PHOENIX — NowAuto Group executives recently shared the reasons why their charge-offs and defaults improved significantly during the fiscal second quarter over the prior quarter and prior year.

NowAuto found that charge-offs and defaults in the quarter that ended on Dec. 31 dropped because of increased credit criteria, improved contract management and system upgrades.

As a result of those trends, executives said net investment increased 19 percent during the past six months.

In other news revealed during the release of its latest financial data, NowAuto indicated that revenue in the second quarter came in at $1.47 million. The figure marked a rise from the amount compiled in the same quarter a year ago, which totaled $1.36 million.

Spurring that revenue growth was the company's gross margin improvement. NowAuto contended that this margin spiked 54.7 percent due to sale of higher margin vehicles and increased interest income.

Despite the positive financial news, NowAuto chief executive officer Scott Miller reiterated an area that the company remains vigilant about maintaining.

"The present condition of the subprime and below subprime auto market has continued to impact our industry and our company. While we have managed to increase year-over-year sales revenue our challenge has been, and will continue to be on, collections," Miller explained.

"Our challenge in the current environment is to aggressively work with our customers to maintain active contracts. Tighter underwriting criteria yielded positive results in the September 2010 quarter," he continued.

"Nevertheless, we expect a difficult environment for the foreseeable future. Our commitment to customers and shareholders alike remains — NowAuto will do whatever it can to maintain productive contracts without placing imprudent demands on our customers," Miller added.

Echoing the sentiment was the company's chief financial officer, Faith Forbis.

"We continue to seek new ways to improve ourselves and have seen some success," Forbis emphasized.

"The current economy has created many challenges that will continue in the near future. Nevertheless, we have been slowly building momentum," Forbis added.

Adding to the discussion about what other initiatives NowAuto is undertaking was Tino Valenzuela, the company's chief operating officer.

"Programs initiated in fiscal 2009 have resulted in solid year-over-year volume and lease revenue," Valenzuela asserted.

"We successfully consolidated our corporate and reconditioning operations during the September 2010 quarter, resulting in a significantly faster and more efficient turnover of inventory," Valenzuela also mentioned.