What is the regional goal for bad debt?

The regional goal for bad debt being set at a specific dollar amount per car is a strategy used to manage financial risk and maintain profitability. Setting a goal of $5 per car reflects a calculated assessment of what is deemed acceptable in terms of bad debt, balancing the need to allow for some level of customer defaults with the imperative of keeping overall losses manageable.

Having this benchmark helps in establishing targets for the team, allowing them to monitor performance against defined financial metrics. It emphasizes the importance of credit risk management within the business operations and encourages practices that minimize bad debt while fostering responsible lending or credit policies. In this context, setting the goal at $5 ensures that the company maintains a focus on sustainability and competitive practices in the region while still being capable of addressing potential defaults.

In contrast, the other options might reflect either more aggressive tolerance levels for risk or overly conservative goals, which could impede business growth. For instance, goals significantly higher than $5 per car may lead to excessive financial losses, while goals lower than $5 may not fully capture the reality of the market conditions and customer behavior.