The details: Dimon, who has led the nation’s largest bank by assets for nearly two decades, said the recent bankruptcies of auto parts supplier First Brands and subprime car lender Tricolor Holdings mark the early signs of broader credit stress, reports CNBC.
For roughly the past 14 years, the U.S. has been in a “credit bull market,” noted Dimon.
The collapse of First Brands and Tricolor may be the first of more to come.
A broader downturn could expose additional cracks in credit markets, he warned.
What they’re saying: “When you see one cockroach, there are probably more,” Dimon told analyst Mike Mayo during the bank’s earnings call, speaking specifically about Tricolor’s bankruptcy. “Everyone should be forewarned on this one.”
Why it matters: Dimon’s warning suggests that tighter lending conditions could ripple through the auto retail ecosystem—making it harder for consumers to qualify for loans and driving up floorplan and financing costs for dealers already contending with margin compression.
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Between the lines: For major banks like JPMorgan, the bankruptcies of First Brands and Tricolor raise red flags about exposure to private-sector lending.
JPMorgan was forced to charge off $170 million in the first quarter related to its lending to Tricolor.
The bank had no exposure to First Brands, allowing it to avoid losses from that bankruptcy.
“It is not our finest moment,” Dimon said. “When something like that happens, you could assume that we scour every issue. ... You can never completely avoid these things, but the discipline is to look at it in cold light and go through every single little thing.”
Bottom line: With rising financing costs and shrinking access to credit, auto retailers could face mounting pressure to streamline operations—cutting overhead, slowing expansion, and leaning more heavily on service and used-vehicle sales to sustain profitability.
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