Credit Acceptance Corporation Reports Decrease in Net Income to $247.9 Million for Fiscal Year 2024

Credit Acceptance Corporation reported a consolidated net income of $247.9 million, or $19.88 per diluted share, for the fiscal year ending December 31, 2024, a decrease from $286.1 million, or $21.99 per diluted share, in 2023. The decline in profitability was attributed primarily to increased interest expenses and provisions for credit losses, despite a 13.5% rise in finance charges, which totaled $1.99 billion. The company also experienced a significant reduction in forecasted net cash flows from its loan portfolio, which decreased by $314 million, or 3.1%, due to a larger decline in forecasted collection rates compared to the previous year.

In terms of operational metrics, Credit Acceptance saw a 16.1% increase in unit volume and an 11.3% increase in dollar volume of Consumer Loan assignments, reaching 386,126 units and $4.62 billion, respectively. The average balance of the loan portfolio also grew by 13.6%, marking the highest level recorded. The company reported that 80.6% of Consumer Loans assigned had either FICO scores below 650 or no FICO scores, indicating a continued focus on consumers with impaired credit histories. The number of active dealers increased by 9.1% to 15,463, reflecting a growing network of partnerships.

Strategically, Credit Acceptance has made adjustments to its forecasting methodology, which resulted in a significant increase in the provision for credit losses. The company recognized a $127.5 million increase in provisions due to changes in expected future net cash flows, reflecting a cautious approach to managing credit risk amid economic uncertainties. Additionally, the company repurchased approximately 590,000 shares, or 4.7% of its outstanding shares, as part of its ongoing capital management strategy.

Looking ahead, Credit Acceptance remains focused on maintaining its market position in the non-prime auto financing sector, which is characterized by intense competition. The company is committed to enhancing its product offerings and improving operational efficiencies to drive growth. However, it acknowledges the potential impact of economic conditions on consumer demand and loan performance, particularly in light of rising interest rates and inflationary pressures. The company’s ability to accurately forecast loan performance and manage credit risk will be critical to its future financial results.