Poor portfolio performance may trigger credit enhancement provisions in our warehouse facility or
Our warehouse facility has portfolio net loss and delinquency ratio levels, and other performance-based metrics
that, if exceeded, would increase the level of credit enhancement requirements under the warehouse facility and redirect all excess cash to the lenders until the required credit enhancement level is achieved.
The documents that govern our securitizations also contain cumulative net loss ratio limits on the receivables included in each securitization
trust. If, at any measurement date, a cumulative net loss level with respect to any securitization trust were to exceed the specified trigger limits, provisions of the securitization trust would increase the level of credit enhancement requirements
for that securitization trust and redirect all excess cash to the holders of the ABS until the required credit enhancement level is achieved. During this period, excess cash flow, if any, from the securitization would be used to fund the increased
credit enhancement levels rather than being distributed to us. Once an impacted trust reaches the new credit enhancement requirement, we would return to receiving a residual distribution from the trust.
Negative changes in the business of the OEMs with which we seek strategic relationships or of our other strategic partners, including the OEMs, could
materially and adversely affect our business, financial condition and results of operations.
A significant adverse change in the
business of the OEMs with which we seek strategic relationships, including (i) significant adverse changes in its respective liquidity position and access to the capital markets, (ii) the production or sale of its vehicles (including the
effects of any product recalls), (iii) the quality or resale value of its vehicles, (iv) the use of marketing incentives, (v) its relationships with key suppliers, or (vi) its respective relationships with the United Auto Workers and
other labor unions, and other factors impacting OEMs or their employees could materially and adversely affect our business, financial condition and results of operations.
In the future, it is possible that the vehicle manufacturers with whom we have relationships could utilize other companies to support their
financing needs, including offering products or terms that we would not or could not offer, which could materially and adversely affect our business, financial condition and results of operations. Furthermore, these vehicle manufacturers could
expand, establish or acquire captive finance companies to support their financing need; thus, reducing their need for our services.
can be no assurance that the global vehicle market or an OEM partners share of that market, will not suffer downturns in the future, and any negative impact could in turn materially and adversely affect our business, financial condition and
results of operations.
Similarly, a significant adverse change in the business of one of our strategic partnerships, including the
Independent Dealer Group with which we have a strategic partnership, could materially and adversely affect our business, financial condition and results of operations.
We may not be able to make technological improvements as quickly as some of our competitors, which could harm our ability to compete with our
competitors and adversely affect our results of operations, financial condition and liquidity.
The financial services industry is
undergoing rapid technological changes, with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial and lending institutions to better serve customers and
reduce costs. Our future success and, in particular, the success of our centralized operations, will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy
customer demands for convenience, as well as to create additional efficiencies in our operations. We rely on our own as well as third-