Credit Acceptance (NASDAQ:CACC) executives used the company’s fourth-quarter 2025 earnings call to highlight leadership priorities under new CEO Vinayak Hegde and to discuss operating trends that included improving loan volume comparisons, modestly weaker credit performance in recent vintages, and continued investment in technology and servicing.
New CEO outlines priorities and operating approach
Hegde, speaking on his first quarterly earnings call as CEO, said his initial focus over roughly 90 days in the role was “listening, learning, and charting a purposeful path forward.” He said he connected with team members across the company and met with dealers to understand where Credit Acceptance’s products and services help and where friction exists.
He reiterated three strategic objectives the company is prioritizing:
- Generating dealer and consumer demand by deepening dealer relationships, supporting dealers in acquiring consumers, and using data-driven insights.
- Empowering dealers to fulfill demand through preferred origination channels, including Credit Acceptance’s proprietary system and aggregator platforms such as RouteOne and Dealertrack.
- Delivering “world-class” servicing and processing, including ongoing investment in artificial intelligence and enhancements to the company’s app.
Technology rollout aimed at franchise and large independent dealers
Hegde pointed to a fourth-quarter launch of a new contract origination experience “specifically built for the way franchise and large independent dealers operate.” He said these dealers increasingly originate contracts through aggregator platforms and integrated dealer systems rather than standalone lender portals.
According to Hegde, the new experience includes RouteOne e-contracting integration, deal structuring and optimization tools, and expanded support for financial and insurance products. He characterized the effort as designed to “eliminate friction” and make working with Credit Acceptance faster inside dealer workflows.
He said the timing is important because declines in loan unit volume have been “most significant among franchise dealers.” He also noted the company has observed that consumer loans originated through franchise dealers have shown “slightly better credit performance” than those from independent dealers. Credit Acceptance expects to expand the number of dealers using the new origination experience in the first quarter of 2026, he said.
In response to a question about competition and market share, Hegde said the company aims to remain “customer focused and not competitive focused,” while also emphasizing speed and workflow integration. He cited a feature that helps dealers and customers optimize a deal and said technology investments have reduced the time required for that process to “less than two seconds,” which he said is increasingly important when competing inside aggregator platforms.
Fourth-quarter activity: contract volume, collections, dealer metrics
Chief Financial Officer Jay Martin said the company reported growth in adjusted earnings per share despite declines in loan performance and loan volume. During the quarter, Credit Acceptance financed nearly 72,000 contracts, collected $1.3 billion, and paid $48 million in dealer holdback and accelerated dealer holdback.
Martin said the company enrolled over 1,200 new dealers and had more than 9,800 active dealers in the quarter. He added that active dealers declined 2.8% year-over-year and that average unit volume per active dealer fell 6.4% year-over-year.
Loan volumes improved sequentially, with year-over-year declines narrowing. Martin said loan unit volume declined 9.1% year-over-year in the quarter, compared with a 16.5% decline in the prior quarter, while loan dollar volume declined 11.3% versus a 19.4% decline in the prior quarter.
Market share in the company’s core segment of used vehicles financed by subprime consumers was 4.5% for the first two months of the fourth quarter, down from 5.4% for the same period in 2024, Martin said.
Credit performance: modest declines in recent vintages, inflation impacts cited
Martin said loan performance, measured by variances in forecasted collection rates from the prior quarter, “moderately declined.” He said the 2023 and 2024 vintages declined 0.4% and 0.2%, respectively, while other vintages were stable. He attributed underperformance in the 2024 vintage primarily to loans originated prior to a scorecard change in the third quarter of 2024, and said the company believes continued high inflation has been impacting the subprime consumer.
Martin said changes to the company’s forecast of future net cash flows improved sequentially, with the rate of decline narrowing to a decrease of $34.2 million (0.3%) in the fourth quarter from a decrease of $58.6 million (0.5%) in the third quarter.
On underwriting and credit management, Hegde told an analyst the company intends to remain conservative and long-term focused, while continuing to improve credit scoring models over time.
Balance sheet and capital allocation: leverage in range, buybacks tied to intrinsic value
In the question-and-answer portion of the call, management addressed leverage and capital allocation. Martin said leverage remained within an acceptable range, though at the higher end, and said the company’s approach to capital allocation has not changed.
He said Credit Acceptance prioritizes maintaining capital to fund new originations, then considers factors that include leverage and its estimate of intrinsic value relative to the market price when deciding whether to repurchase shares. Martin said the company was “very active” in repurchasing during the fourth quarter because it believed conditions warranted it.
Management also discussed a change in provision for new advances per unit. Martin said the provision is a function of how much the company advances dealers and the mix between its portfolio and purchase programs. He said the initial provision on the purchase program is about three times that of the portfolio program, and confirmed that mix was the driver of the fourth-quarter increase referenced by an analyst.
On prepayments, Martin said prepayments have increased year-over-year but remain below historical norms. He said it is difficult to interpret the trend, adding that one possible explanation—while “pure conjecture”—is that customers may be staying in their vehicles longer.
About Credit Acceptance (NASDAQ:CACC)
Credit Acceptance Corporation, founded in 1972 and headquartered in Southfield, Michigan, is a specialty finance company focused on the indirect automotive lending market. The company partners with independent and franchised auto dealers to facilitate purchase financing for consumers who may not qualify for traditional prime auto loans. By purchasing retail installment contracts originated by these dealers, Credit Acceptance provides capital and credit insurance to support vehicle sales, enabling dealers to broaden their customer base and reduce credit risk.
Through its proprietary underwriting platform and risk management strategies, Credit Acceptance evaluates borrower applications, structures credit plans, and retains servicing rights on the acquired contracts.
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