Tricolor Auto Group: How a Dallas-Backed Used-Car Empire Became the World’s Most Honest Mirror

Tricolor Auto Group and the Global Rear-View Mirror
By Dave’s International Affairs Correspondent, still stuck in traffic on the Ring Road

The first time I heard the words “Tricolor Auto Group” I was in a smog-choked Mexico City café, eavesdropping on a German financier and a Canadian actuary arguing over whether sub-prime lending was a moral failing or merely an accounting identity. Both, apparently, had flown south to inspect Tricolor’s algorithmic approach to selling modest used cars to modestly employed Mexicans who modestly hoped tomorrow’s paycheck might stretch further than today’s. The conversation ended, as all such conversations now do, with both men staring at the same Bloomberg terminal, wondering if the Federal Reserve’s next rate hike would make their plane tickets home cheaper or merely irrelevant.

Tricolor, you see, is not just a used-car lot that learned to spell “fintech.” It is an experiment in how far the global appetite for yield can travel before it meets the global shortage of dignity. Headquartered in the greater Dallas sprawl—because of course it is—the company packages auto loans made to Mexico’s working class, securitizes them, and sells the paper to yield-hungry pension funds from Stockholm to Singapore. Somewhere in the chain sits a Norwegian retiree who believes she is buying a socially responsible slice of emerging-market infrastructure; in reality she owns 0.0003 percent of a 2014 Nissan Tsuru whose bumper is held together by optimism and duct tape outside Puebla.

The model works because the world is simultaneously awash in capital and allergic to paying for it. Negative-yielding European debt pushes money toward anything that promises a pulse; meanwhile, Mexican wages stagnate like a telenovela plotline. Tricolor simply parks itself at the intersection: a tollbooth on the road between surplus and survival. In the first half of 2023 its delinquency rate ticked up to 12.4 percent, a figure politely described by analysts as “manageable,” which is finance-speak for “not yet torch-and-pitchfork territory.”

International significance? Picture the butterfly effect, but heavier: every repo-ed Versa nudges a credit score downward, which nudges a family toward informal lenders, which nudges local politicians to rail against predatory gringos, which nudges U.S. trade negotiators to add another footnote nobody reads to the next USMCA annex. Multiply by 200,000 contracts and you have a small, perfectly legal pipeline transferring risk from air-conditioned boardrooms to tin-roof colonias. The IMF, ever the life of the party, calls this “financial inclusion.” The borrowers call it Tuesday.

The geopolitics get spicier. Chinese investors—fresh from discovering that Evergrande was less a property developer and more a flaming bag of yuan—have begun sniffing around Tricolor’s ABS tranches, eager to diversify away from their own domestic Chernobyl. Nothing says “de-risking” quite nicely like parking cash in someone else’s subprime tail risk. Meanwhile, Mexican regulators, who still remember the day NAFTA was signed on a cocktail napkin, now wonder aloud whether fintech is just Spanish for “we forgot to regulate it.”

Climate change, never one to miss a cameo, hovers in the background. Every one of Tricolor’s cars will belch carbon for another decade because the people who drive them cannot afford an electric vehicle subsidy that exists only on PowerPoint slides in Brussels. Greta Thunberg tweets something scathing; the algorithm short-sells her sincerity and goes long on cobalt.

In the end, Tricolor Auto Group is less a company than a mirror. Hold it up and you see the entire global economy: a high-definition reflection of inequality, ingenuity, and the perennial hope that someone, somewhere, will keep the engine running long enough for the next payment to clear. The mirror does not flatter; it merely records the skid marks. And if the reflection sometimes looks like a clown car driven by pension funds, regulators, and climate refugees all honking at one another—well, that’s the joke. The rest of us are just the punchline, buckled in for the ride.