Financial analysts anticipate a mixed performance for America’s Car-Mart Inc. in the third quarter of fiscal 2025, as the company navigates fluctuating vehicle sales and rising prices. The buy-here-pay-here used car retailer is projected to report earnings of 15 cents per share for the period ending January 31, up from a loss of $1.34 per share in the same period last year. Revenue, however, is expected to decline by 5.6%, totaling $282.83 million compared to $299.61 million in the previous year.

Despite these challenges, there are early signs of improvement in credit performance, which may signal a return to historical averages. Analysts from Jefferies highlight several key metrics they expect Car-Mart to report: an average retail sales price increase of 5% to $20,428, a decrease in vehicles sold by 4% to 11,197 units, and a gross margin boost of 2.97 percentage points to 37.1%. Additionally, the number of dealerships is anticipated to rise by one to a total of 155. While the integration of a new loan origination system could impact sales, improvements in the provision for losses are expected, dropping to $85 million from $100 million in the second quarter.

The broader automotive finance landscape also presents significant challenges. According to a recent Edmunds report, a growing number of U.S. residents with vehicle loans owe more than their cars are worth. In the fourth quarter of 2024, nearly one in four trade-ins had negative equity, marking an increase from previous quarters. The average amount owed on upside-down loans reached a record high of $6,838, reflecting a troubling trend in auto financing. Consumers with negative equity are facing increasingly burdensome debt, with some owing over $10,000 on their vehicle loans. This situation underscores the importance of responsible borrowing and financial planning in the automotive sector. By maintaining payments and focusing on long-term stability, consumers can work towards breaking the cycle of unsustainable debt.