America's Car-Mart, Inc. - Company Profile, Information, Business Description, History, Background Information on America's Car-Mart, Inc.

1501 Southeast Walton Boulevard, Suite 213
Bentonville, Arkansas 72712

Company Perspectives:

Our customers have always been #1 with Car-Mart, and they will continue to be #1. We specialize in working one on one with you. If you ever have a question or problem, solving it will be our top priority. That's why we have so many repeat customers. In fact, every 5, 10 and 15-time repeat customer is placed in the Car-Mart Silver, Gold or Platinum Club, respectively. Every member of the club is honored with their name engraved on a plaque at the front of the store.

History of America's Car-Mart, Inc.

America's Car-Mart, Inc., operates a chain of more than 70 used-car dealerships. Car-Mart targets customers with limited or poor credit histories and offers these customers financing. Typically, a Car-Mart customer pays a down payment of between zero percent and 17 percent of the automobile's cost. The average price of an automobile on a Car-Mart lot is $6,200. Payments are made by the customer as frequently as once per week. If a payment is one day late, the customer receives a letter from Car-Mart. After three days without payment, the customer receives a telephone call from Car-Mart. Vehicles are repossessed after 40 days without payment. Approximately 18 percent of Car-Mart's customers have their vehicles repossessed. Car-Mart operates dealerships in Arkansas, Oklahoma, Kentucky, Missouri, Texas, Kansas, and Indiana. The company prefers to open its dealerships in rural communities, favoring communities with populations ranging between 20,000 and 50,000.


Car-Mart was started in 1981, when the company's first used-car dealership opened in Rogers, Arkansas. The basis of the company's business strategy from the start was to sell automobiles to customers with limited or poor credit. The first dealership focused on extending credit to individuals who could not obtain loans from conventional sources or other used-car dealers, offering itself as the only way some residents in Rogers could purchase transportation. The offer was not altruistic: The company charged high interest rates and it pursued delinquent accounts doggedly, but the offer did answer a need. The Rogers dealership recorded immediate success, prompting management to open three more dealerships in 1982, each offering the company's "Buy Here/Pay Here" financing.

Car-Mart discovered a lucrative market niche in the early 1980s and built on its sound business premise throughout the 1980s and into the 1990s. The company's business model required assiduous, daily attention to its sales, placing a premium on the financing side of the business. The cars were merely commodities, commodities that consumers wanted, and commodities that some consumers could only obtain by entering into financing agreements such as those offered by Car-Mart. The profits to be made were enticing, but much depended on the careful execution of the financing model. In this area, Car-Mart excelled, enabling the company to expand throughout Arkansas.

Car-Mart targeted rural markets, those communities with populations ranging between 20,000 and 50,000. According to the company's thinking, in these small communities the need for a car was greater than in a large metropolitan market supported by mass-transit systems such as buses or subways. In addition, individuals who failed to make payments were easier to track down in smaller communities. For Car-Mart, everything depended on recouping the money credited to its customers, an endeavor the company found far easier in rural communities.

During the first 18 years of its existence, the company opened an average of nearly two new dealerships each year, fanning outward from its starting point in Rogers. By the end of 1998, the company operated 35 dealerships, presiding over a $65 million-in-sales operation whose geographic reach extended from Arkansas into Oklahoma, Texas, and Missouri. It was at this point that the company was introduced to another company named Crown Group, Inc., forever changing the structure and strategy of Crown Group.

1999 Acquisition by Crown Group

Crown Group, which played a decisive role in Car-Mart's future from the end of 1998 forward, began its eclectic corporate life in 1983. During its first decade of existence, as Car-Mart expanded throughout Arkansas, Crown Group operated in various facets of the cable television business, owning a range of cable and cable-related programming businesses. In 1992, the Irving, Texas-based company decided to reinvent itself. It sold most of its programming businesses and began to search for new business opportunities, embarking on a path toward diversity. After exploring various businesses, the company decided to enter the casino market. In June 1993, the company acquired St. Charles Gaming Company, Inc., a company that owned, operated, and developed casino gaming properties. St. Charles's signature property, a riverboat casino located in Calcasieu Parish, Louisiana, was completed in mid-1995, by which time Crown Group already had begun to reduce its ownership stake in the casino company. Crown Group sold 50 percent of St. Charles in June 1995, making a profit on its original investment, and sold the remaining percentage in May 1996.

After the divestiture of St. Charles, Crown Group had to find a new identity for itself. The company either formed companies or acquired companies that in less than a year added numerous faces to the organization. The program to expand into variegated business interests began in June 1997, when the company added two companies to its fold. Crown Group acquired a 49 percent stake in Casino Magic Neuguen S.A., an enterprise that operated two casinos in Argentina. The company also formed Concorde Acceptance Corporation, a mortgage lender targeting customers with less than exemplary credit history. Crown Group added two more companies in February 1998. The company purchased 53 percent of Paaco Automotive Group, a used-car dealership that also owned a finance company, and 80 percent of Precision IBC, Inc., a company that rented sold, tested, and serviced stainless steel bulk containers. In May 1998, Crown increased its interest in Paaco to 65 percent and its interest in Precision to 100 percent. The company also added a fifth company in May 1998, forming Home Stay Lodges I, Ltd., a partnership focused on the development and operation of extended-stay lodging facilities.

By the end of 1998, Crown Group had completed the quick transformation from casino operator into a diversified holding company with interests in gambling, used cars, mortgage lending, bulk containers, and lodging. Its management was ready to make further additions to the company's portfolio of concerns, and in the beginning of 1999 its sights set on Car-Mart. In Paaco, Crown Group already had an interest in used-car sales. Like Car-Mart, Paaco catered to customers with weak credit histories and offered financing to such customers, but unlike Car-Mart, Paaco focused on larger metropolitan markets, operating in Dallas/Ft. Worth and Houston, and it reconditioned nearly all of its vehicles, a practice Car-Mart did not observe. In January 1999, Crown Group added to its used-car holdings by acquiring 100 percent of Car-Mart for $41 million, purchasing the company when its annual sales totaled $65 million. Once included within Crown Group's fold, Car-Mart exuded admirable strength, quickly becoming the holding company's brightest shining asset. Within two years, the success of Car-Mart convinced Crown Group's management to change its business strategy entirely.

Crown Group's management continued to add to its holdings in the months following the acquisition of Car-Mart. In February 1999, the company took a 50.1 percent interest in CG Incorporated, S.A. de C.V., which was formed to develop and operate casinos in El Salvador. The following month, the company acquired 45 percent of Atlantic Castings, Inc., an investment-casting manufacturer of turbine engine components. In December 1999, management showed its growing appreciation for the used-car business by adding to its investment in Paaco and Car-Mart. The company acquired a 70 percent interest in Smart Choice Automotive Group, a company that sold and financed used cars and trucks in Florida. Once the acquisition was completed, Paaco became a wholly owned subsidiary of Smart Choice.

The acquisitions completed once Crown Group decided to diversify its interests led to exponential revenue growth. Having shed nearly all of its assets by 1997, the company's sales volume totaled $2 million at the beginning of its acquisition campaign. By 1999, revenues had reached $111 million. In 2000, sales totaled $237 million, a total derived primarily from the company's involvement in used-car sales and financing. Of the $237 million generated in sales in 2000, nearly $220 million came from the company's three used-car entities. The 35 dealerships operated by Car-Mart combined with the ten dealerships operated by Paaco and the 15 dealerships operated by Smart Choice represented the heart of the company.

As Crown Group entered the 21st century, it looked at its diverse holdings and began to increase its already overwhelming dependence on used-car sales and financing. The company began to retreat from its other businesses, divesting its casino holdings and lodging interests and, by April 2001, reducing its equity position in Precision to 50 percent. The divestitures left the company with its used-car operations, a 50 percent stake in Precision, an 80 percent interest in Concorde, and a 45 percent stake in Atlantic Castings. Revenues for the 12-month period ending in April 2001 totaled $342 million, $327 million of which came from the company's used-car businesses.

An Independent Entity in 2001

During the summer of 2001, Crown Group's management was involved in serious discussions about the future of the company. The discussions led to the announcement in October 2001 that the company intended to sell all of its subsidiaries except for Car-Mart. Further, the company intended to abandon its headquarters in Irving, Texas, and move to Car-Mart's home base in Bentonville, Arkansas. Finally, in the ultimate expression of the company's commitment to Car-Mart, it revealed that it would change its name to America's Car-Mart, Inc. The decision to stake its future entirely on Car-Mart was based on two conclusions. First, Car-Mart had proven to be the strongest asset within the company. In 2001, Car-Mart generated more profits than all of Crown Group's other subsidiaries combined. Second, Crown Group's management believed the diversity of its holdings presented a confusing picture to investors. "It was hard for investors to know what they were investing in," the company's chief executive officer explained in a September 17, 2002 interview with Investor's Business Daily. "So we've become one company they do understand: auto retailing."

The momentous announcement made in October 2001 set in motion the unraveling of Crown Group and its emergence as Car-Mart. Smart Choice was sold in October 2001. In the beginning of the year 2002, the company officially changed its name to America's Car-Mart, Inc. In May 2002, the company sold its 50 percent interest in Precision for $3.8 million. In July 2002, the company divested its last non-Car-Mart asset, selling its 80 percent interest in Concorde for $3 million. Meanwhile, a new management team was installed, taking the helm in May 2002. Nan R. Smith, who had served as Car-Mart's chief operating officer from 1981 to 1998 and as its president from 1999 to May 2002, was appointed vice-chairman of the board in May 2002 before being named chairman of the board in September 2002. Tilman J. Falgout, III, who had served as Car-Mart's general counsel since 1995, was appointed chief executive officer.

The new management team took control of a vibrant enterprise with an impressive record of financial growth. During a seven-year period beginning in the mid-1990s, Car-Mart's sales increased at a compounded annual growth rate of 20 percent. Its profits during the same period increased at a 21.4 percent compounded annual growth rate. During its ownership by Crown Group, Car-Mart increased the number of its dealerships from 35 to the 62 properties Smith and Falgout presided over in late 2002. Geographically, the company had expanded into Kentucky, Indiana, and Kansas since 1999, giving it a presence in seven states.

As Car-Mart prepared for its future, it planned to continue to expand the proven concept that had realized growth for more than 20 years. Much of the company's success depended on its ability to effectively prosecute its "Buy Here/Pay Here" financing model. "It requires daily execution to keep contact with customers," an analyst said in a September 17, 2002 interview with Investor's Business Daily. Falgout realized as much, saying in the same article, "Collections is the focus of our business--selling cars is not." By April 2003, after opening nine new dealerships during the preceding 12 months, the company owned 64 dealerships. In the years ahead, it planned to follow what Falgout referred to as a "grass fire" approach to expansion. The company intended to spread outward from its base in Arkansas, hoping to eventually make Car-Mart a genuine, nationally operating chain of dealerships.

Principal Subsidiaries: Crown Group of Nevada, Inc.; Crown Delaware Investments Corporation; Colonial Auto Financing, Inc.; Colonial Underwriting, Inc.; Texas Car-Mart, Inc.; Auto Finance Investors, Inc.

Principal Competitors: AutoNation, Inc.; CarMax, Inc.; DriveTime Automotive Group, Inc.


Additional Details

Further Reference

User Contributions:

Comment about this article, ask questions, or add new information about this topic: