BENTONVILLE, Ark. — This week, America's Car-Mart opened the
127th dealership in its network of buy-here, pay-here stores. And it's nearly
certain the vehicle in inventory will be equipped with a GPS device, a practice
the company hesitated in doing until recently.

Car-Mart president and chief executive officer William "Hank"
Henderson explained the company's methodology during a conference call after the
BHPH chain recently completed the first quarter of its 2014 fiscal year.

"Actually, we are kind of about the last ones to enter this
market. Virtually, everyone who sells vehicles at our level, they have already
offered it," Henderson said according to a transcript posted by
SeekingAlpha.com.

"When these things first came out, we stayed out of it,"
Henderson continued. "We are very relationship driven. Much due in part to …
the perception, I can tell you that we have been rolling this out for several
months.

"We have actually already sold a lot of vehicles with it on
there. We've really had virtually no negative comments from our customers. It's
a very commonplace," he went on to say.

Going forward, Henderson indicated vehicles sold at the
newest store in Covington, Ga. — Car-Mart's third dealership in Georgia and the
third new store to open so far in its current fiscal year — will be equipped
with a GPS device. Units sold at the remainder of the dealerships will have
these devices, too, but the Car-Mart boss said contracts currently in its
portfolio will not be brought back so the technology can be installed.

Henderson also insisted the GPS technology will not replace
the practices Car-Mart has been using for years.

"We have long prided ourselves on being the absolute best in
the business in collections through developing relationships with our customers
and working with them when they have challenges," he said. "But just because we
are the best, doesn't mean we don't have room to improve. We do and we will."

Car-Mart is making all of these moves after a first-quarter
performance where competition from finance companies buying paper from
customers with lower credit scores pinched the BHPH dealer company.

Henderson highlighted that Car-Mart's Q1 net income and
revenue both increased year-over-year. The company's net income came in at $7.5
million based on revenues of $123 million, including a same-store revenue jump
of 5.6 percent.

Car-Mart retailed 9 percent more units during the first
quarter — 10,643 vehicles — up from 9,753 vehicles a year earlier. The average retail
sales price increased $252 to $9,836, or 2.6 percent, from the prior year quarter
and decreased $127, or 1.3 percent, sequentially.

However, the company reported net charge-offs as a percent
of average finance receivables came in at 6.2 percent in Q1, up from 5.9
percent for the prior-year quarter. Furthermore, Car-Mart's Q1 provision for
credit losses was 24.3 percent of sales versus 22.0 percent a year earlier, and
its allowance for credit losses stood
at 21.5 percent of finance receivables as of July 31,

"We are very pleased with our top line growth for the
quarter. Our general managers continue to work hard at helping our customers
succeed and are meeting the challenges of the current competitive environment
head-on," Henderson said. "We are determined to earn the repeat business of our
customers by doing everything we can to help them purchase a quality vehicle
with affordable payment terms and excellent service.

"Even though our revenues were up, we feel like we could
have done even better as we believe that increased funding to the subprime auto
industry continues to have a negative effect on our business especially on the
provision for credit losses line," he continued.

"We believe that many companies that are competing for our
customers on the funding side are not focused on earning repeat business tied
to customer success. We believe that by helping our customers successfully
complete the terms of their contracts, which has always been and will always be
our primary focus, we will continue to fulfill our vision of being the most
respected buy-here, pay-here organization in the country," Henderson went on to
say about Car-Mart's current portfolio that now stands at more than 59,000
active accounts.

Nick Zulovich can be reached at nzulovich@subprimenews.com. Continue the conversation with SubPrime Auto Finance News on LinkedIn and Twitter.


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