Author Archives: Carguy
Delinquency rates push up subprime APRs
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Reagor-Dykes employee admits to $27M floorplan scam
Prosecutors have secured their 10th guilty plea in the on-going Reagor-Dykes case, according to court documents filed in Amarillo, Texas on Wednesday.
Elaina Marie Cabal, former finance assistant and office manager at two Reagor-Dykes dealerships, pled guilty to conspiracy to commit wire fraud. Cabal’s guilty plea is the second dealership employee to admit guilt this month.
Read more: 9th person pleads guilty to scamming Ford Credit in Reagor-Dykes case
Cabal was material in conspiring with former Chief Financial Officer Shane Smith in providing Ford Motor Credit Co. with false information regarding vehicles at the dealership, receiving additional financing from Ford Credit, and delaying payment to the captive for vehicles previously sold in the floorplan fraud scheme that totaled $27 million.
The breakdown is as follows: 409 vehicles worth $13.8 million were absent from the dealership chain’s inventory; 352 vehicles were sold and funded, totaling $11.6 million; and 37 vehicles worth $1.6 million were “double-floored.”
Cabal’s sentencing hearing is scheduled for April 14, 2020. She faces up to five years in prison, a maximum fine of $250,000, and restitution payments equal to the total loss Ford Credit incurred as a result of the floorplan scheme.
The dealership chain is currently awaiting approval from the United States Bankruptcy Court on its $14 million restructuring plan that the dealership chain hopes will keep some of its locations in operations. GM Financial, another floorplan financier for the Lubbock-based dealer group, is fighting the proposal in court, calling it “inadequate.”
Read more: GM Financial opposes second Reagor-Dykes restructuring plan
For more content like this, join us at the upcoming Auto Finance Accelerate event, March 9-11, at the Omni San Diego. Combining three crucial topics in auto lending and leasing, Auto Finance Accelerate dives into the strategies and knowledge needed to enhance your company’s auto finance sales, marketing, and innovation. Register before Friday, January 31st to save with early registration rates. Visit www.AutoFinanceAccelerate.com to learn more.
Weakening credit quality to bog down auto ABS in 2020
Loan quality within auto securitizations is expected to weaken, driven by higher delinquencies and a potential economic slowdown, according to a Moody’s Investor’s Service 2020 outlook.
While the risk of a recession should limit loose underwriting, lenders continue to actively pursue nonprime customers, Moody’s said. “Auto originations are no longer being bolstered by borrowers with especially strong credit profiles relative to U.S. consumers in general,” the report said. The rating agency noted that several auto loan ABS shelves will continue to include obligors “with very low scores” next year, as will a handful of lease deals.
Additionally, other collateral attributes outside of credit quality, such as lengthening loan terms and elevated loan-to-value ratios, continue to worsen. However, a solid job market and used-car price strength should offset those risks. Specifically, prime auto finance exhibits strong credit quality, even as the share of borrowers falling 90-or-more days delinquent continues to rise in other consumer debt categories. Used-car market strength will likely buoy slower new-car sales and support loan recovery rates and residual value performance in lease deals.
For more content like this, join us at the upcoming Auto Finance Accelerate event, March 9-11, at the Omni San Diego. Combining three crucial topics in auto lending and leasing, Auto Finance Accelerate dives into the strategies and knowledge needed to enhance your company’s auto finance sales, marketing, and innovation. Register before Friday, January 31st to save with early registration rates. Visit www.AutoFinanceAccelerate.com to learn more.
Asbury inks $1B deal to acquire luxury dealership chain in 2020
Asbury Automotive Group is acquiring Dallas-based Park Place Dealerships in a $1 billion all-cash transaction expected to close in the first quarter 2020, the company announced today.
The newly inked deal adds 17 new vehicle franchises to Asbury’s operations, bringing its total to 124 franchises spread across 88 dealerships. The majority of the Park Place Dealerships are located in the Dallas market and include new-vehicle franchises from Mercedes-Benz, Lexus, Jaguar, Land Rover, Porsche, Volvo, Bently, Rolls Royce, McLaren, Maserati, Karma, and Sprinter.
In addition, Asbury intends on opening a Jaguar/Land Rover franchise dealership in Austin, Texas, “late” in the first quarter of 2020, the company noted.
“This acquisition will transform our total portfolio to 50% luxury stores and add approximately $2 billion in expected annualized revenues,” said Asbury’s President and Chief Executive David Hult. The transaction will also increase Asbury’s geographic mix to 36% of revenue derived from the Texas market.
The new-vehicle retailer is betting the luxury segment is “more resilient” during a downturn, the company noted. “[Luxury segements] tend to have higher and more stable margins, fewer dealers nationwide, and a higher portion of gross profit from parts and service.”
The breakdown of the purchase price includes $785 million of goodwill — the cost to purchase the business minus the fair market value of the tangible assets — $215 million for real estate and leasehold improvements, and $30 million for parts and fixed assets.
For more content like this, join us at the upcoming Auto Finance Accelerate event, March 9-11 at the Omni San Diego. Combining three crucial topics in auto lending and leasing, Auto Finance Accelerate dives into the strategies and knowledge needed to enhance your company’s auto finance sales, marketing, and innovation. Register before Friday, January 31st to save with early registration rates. Visit www.AutoFinanceAccelerate.com to learn more.
The changing terrain of compliance in 2020
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Truist taps Regional Acceptance’s Bill Jones as head of auto division
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BB&T-SunTrust merger puts Truist Bank among top-20 auto financiers
With the BB&T Bank–SunTrust Bank merger complete, the combined auto finance business of newly minted Truist Bank creates a $16.7 billion operation that propels the once-regional lenders among the top-20 auto financiers.
Yet, it could take as long as two years to complete the system integration, Truist announced today in a press release. To that end, customers may not experience the transition to the “full Truist experience” until 2021.
With the finalized merger, Truist has a seat at the table with the nation’s largest auto financiers, including TD Auto Finance, USAA Federal Savings Bank and Southeast Toyota Finance. Moving forward, SunTrust and BB&T executives are working to build the Truist leadership team for the auto finance side of the business.
Taking the helm of the prime business is Chief Operating Officer Chuck Jones, who leads the legacy SunTrust Dealer Financial Services and legacy BB&T Dealer Finance teams for Truist Bank, Jones told Auto Finance News. The prime auto finance business consolidates SunTrust Bank’s legacy auto business and BB&T’s prime portfolio, he said.
SunTrust’s prime and super-prime business combined with BB&T’s mostly subprime subsidiary Regional Acceptance Corp. “will operate very successfully to cover the full spectrum,” Jones said.
Truist Bank did not respond to request for comment by press time.
For more content like this, join us at the upcoming Auto Finance Accelerate event, March 9-11 at the Omni San Diego. Combining three crucial topics in auto lending and leasing, Auto Finance Accelerate dives into the strategies and knowledge needed to enhance your company’s auto finance sales, marketing, and innovation. Register before Friday, January 31st to save with early registration rates. Visit www.AutoFinanceAccelerate.com to learn more.
Applications open for the 2020 DEMOvation Challenge
Bloom’s CEO Jesse Leimgruber (left), stands with Auto Finance News CEO JJ Hornblass at the 3rd annual DEMOvation Challenge at Omni San Diego.
Auto Finance News is excited to announce that applications are open for the 2020 DEMOvation Challenge, which will take place at the Auto Finance Innovation Summit on March 10-11 at the Omni San Diego.
The 4th annual DEMOvation Challenge offers startups 5-years-old or younger the opportunity to showcase their technology in front of a wide audience of auto lending and leasing executives during the two-day innovation event.
Technology startups with an eye toward auto finance are invited to fill out this short survey to be considered by the Auto Finance News editorial team for a DEMOvation slot. Startups are required to present a live demo at the event.
Past winners include Bloom, a decentralized data security solution powered by blockchain, and used-leasing app Fair.
The Auto Finance Innovation Summit is part of Auto Finance Accelerate, a three-day event that includes the Auto Finance Sales & Marketing Summit, and dives into the strategies and knowledge needed to enhance your company’s auto finance sales, marketing, and innovation. Register before Friday, January 31st to save with early registration rates. Visit www.AutoFinanceAccelerate.com to learn more.
9th person pleads guilty to scamming Ford Credit in Reagor-Dykes case
The executive assistant for former Reagor-Dykes Chief Financial Officer Shane Smith is the 9th employee to plead guilty for her role in the dealership group’s floorplan fraud scheme against Ford Motor Credit, according to the U.S. Attorney for the Northern District of Texas.
FBI investigations reveal that Ashley Nicole Dunn, Smith’s executive assistant, has admitted that she was one of the co-conspirators that falsely inflated the daily balances of the dealership’s bank accounts.
So far, nine employees have admitted to their roles in covering the dealership’s “double flooring” scheme, in which Smith instructed staff to artificially inflate the company’s bank account balance by cross-depositing insufficient checks, according to court documents. Vendor and payroll checks that should have bounced were instead cleared during the time between the deposit in the recipient account and the deduction from the payer’s account.
Reagor-Dykes employees who have pleaded throughout the year guilty include:
- Ashley Nicole Dunn, executive assistant to the CFO
- Brad William Fansler, RDAG group administrative director
- Paige Anna Johnston, office manager for the Reagor-Dykes location in Floydada, Texas
- Sheila Evans Miller, RDAG group controller
- Pepper Laray Rickman, accounting controller at Reagor-Dykes Plainview
- Shane Andrew Smith, chief financial officer
- Diana Herrera Urias, office manager
- Lindsay Clare Williams, group accounting manager
- Sherri Lynn Wood, office manager of Reagor-Dykes Plainview
The trio of executives at the helm of the Texas-based dealership group have been ordered to shell out a combined $162.4 million in restitution, including Chief Executive Bart Reagor, Co-Owner Rick Dykes, and Smith. Smith is the only one of the three executives that has pleaded guilty in the case; his sentencing is scheduled for Jan. 7, 2020, and he faces up to 20 years in prison.
Ford Credit sued Reagor-Dykes Auto Group in August 2018, and the dealership chain subsequently filed for Chapter 11 bankruptcy. Ford Credit served as the floorplan lender to six of Reagor-Dykes’ 13 locations across Texas. GM Financial was the floorplan lender to one dealership location in Snyder, Texas. Other lenders involved include First Capital Bank, First Bank & Trust, AIM Bank and Vista Bank. A total of 19 banks were victimized by the dealership group.
Reagor-Dykes is also awaiting approval on a proposed $14 million restructuring plan submitted to the court on June 29. However, GMF recently filed a motion urging the court to reject the restructuring plan.
For more content like this, join us at the upcoming Auto Finance Accelerate event, March 9-11 at the Omni San Diego. Combining three crucial topics in auto lending and leasing, Auto Finance Accelerate dives into the strategies and knowledge needed to enhance your company’s auto finance sales, marketing, and innovation. Register before Friday, January 31st to save with early registration rates. Visit www.AutoFinanceAccelerate.com to learn more.