The Used EV Play and the Tricolor Mess

"When banks discover you've been borrowing against the same assets from multiple lenders, it's not a bankruptcy—it's a crime scene." — Asset-backed securities investor on Tricolor

CURRENT EVENTS

The Tricolor Fraud Scheme: What Actually Happened

We covered Tricolor's bankruptcy two weeks ago. Now we know why it collapsed so fast.

The scheme: Double-pledging. Tricolor allegedly used identical loan portfolios as collateral for separate warehouse credit lines with multiple banks.

Translation: They borrowed against the same assets multiple times from different lenders who didn't know about each other.

The damage: Fifth Third Bancorp disclosed a potential $200 million loss. JPMorgan Chase and Barclays got hit too. Federal DOJ is now investigating.

The aftermath: Vervent (the backup loan servicer) got locked out of Tricolor's Dallas headquarters. When they finally got in, they found scores of license plates piled in corners, stacks of car titles, and a completely downed loan-collection system.

One investor called it "one of the worst things I've ever seen" in the asset-backed securities market.

What this means for dealers:

Subprime lending just got tighter. Banks that got burned are pulling back. Expect stricter warehouse lines and higher costs for subprime auto credit.

The opportunity: Dealers with clean books and solid banking relationships will pick up customers who can't get financed elsewhere. If you've been conservative with your lending practices, you just gained a competitive edge.

Used EVs Are the Fastest-Selling Cars in America

Bloomberg just dropped a report: used EVs are moving faster than gas-powered vehicles.

The data: A 2024 Ford Mustang Mach-E GT with a $55,000 sticker sold used for $33,000 after just 12 months and 13,000 miles. That's a 22% discount for barely-used metal.

Why it's happening: The federal EV tax credit expired September 30. Buyers rushed to grab new EVs before the deadline. Now those early buyers are trading in, and used EVs are flooding the market.

For used car dealers:

This is a short-term arbitrage play. Used EVs are depreciating faster than gas cars, creating buying opportunities at auction. But you need buyers lined up before you stock them.

The risk: Don't stockpile. The market for used EVs is soft long-term. Buy cheap, move fast, don't hold inventory.

The opportunity: Customers who want EVs can get 20-30% discounts on lightly used models. If you've got eco-conscious buyers in your market, this is your window.

Used Car Prices Up 1.2% for Second Straight Month

Manheim data shows wholesale used vehicle prices rose 1.2% in early September—second straight month of gains.

What's driving it: Supply is still tight. Retail demand is stronger than expected. And here's the kicker—days-to-turn dropped to 40 days, down from 55+ days late last year.

Why this matters: Prices rising while turn time drops is unusual. Normally when prices climb, cars sit longer. Right now, the opposite is happening.

The takeaway: Market is hot. If you're sitting on inventory waiting for better margins, you're missing the window. Move units while demand is strong.

EVENTS AND CONFERENCES

Impel Launches First AI Certification Program Impel partnered with RockED to launch the automotive industry's first standardized AI certification program. Finally, some structure around AI training instead of every dealer figuring it out alone. Program aims to get dealer teams certified on AI tools and best practices.

Cox Automotive Study: Digital Adoption Doubles Cox's newest research shows dealers offering every purchase step online have doubled in two years. Buyers who engage with chatbots report a 57% improvement in dealership experience. The gap between digital adopters and holdouts continues to widen.

INDUSTRY UPDATES

Luxury Cars Up, Pickups Down Carfax data shows used luxury car prices climbed for the sixth straight month, up 5.8% year-over-year. Meanwhile, pickup trucks fell nearly $150 in September. Market is shifting.

Days-to-Turn Accelerating Black Book reports average time to sell a used car dropped to 40 days, down from 55+ days late last year. Market velocity is accelerating. Cars are moving faster than expected.

Got news worth covering? Hit reply.

— Adam