The affordability of new cars has long been a concern for many consumers. While plenty of people purchase new cars, the burden of monthly loan payments often makes true affordability a challenge. The common justification for buying new cars has been the peace of mind and reliability they offer, despite the fact that a new car loses value as soon as it leaves the lot.
However, the landscape of car buying has shifted dramatically in recent years. Even purchasing a used car has become a complex financial decision. According to Edmunds, the average monthly payment for a new car has reached a record high of $777, with 20.3% of buyers paying $1,000 or more each month. To manage these high costs, many buyers are opting for longer loan terms, stretching them over six or seven years. This approach, however, comes with significant financial consequences, as buyers end up paying substantial amounts in interest over the life of the loan.
Used car buyers are also feeling the financial strain, financing an average of $30,414 at interest rates as high as 21.7% for subprime buyers. These exorbitant interest rates further compound the financial challenges faced by consumers in the car buying market.
The pressure on buyers is not only affecting individuals but also impacting dealerships that specialize in financing customers with weaker credit. One such dealership, America’s Car-Mart, recently announced a significant reduction in its retail footprint. The company reported a total revenue of $1.281 billion, down by 7.9% from the previous fiscal year. Additionally, America’s Car-Mart experienced a net loss of $139.11 million, a stark contrast to the net income of $17.93 million in the previous year.
As part of its cost-cutting measures, America’s Car-Mart consolidated 60 dealership locations within a 12-month period, resulting in a 40% reduction in its retail footprint. This move reflects the challenges faced by both consumers and dealerships in the current car buying market, where affordability and financial sustainability are top concerns. America’s Car-Mart has been making headlines for closing a significant number of its locations in recent times. The company’s decision to shutter stores has raised questions about its financial health and long-term viability.
The troubles for America’s Car-Mart started over a year ago when the company secured a $300 million term loan to optimize its store footprint and organizational structure. This move was aimed at improving capital efficiency and strengthening the company’s financial position. CEO Doug Campbell announced that the company would be executing a multi-phase plan to achieve these objectives.
The first phase of the plan involved consolidating five underperforming stores and cutting approximately 10% of its workforce. This initial phase was completed in early November. The second phase, which was slated for Q3, aimed to generate more than $20 million in annualized savings in selling, general, and administrative expenses (SG&A).
By January 13, America’s Car-Mart had completed the second phase by consolidating 13 more locations into higher-performing nearby dealerships. This brought the total number of consolidated locations to 18. However, the company has not disclosed the locations of the remaining 42 dealership locations that were consolidated in the fourth quarter of fiscal 2026.
Despite the efforts to optimize its operations, America’s Car-Mart issued a “going concern” disclosure, indicating concerns about its ability to continue operating in the foreseeable future. This disclosure is a serious red flag for investors and suggests that the company’s financial challenges go beyond routine cost-cutting measures.
While other retailers like Fossil Group, Vera Bradley, and Tilly’s have also closed stores to improve profitability, the situation at America’s Car-Mart appears to be more severe. The company’s management has highlighted liquidity as a primary challenge, indicating that store efficiency alone may not be sufficient to address its financial woes.
As America’s Car-Mart continues to navigate these challenges, investors and analysts will be closely monitoring the company’s financial performance and strategic initiatives to determine its future prospects in the highly competitive automotive industry. America’s Car-Mart recently made headlines when it disclosed in its financial statements that there is substantial doubt about its ability to continue operating over the next year. This disclosure, known as a “going concern,” is a significant development for the company and its stakeholders.
The going concern principle is a standard accounting practice that assumes an organization or business is financially stable enough to continue operating for the foreseeable future, typically the next 12 months. When a company issues a going concern disclosure, it means that management has identified conditions that raise doubts about the company’s ability to continue operating over the next year.
In the case of America’s Car-Mart, the company specifically mentioned the potential need to seek protection under applicable bankruptcy or insolvency laws as one of the risks it faces if it cannot secure additional financing or complete a strategic transaction. The company also stated that it is facing severe liquidity, debt, and funding challenges that threaten its survival over the next year.
For millions of working-class Americans, America’s Car-Mart’s financial struggles have significant implications. The company operates as a “buy here, pay here” dealership, offering financing options to borrowers with poor or limited credit histories. Keeping a reliable car on the road is essential for many individuals to get to work, especially in rural communities where other financing options may be limited.
Earlier this year, Senator Elizabeth Warren launched an investigation into the “buy here, pay here” industry, raising concerns about the combination of high-interest rates and aggressive repossession practices that can be predatory for financially vulnerable drivers. Data shows that subprime borrowers who obtain auto loans from companies like America’s Car-Mart are more likely to face delinquency, default, and repossession than those who borrow from traditional auto lenders.
Car repossession can have a devastating impact on individuals’ lives, and it is crucial to address the affordability crisis facing subprime borrowers. Symend data reveals that nearly one in six subprime auto borrowers is at least 30 days late on their payments, highlighting the urgent need for solutions to support these individuals.
As America’s Car-Mart works to address its financial challenges and preserve liquidity, the company’s optimization efforts are focused on securing additional financing rather than responding to weaker customer payment performance. The outcome of these efforts will have a significant impact on the company’s future and the individuals who rely on its services for access to reliable transportation. In the wake of dealership consolidations, existing borrowers can breathe a sigh of relief knowing that they will continue making payments under the same loan terms. This is because loan servicing is transferred to another location, ensuring a smooth transition for customers. While this may seem like a small detail, it is a crucial aspect of maintaining financial stability for those who rely on auto financing.
However, this situation highlights a larger issue within the automotive industry. As financing becomes more expensive for both consumers and lenders, dealerships that cater to higher-risk borrowers are facing increasing pressure. This can have a significant impact on working-class Americans who rely on these dealerships to stay on the road.
For many individuals, the question is no longer whether they can afford a new car, but rather if they can afford to keep their current vehicle. The closure of dealerships and the financial strain placed on borrowers only exacerbate this dilemma, making it harder for people to maintain their transportation needs.
In a related development, KFC recently announced the closure of 207 restaurants in the U.S, further highlighting the challenges faced by businesses in the current economic climate. These closures serve as a stark reminder of the impact of financial struggles on various industries and the ripple effect it can have on consumers.
Overall, the automotive industry is facing significant challenges, with dealership consolidations and financial pressures creating a difficult environment for both lenders and borrowers. As the landscape continues to shift, it is essential for individuals to stay informed and proactive in managing their financial obligations. By staying informed and seeking assistance when needed, borrowers can navigate these challenges and maintain their financial stability.
This article was originally published by TheStreet on Jul 19, 2026, and first appeared in the Retail section. For more information and updates on this topic, readers can visit TheStreet website for additional insights and analysis.
