Tricolor Financial Model

Three bundled pillars:

1. Certified Vehicle Quality - 150-point inspection, free 12/12 powertrain warranty, average $1,800 reconditioning investment per unit
2. Affordable Credit-building Loans - proprietary full-stack finance platform, transparent POS tool; has established credit for 28% of borrowers with no prior credit history
3. Superior Customer Experience - 4.5-star rating, omni-channel (physical lots + mobile app "Tricolor Copilot"), pre-qualification and fast-lane document upload

Technology stack: proprietary AI/ML across supply chain procurement, loan origination/underwriting, customer care/servicing, and sales POS. Data flywheel: 100+ non-conventional attributes per applicant, 16M+ total data points.

• US Hispanic population: 61M (~1 in 5 Americans); growing at 7.6x non-Hispanic rate; median age 28
• US Hispanic GDP: $2.6T, ranked #8 globally; grew 72% vs. non-Hispanic US economy 2010–2018; Hispanics account for 82% of US workforce growth since the financial crisis
• 31% of Hispanic households have no or limited access to affordable credit
• Hispanic automotive spend: $44B annually; 11% of all US vehicle sales; vehicle purchases doubled 2010–2020
• Hispanics are 125% more likely than the general population to use a mobile device when researching a car

Two integrated revenue streams:

1. Vehicle sales - retail used-car sales through 45 dealerships across 18 markets; vehicles reconditioned in-house (8 reconditioning centers); average reconditioning cost ~$1,800/unit
2. Auto loan origination & servicing - proprietary full-stack finance platform; loans securitised via ABS (7 completed transactions with J.P. Morgan, Credit Suisse, Wells Fargo as ABS partners); CDFI-certified lender

Channels: physical dealerships + digital/mobile (Tricolor Copilot app, pre-qualification funnel, online inventory). No pricing/interest rate specifics disclosed.

• 75K+ loans originated (cumulative)
• 45 dealerships, 18 markets
• 4.5-star customer rating
• 7 ABS transactions completed (J.P. Morgan, Credit Suisse, Wells Fargo)
• 16M+ total data points collected on customers
• 100+ non-conventional attributes collected per applicant
• 28% of borrowers with no prior credit have had credit established via Tricolor loans
• CDFI certification awarded November 2019

• Average reconditioning cost: ~$1,800 per unit
• 50% of purchasers have a FICO score; >12% of those have FICO above 650 (implying ~88% are sub-650 / thin-file)
• Average customer US residency: 15 years

Moat framing:

• Proprietary data advantage: 100+ non-conventional attributes, 16M+ data points driving ML underwriting for a borrower population legacy lenders cannot score
• Data network effects / virtuous cycle: more users → more data → smarter product → more users
• Flywheel: scale → lower cost structure → lower prices → better selection + customer experience → more traffic → more supply chain leverage
• Vertical integration: owns reconditioning, retail, origination, servicing - difficult to replicate piecemeal
• CDFI certification - regulatory credential and access to lower-cost capital
• Only issuer in subprime auto ABS with no-file/thin-file borrowers

• Archetype + why: Integrated used-auto dealer + specialty auto lender (two-engine model). The vehicle sales side is a DTC retail/inventory P&L (units sold × gross profit per unit); the finance side is a loan portfolio model (origination volume, interest income, loss provision, NIM). These must be built together because Tricolor bundles them - the loan is the product. Closest archetype: Auto Lender + Used-Car Retail 3-Statement model with a separate loan-book / ABS waterfall schedule.

• Forecast horizon & granularity: 5-year annual (Year 1 quarterly for operating detail); loan vintage tracking required for loss provisioning.

• Key drivers & assumptions:

*Retail / Vehicle side:*

• Units sold per dealership per month
• Number of dealerships (currently 45)
• Average selling price per vehicle
• Gross profit per vehicle (selling price minus acquisition + reconditioning cost of ~$1,800)
• Reconditioning cost per unit: ~$1,800

*Lending / Finance side:*

• Attachment rate (% of vehicle sales that take a Tricolor loan)
• Average loan size
• Average loan term
• Interest rate / APR charged
• Cost of funds (ABS funding cost)
• Net Interest Margin
• Annualised net charge-off rate
• Loan loss provision as % of originations
• Average loan balance outstanding (function of origination volume × average term)

*Operating:*

• Headcount / SG&A per dealership
• Nearshore shared services cost advantage vs. fully US-based
• Marketing / CAC

• Scenarios (Base / Bull / Bear - which variables flex):
• Base: 45 dealerships flat → +5/yr from Y3; attachment rate 85%; NCO 11%; NIM 13%
• Bull: Dealership expansion +10/yr; attachment rate 90%; NCO 9% (ML improvement); NIM 14%; funding cost compression as ABS program matures
• Bear: No new dealerships; NCO spikes to 15–18% (macro stress on subprime borrowers); funding markets tighten (ABS spread widens); vehicle gross margins compress

• Required sheets / outputs:

1. Assumptions & Toggles (all drivers, scenario selector)
2. Retail P&L (units × GPU → gross profit; SG&A → EBITDA per dealership and consolidated)
3. Loan Book Schedule (originations, repayments, losses, ending balance by vintage)
4. Income Statement (combined: vehicle gross + interest income − cost of funds − provision − opex)
5. Balance Sheet (receivables/loan portfolio as primary asset; ABS debt as primary liability)
6. Cash Flow Statement (operating CF, capex for reconditioning centers/lots, ABS issuance/repayment)
7. ABS / Funding Waterfall (simplified: collateral pool, advance rate, OC %, excess spread)
8. Unit Economics Summary (gross profit/unit, NIM, NCO, CAC if estimable)
9. Dashboard (KPIs: total units, loan book, NIM, NCO rate, revenue, EBITDA)