Credit Acceptance Corp. (CAC), improves its total loan originations by 40.8% and its U.S. net income by 18.9% in the second quarter, CEO Brett A. Roberts reports.
The Southfield, MI-based specialist in non-prime financing improved its bottom line in June by terminating loan services in Canada and the United Kingdom. Instead, says Roberts, it returns to a focus on “guaranteed credit approval” through its growing network of dealer-partners in the U.S.
CAC, which halted leasing of used cars to higher-risk buyers in 2002, raised its U.S. net profit in the June quarter to $8.7 million from $7.3 million a year ago.
First-half U.S. net profit advanced 29.6% to $16.1 million. The company took a $7.5 million one-time charge against overall net income for terminating its UK operation. This reduced its consolidated net income globally 88.1% to $1.0 million in the second quarter, from $8.4 million in 2002.
CAC stock valuation has jumped in 2003. Growth in the subprime auto loan market is one factor, according to analysts, combined with the company's downsizing. CAC traded at a 52-week low of $4.75 in 2002, rising to a high of $12.20 in the second quarter of 2003.
Roberts, 36, succeeded CAC's chairman and founder, Don Foss, 58, as CEO in 2002 after an 11-year career in CAC financial operations. Foss launched CAC in 1972 after running a “buy here/pay here” used-car lot on Detroit's historic Livernois Avenue auto row. CAC went public in 1992.