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Stellantis announced a massive ~$26.5B write-off this month.

When an automaker takes a charge this large, the easy (and wrong) reaction is to dismiss it as “one-time accounting.” A line item. A reset. A clean slate.

But write-offs like this don’t clear decks — they expose what was already failing underneath.

And based on our boots-on-the-ground work with dealerships and OEM channels, Stellantis is not even close to out of the woods.

On February 6, Stellantis disclosed approximately €22.2B (~$26B) in charges tied to a strategic reset—most of it stemming from reduced expectations for BEV programs, battery-capacity rationalization, and—critically—a major change in its contractual warranty provision that explicitly cites cost inflation and deteriorating quality.

We think that matters for one reason:

This is not a one-time event. It’s the first public marker that the balance sheet is finally starting to catch up to years of compounding operational, product, and consumer-finance stress.

And our research to our clients indicates that Stellantis’ deterioration is likely to continue.

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We have been following First Brands and Tricolor since last year.

First Brands Group has announced (late Friday) the launch of a sale process to market and sell its business, as a whole or in parts. The sale process is intended to accelerate the transition to new ownership, the company’s emergence from these chapter 11 cases, and the next phase for First Brand’s portfolio of brands and businesses.

But, that is not what is happening as of today. First Brands is not “emerging” from anything, it appears that it is on its way to Chapter 7.

Here is what is happening RIGHT NOW with First Brands.

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This was initially published to our clients on October 11th 2025. This is a delayed publication for confidential insights members only.

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For years, auto parts retailers have enjoyed extended payment terms for inventory purchases, forcing their suppliers to finance their accounts receivable. Suppliers such as First Brands have done so with straight debt and by factoring receivables through a third-party bank. The big four parts retailers average over 200 days of accounts payable.

First Brands, a parts manufacturer and distributor that recently went bankrupt, may be the tip of the iceberg of a larger problem relating to tariffs. Parts companies, such as First Brands, are squeezed between suppliers who are unwilling to absorb tariffs and customers who are reluctant to pay higher prices. At the very least, parts retailers will experience higher costs and less favorable terms. Sources indicated to us that First Brands has intentionally sought to circumvent tariffs in various ways, as described below. The sheer number of subsidiaries results in a complex web of companies that resembles Enron.Ultimately, other parts companies could experience a similar shift in their inventory financing capabilities, and the banking sector may have hidden losses.

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Note: This was initially provided to our clients a month ago. Founding Members get a delayed yet actionable version of occasional insightful notes from our sources. Some critical insights are not reported here as it is privy only to our clients. If you would like timely, actionable information, please reach out to us to become our clients. This is a newsletter, and the information provided below is not financial advice to the readers; it is only for information purposes.

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Since Jan 2024, we have been recommending ALLY -15.89%↓ as a short to our clients.

Our thesis has been based on ALLY’s exposure to auto and credit card portfolios and then another critical element that is causing ALLY to tumble. Today, for the first time, ALLY accepted this fact and the ongoing receivables issues at the Barclays conference. The stock has been in freefall since this morning.

Our target price for is <$25, and here is why.

We initially published the below post earnings insights to our clients last month. post-earnings

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Note: This was initially provided to our clients a month ago. Founding Members get a delayed yet actionable version of occasional insightful notes from our sources. If you would like timely, actionable information, please reach out to us to become our clients. This is a newsletter, and the information provided below is not financial advice to the readers; it is only for information purposes.

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KMX – The $5 Billion Hangover

Following the eps call, we spoke with the company. On the conference call, the management stunned analysts with a discussion regarding subprime auto loan securitizations. Management intends to split their securitizations into two pools: subprime/near prime (under 650 FICO) and prime (over 650). The company has already securitized $625M of these subprime loans and is planning to experiment further over the balance of the year. The prospectus, however, is very revealing as to the amount of bad debt that KMX could have in its portfolio1The company has $5 billion of loans with an average FICO of 602 or about one-third of the $17.6 billion total portfolio. The average contract interest rate is 16% for the subprime loans compared to ~$12 billion, which are above prime, Tier 1 loans with an interest rate of ~6-7%, for an average of 11.4% for the entire portfolio. The allowance for loan losses is down for the company, but the subprime delinquencies are up.

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The below was initially published to our clients a few weeks ago. We did not share the name of our shorts in this piece as it is only privy to our clients. We sincerely apologize for the delayed publication; respecting your time is our priority.

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Last week, we published Higher Auto Delinquencies and REPOs.

This week, we continue to address surging repossessions and delinquencies in the automotive industry. According to a repo man:

Our repo source continued “with increased costs for things like rent, child care and other expenses, car owners are running on fumes, which in turn, results in repos. We have to pick it up. It’s a job like everybody else. We’re sent out by the financial institutions because people have failed to stay in communication, people have been unable to make payments, and it’s got to be picked up.”

According to data from the Federal Reserve Bank of New York, the annual rate for car owners behind a month or more on payments was 7.7% nationwide, the highest since the fourth quarter of 2010. Typically, they repo cars after 60 or 90 days of missed payments. However, this year, the consumer have a different agenda for their tax refund - According to a new Bankrate survey, 28 percent of Americans expecting a tax refund plan to use most or all of the money to boost their savings. They’re followed by the 19 percent who plan to pay down debt, including credit card debt. The results are a change from last year, when more people said they’d pay off debt (28 percent) than those who’d save their refund (26 percent). In fact, the 2024 survey shows the lowest preference for debt payoff in a decade.1

Our Sources on Spiking Repos and its Problems

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The below was initially published to our clients a weeks ago. We did not share the name of our shorts in this piece as it is only privy to our clients.

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Last week, we published AUTO LOAN (INDUSTRY) UPDATE; this week, we are focusing on the challenges faced in the Repo industry.

Post-Pandemic Hangover

The impact of pandemic-period auto industry trends will be with lenders and borrowers for some time yet, thanks to a cascade of factors: increasing numbers of defaults on higher balance loans, an increase in repossessions in the wake of those defaults, and higher losses on those loans, due to the difference between COVID-level auto prices and today’s lower levels. Many loans are “underwater” in relation to current values.

According to the latest Transunion Survey data1, affordability continues to pose a challenge for the used-vehicle market and, in particular, for below-prime consumers, who have seen a buying climate of higher interest rates, increasing lender pullback, and cross-wallet inflation. In addition, the 60-day delinquency rate ticked to 1.33% in Q1 2024. According to Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion, higher delinquencies are likely to constrain loan availability further, potentially keeping the market tempered until interest rates begin to decline.

As the CEO of Asbury Automotive - noted in the company’s latest earnings call, “one interest rate cut is not going to help the consumers. For consumers to have any relief, we need to have at least three interest rate cuts.”

According to the New York Federal Reserve Board (NYFRB), loans originated in 2022 and 2023 and are performing worse than other vintages. Our sources concur with the NYFRB data. The car industry and the Banks that lent them had to navigate higher delinquencies and a surge in underwater loans relative to car value.

Auto Delinquencies and the Repo Market

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The below was initially published to our clients a week ago. We did not share the name of our shorts in this piece as it is only privy to our clients.

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In early 2023, we started recommending some auto dealerships and consumer finance-related companies as shorts. We were attempting, in part, to estimate the time when the consumer would stop buying big-ticket cars being sold at elevated prices following the rapid rise in interest rates in 2022. The belief was the government pumped too much money into the system in a short period and that consumers would "revenge spend" much of that money.1

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Last week, we published Buffett’s ALLY-I.

While Ally offers mortgages and credit cards, auto loans represent 78% of its finance receivables and loans. In Q3, 33% of its auto loan originations were to subprime borrowers. The gravest concern is that while ALLY’s profitability is declining, the riskiness of its balance sheet is increasing.

In ALLY’s latest conference call the management said, “Our Dealer Financial Services platform revolves around the dealer, deepening those relationships and providing a comprehensive value proposition to help grow their businesses. We have continued to evolve the business to find new ways to help our dealer customers while also optimizing risk-adjusted returns for Ally.”

Commercial receivables, consisting of floor plans and real estate loans to dealerships, increased to $23.7 billion, up $4.5 billion year over year from $19.3 and up $431M sequentially.

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🔔 Our clients always get the first version on a timely basis. This information has been delayed by a few weeks, yet it is still current. If you want to be our client and gain unlimited access to our short ideas and analyst access, email us at laks@unicusresearch.com.

The Tuesday “source whisperers” are available only to the founding members. This was initially published to our clients on April 10th 2024. The contents of this report are still current. If you prefer to sign up for our newsletter, you can click below ⬇️

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Buffett owns nearly 9% of ALLY, which is a key reason why the stock is at or near $40.

It doesn’t change the fact that ALLY -0.23%↓ continues to cater to the subprime consumer. According to our dealership sources, is heavily exposed to consumer car loans and underperforming dealership floor plans.

In addition, let us not forget ALLY’s past and how the Government bailed out the reckless bank after the financial crisis. In December 2014, the U.S. government finally disposed of its remaining $1.28-billion stake in auto lender Ally Financial Inc., resolving the last big bailout from an emergency government program to halt the 2008 financial crisis. The U.S. had owned as much as 74% of Ally after a $17.2-billion rescue, part of emergency efforts to prop up the nation’s auto and banking industries.

In a six-year transition- 2008 to 2014- Ally sold assets and put its subprime mortgage arm through bankruptcy before an initial public offering of stock in April 2014, refocusing on auto lending.

Fast forward to 2020-2024; ALLY has a huge exposure to subprime consumers and dealership floor plans - Based on our years of ongoing research, it is irrelevant whether Buffett owns ALLY - the bank is a toxic dump. And here are the reasons why….

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The Tuesday “source whisperers” are available only to the founding members. Pic Credit: advisor perspectives

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On April 1, 2024, when KMX was at $85.72, we published our pre-earnings analysis to our clients - which included the whispers from our sources in the industry.

KMX reported its 4Q 2024 earnings on April 11th, 2024. KMX’s earnings were disastrous. We published a post-earnings analysis with our insights—the stock was at $68.68.

Here is the synopsis of what we heard from our auction sources and our brief interview with a dealer during the process.

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Sales of large pickups fell 4% from January through March as the overall new light-vehicle market grew 5.6%. The Ram 1500 pickup fell 15%, and Ford Motor Co.'s F-Series line dropped 10%. General Motors' light-duty full-size pickups declined 1.2%, though higher sales of heavy-duty models resulted in overall gains for both the Chevrolet Silverado and GMC Sierra.

Automakers — particularly the Detroit 3 — rely on full-size pickups for profits and have been adding content and features in recent years to high-end trim levels, some of which start above $70,000.

Last week in our The Auction Market Problem -I, we shared our discussions with our sources on the supply side of the market - the auction market.

This week, we will focus on the auction market economics, auction profitability, an interview with a Nissan dealer, and what is going on with ?

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On October 4th, 2023, CACC’s CEO, Ken Booth said, "First-quarter 2022 vintages are "really struggling" and will be some of the lowest-performing loans the lender has had over the last 20 years.”

If that's true, what about the rest of the 2022 vintages, and why are we hearing about it 18 months later?

We have been speaking to our dealership sources nationwide since 4Q 2022 and here is some critical information shared by our sources. The information is delayed by a month, as our latest information from our sources is privy only to our institutional clients. If interested in being our client, you can reach us here: https://www.unicusresearch.com/contact

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