The Auto Credit Mirage
Why CarMax Looks Guilty, Others Look Fine, and Why This Feels Like 2008 All Over Again
By The Craig Bushon Show Media Team
Most Americans think buying a car is a simple transaction. You walk onto a lot, pick a vehicle, agree to a monthly payment, and drive away. What almost no one sees is the financial machinery underneath that transaction — and right now, that machinery is under real strain.
Over the past year, headlines have zeroed in on CarMax. Falling earnings. Rising loan losses. Stock volatility. Even securities litigation. To the casual observer, it looks like CarMax is the problem.
That conclusion is not just wrong.
It is backwards.
CarMax is not exposing a scandal.
CarMax is exposing a system.
Transparency Is Being Mistaken for Failure
CarMax operates one of the largest captive auto finance businesses in the country through CarMax Auto Finance. Unlike many competitors, CarMax keeps those auto loans on its own balance sheet.
That matters.
When borrowers fall behind, delinquencies rise. Loss reserves increase. Earnings take a hit. Investors see it immediately.
That is not deception. That is conservative accounting.
CarMax is recognizing credit stress as it happens, not months or years later through financial engineering. Ironically, that transparency is now being interpreted as weakness.
How Other Companies Make Risk Look Smaller Than It Is
Many other auto retailers and online sellers operate very differently.
Take Carvana.
Carvana relies heavily on securitization. Instead of holding auto loans long term, loans are bundled together and sold to investors as asset-backed securities, often moved into special-purpose entities.
Here is the critical point most consumers never hear.
The debt does not disappear.
The borrower still owes the money.
The risk still exists.
It is simply repackaged and relocated.
This structure allows companies to generate immediate cash, reduce visible credit exposure, and smooth earnings in the short term. But it also creates fragility. The entire system depends on investors continuing to buy those securities. When that demand weakens, stress shows up suddenly, not gradually.
What About Penske and AutoNation?
Large dealer groups such as AutoNation and Penske Automotive Group operate under a different financial structure, but that difference should not be confused with immunity.
AutoNation does originate vehicle loans, including through captive and affiliated finance channels, but sells a substantial portion of those loans either directly to third-party lenders or through securitization structures. This limits long-term balance-sheet exposure and keeps most credit losses off AutoNation’s consolidated financial statements.
Penske Automotive Group is even more retail-focused. While it offers financing to customers, loans are typically arranged through external banks and finance companies, with little long-term credit risk retained by Penske itself. Industry norms favor rapid loan offloading to avoid holding borrower risk.
In both cases, the strategy is not to eliminate risk, but to move it downstream.
That distinction matters, because if lenders tighten standards or securitization markets slow, the impact shows up elsewhere. Fewer approved buyers. Higher effective monthly payments. Inventory backlogs. Falling unit sales.
The risk does not disappear.
It simply reemerges through declining volumes instead of rising loan losses.
Tricolor Proves the Risk Is Real
The clearest warning sign in this entire story is Tricolor Auto Group.
Tricolor specialized in deep-subprime borrowers. High interest rates. Thin margins. Heavy reliance on securitization markets. When delinquencies rose and investor appetite dried up, the business collapsed.
Tricolor filed for bankruptcy.
Not because Americans stopped needing cars, but because the credit math stopped working.
Tricolor did not invent this risk.
It encountered it first.
Why This Feels Like 2008, and Why It Is Not the Same Crisis
Anyone who lived through the mortgage collapse will recognize the pattern.
In 2008, housing debt totaled roughly eleven to fourteen trillion dollars, representing more than three quarters of household debt. Today, total auto debt sits closer to one and a half trillion dollars, under ten percent of household debt. The scale is dramatically smaller.
Housing appreciated rapidly before 2008, fueling speculation and a belief that prices could only rise. Cars do the opposite. They depreciate by design. There is no expectation of appreciation and no speculative asset bubble driving auto lending.
The securitization structures are also different. In 2008, mortgage-backed securities and collateralized debt obligations were massive, highly leveraged, and misrated, freezing global interbank lending when they failed. Auto asset-backed securities are smaller, simpler, and subject to post-crisis reforms that improved disclosure and reduced leverage.
Delinquency levels tell a similar story. During the mortgage collapse, overall delinquency rates approached ten percent, with subprime far higher. Today, overall auto delinquencies remain in the low single digits, while subprime stress is elevated but contained to that segment. Prime borrowers remain largely stable.
The regulatory environment has also changed. Pre-2008 lending lacked meaningful ability-to-repay rules. Today’s system, while strained, operates under tighter standards, even accounting for some loosening after COVID.
The implication is clear. This is not a replay of a global financial meltdown. The auto market is not large enough, interconnected enough, or structurally fragile enough to trigger a 2008-style collapse.
But that does not mean there is no danger.
The auto sector is acting as a canary in the coal mine for household financial health. Elevated delinquencies, rising repossessions, longer loan terms, and payment-driven affordability are warning signs that consumers are stretched.
The risk is not systemic in the same way.
It is personal, concentrated, and real.
Why CarMax Is Not the Villain, It Is the Early Signal
CarMax looks worse right now because it is telling the truth first.
Credit risk is visible.
Losses are recognized early.
Accounting reflects reality, not optics.
That creates volatility.
It attracts lawsuits.
It scares short-term investors.
But history is clear. Institutions that recognize losses early tend to survive. Institutions that hide them tend to collapse when capital dries up.
What the Average American Should Be Concerned About
This is not just a Wall Street issue.
Consumers should be paying attention to subprime auto credit stress, ever-longer loan terms, higher interest rates masking affordability, negative equity compounding risk, and financing structures most buyers do not fully understand.
If securitization markets tighten, credit availability shrinks. Vehicle values fall. Bankruptcies rise. Consumers feel it immediately.
Just like they did in 2008.
Bottom line
CarMax is not revealing fraud.
It is revealing a cycle.
The real danger is not the company showing losses.
The real danger is an industry still pretending those losses are somewhere else.
When risk is hidden, collapse is sudden.
When risk is disclosed, pain is gradual.
We have seen this movie before.
The only real question is whether anyone is willing to admit it before the ending repeats.
Editorial and Financial Disclosure
This op-ed is for informational and educational purposes only and does not constitute investment, legal, or financial advice. The Craig Bushon Show and its contributors analyze publicly available information and industry trends but do not provide individualized investment recommendations.
