Subprime Lender Implodes While AI Market Explodes

"We're excited to complete our second securitization of the year... We have conviction that our differentiated approach enables us to deliver consistent, predictable and positive outcomes."

— Daniel Chu, Tricolor CEO, just three months ago

CURRENT NEWS

Tricolor Auto Files for Bankruptcy

The seventh largest independent used car retailer in the US just went from raising $217 million in June to filing for bankruptcy this week.

Tricolor Auto Group operated 65 retail centers across Texas, Arizona, and California before an unidentified bank took control Friday and placed 80-90% of its workforce on temporary leave.

The timeline is brutal. Company leadership was discussing business expansion and lending partnerships just three weeks ago before abruptly discontinuing those efforts. The bankruptcy decision followed the discovery of significant financial complications within the company's lending operations.

The damage: More than $5 billion in auto loans issued since 2007, with thousands of active borrowers now uncertain about their loan servicing. Tricolor specifically targeted Hispanic customers with limited credit history.

This raises serious questions about the broader subprime auto lending market.

Cox Doubles Down on Digital

While some companies collapse, others are investing heavily in technology.

Cox Automotive's newest study reveals dealers offering every purchase step online have doubled in two years. More importantly: buyers who engage with chatbots report a 57% improvement in their dealership experience.

The numbers that matter: High-performing dealers report significantly higher close rates and profit margins by using AI.

The gap between digital adopters and holdouts continues to widen.

Palantir Scores Big Manufacturing Win

Palantir Technologies announced a five-year expansion with Lear Corporation, with more than 11,000 Lear employees now using Palantir's AI platforms.

The results: More than $30 million in savings during the first half of 2025.

This isn't experimental AI. It's operational AI delivering measurable business outcomes through proactive tariff management, automated workflows, and dynamic manufacturing line balancing.

INDUSTRY UPDATES

First AI Certification Program Launches

Impel is partnering with RockED to launch the automotive industry's first standardized AI certification program. Finally, some structure around AI training instead of everyone figuring it out as they go.

The Bottom Line

The Tricolor collapse versus the AI market expansion tells you everything about where this industry is heading. Traditional business models are facing serious pressure while technology driven approaches gain momentum and investment.

The dealers figuring this out now will be the ones still standing when the dust settles.

Got news worth covering? Send it over!

-Adam