The segment manages credit underwriting through a proprietary loan origination system that evaluates employment residence credit history and personal references. Approved contracts are serviced and collected at the dealership level with support from corporate collections staff. The segment also offers service contracts and the Accident Protection Plan to enhance customer protection and generate additional fee income. Collection strategies involve in person payments which account for approximately forty six percent of payments as well as mail auto draft mobile online and phone payment options. The company uses delinquency standards loss standards and regular monitoring to manage credit risk and provides contract modifications such as term extensions to assist customers experiencing financial difficulty. The segment’s operations are supported by a cost efficient model that aligns staffing levels with active account volumes standardizes compensation by position and leverages technology investments in a new loan origination system and an enterprise resource planning system to drive efficiencies.

Within the used car retail industry America’s Car Mart holds a distinct position as a leading provider of Integrated Auto Sales and Finance services to subprime customers. Its primary competitors include other independent Integrated Auto Sales and Finance dealers franchised automobile dealerships that sell used vehicles independent used vehicle dealers and individuals engaged in private party transactions. The company differentiates itself through its ability to offer financing to consumers who lack access to traditional credit sources its face to face collection model that fosters strong customer relationships and its standardized yet locally empowered dealership structure. Additional competitive advantages arise from its experienced management team proven business practices cost efficient operating model and well capitalized balance sheet which together enable it to pursue organic growth and strategic acquisitions while maintaining credit performance within industry norms.

The company’s customer base consists primarily of individuals who need basic affordable transportation and who have limited financial resources or impaired credit histories. Many customers are repeat buyers who return for additional vehicles and refer others to the dealerships due to the personalized service and payment flexibility offered. The business does not rely on corporate or institutional customers but instead serves individual consumers across the communities where its dealerships are located. The typical customer makes payments in person at the dealership approximately forty six percent of the time which helps build trust and encourages timely repayment.