Credit Acceptance Corporation (NASDAQ:CACC) Q3 2023 Earnings Call Transcript

John Hecht: And then just, I guess, maybe comment on obviously you’re writing down the expected cash flows at kind of fits and spurts over the past few quarters in that. Maybe can you just discuss the credit environment, I mean, is it a consumer that’s just been exhausted by inflation or is it because — is it more tied to asset values in the market? How do you describe the credit and the consumer’s ability to service their debts right now?

Douglas Busk: I mean I think it’s a combination of several factors, probably the two that you mentioned asset values and inflation would be the two most material contributors.

John Hecht: Okay. Thanks very much, guys.

Operator: Thank you. [Operator Instructions] And our next question comes from Robert Wildhack of Autonomous Research.

Robert Wildhack: Hi, guys. Just to follow-up on the last point there. Why you think the competitive or what’s the reason behind the improvement in the competitive landscape? Is that structural, in other words competitors going out of business or is that temporary i.e. something just pulling back for a bit?

Douglas Busk: There have been some companies that have gone out of business or exited the market, but they haven’t been huge participants in used vehicle financing to sub-prime consumers. So I think it’s just more a function of other industry participants having to price their loans differently due to the increase in interest rates. I think people are also probably reacting to softness in credit performance.

Robert Wildhack: Okay. And then as it relates to the downward revisions in forecasted collections, have you adjusted your approval rate at all in the recent quarters, and that did you change your approval rate at all in October?

Douglas Busk: We haven’t seen a material, I mean, we approve everyone. So we haven’t seen a change in our approval policies. And we haven’t made any meaningful changes in policy or price in October.

Robert Wildhack: Okay. No change in October.

Douglas Busk: No material changes. No.

Robert Wildhack: Okay. Thanks.

Operator: With no further questions in the queue, I would like to turn the conference back over to Mr. Busk for any additional or closing remarks.

Douglas Busk: We would like to thank everyone for their support and for joining us on our conference call today. If you have any additional follow-up questions, please direct them to our Investor Relations mailbox at ir@creditacceptance.com. We look forward to talking to you again next quarter. Thank you.

Operator: Once again, this does conclude today’s conference. We thank you for your participation.