# Tricolor Financial Model Technology-powered used-car dealership and auto lender serving credit-underserved US Hispanic consumers - Canonical: https://finamodel.com/startups/tricolor - Excel download: https://finamodel.com/startup-models/tricolor.xlsx - Category: Fintech - Model type: Lending / Credit - Funding round: Venture - Funding: $90M - Founded: 2021 - Geography: United States; 18 markets, nearshore shared services in Guadalajara, Mexico [DECK sl.24] - Customer: B2B2C ## About the company Tricolor is a technology-powered used-car dealership and auto lender serving credit-underserved Hispanic consumers in the US. It integrates vehicle sourcing, reconditioning, retail sales, loan origination, and servicing rather than treating financing as a separate referral product. The company operates dealerships and reconditioning centres while funding auto loans through securitisations. Vehicle margin and credit performance are therefore linked: the quality, pricing, and affordability of each car sale affect both upfront profit and the future loan portfolio. The model should forecast vehicles acquired and sold, average selling price, reconditioning cost, retail gross profit, loan penetration, average balance, APR, and securitisation funding. Delinquencies, losses, recoveries, servicing costs, and inventory turns need separate schedules to reflect the two-engine business. ## What's included - 5-year monthly revenue build with stage-appropriate growth assumptions - Full P&L, headcount plan, and operating-expense schedule - Cash-flow statement, runway, and burn-rate tracking - Valuation via exit multiple with a DCF cross-check - Returns analysis with MOIC and IRR - Unit economics including CAC, LTV, payback, and cohort retention ## Product & value proposition 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. ## Market - 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 ## Revenue model 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. ## Traction & metrics - 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 ## Unit economics - 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 ## Competition / moat 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 ## Team & funding ask / use of funds --- ## Recommended financial model - **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) ## Frequently asked questions ### Is the Tricolor financial model free? Yes. The Tricolor model is a free Excel download with live formulas. ### Can I change the assumptions? Yes. The workbook is editable and its live formulas recalculate when assumptions change.