Credit Acceptance's Q2 2025: Unraveling Key Contradictions in Collections, Loan Mix, and Competitive Landscape

Collections and adjusted yield, evolution of loan mix and size, collection rate performance and expectations, economic profitability of vintages, and competitive environment are the key contradictions discussed in Credit Acceptance Corporation's latest 2025Q2 earnings call.



Loan Performance and Vintage Underperformance:
- Credit Acceptance Corporation reported a decline in loan performance, with its 2022, 2023, and 2024 vintages underperforming expectations.
- The underperformance was attributed to continued impacts of inflation and adjustments made to address performance issues in 2024 loans.

Origination Volume and Market Share Decline:
- The company experienced a decline in unit and dollar volumes, with market share in its core segment of used vehicles financed by subprime consumers decreasing to 5.4% in the first five months of 2025.
- The decline was primarily due to a Q3 2024 scorecard change that resulted in lower advance rates and increased competition in the market.

Share Repurchase Activity:
- Credit Acceptance Corporation was active in share repurchases, buying back 530,000 shares at an average price of $490 in the second quarter.
- The activity was driven by adequate capital to fund new originations and a lower volume in originations due to pricing changes and competition.

Loan Size and Consumer Mix:
- The company observed a decline in loan size, with a different mix of consumers contributing to the change.
- The shift in consumer mix was influenced by variability in the types of vehicles being financed since the start of the pandemic.