The following discussion should be read in conjunction with the Company's consolidated financial statements and notes thereto appearing elsewhere in this report.

Forward-Looking Information

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements address the Company's future objectives, plans and goals, as well as the Company's intent, beliefs and current expectations regarding future operating performance, and can generally be identified by words such as "may", "will", "should", "could", "believe", "expect", "anticipate", "intend", "plan", "foresee", and other similar words or phrases. Specific events addressed by these forward-looking statements include, but are not limited to:

· new dealership openings;

· performance of new dealerships;

· same store revenue growth;

· future revenue growth;

· future credit losses;

· the Company's collection results, including but not limited to collections during income tax refund periods;

· investment in development of workforce;

· gross margin percentages;

· financing the majority of growth from profits;

· seasonality;

· compliance with tax regulations; and

· the Company's business and growth strategies.

These forward-looking statements are based on the Company's current estimates and assumptions and involve various risks and uncertainties. As a result, you are cautioned that these forward-looking statements are not guarantees of future performance, and that actual results could differ materially from those projected in these forward-looking statements. Factors that may cause actual results to differ materially from the Company's projections include, but are not limited to:

· the availability of credit facilities to support the Company's business;

· the Company's ability to underwrite and collect its contracts effectively;

· competition;

· dependence on existing management;

· availability of quality vehicles at prices that will be affordable to customers;

· changes in financing laws or regulations;

· the outcome of pending tax audits; and

· general economic conditions in the markets in which the Company operates, including but not limited to fluctuations in gas prices, grocery prices and employment levels.

The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

Overview

America's Car-Mart, Inc., a Texas corporation (the "Company"), is the largest publicly held automotive retailer in the United States focused exclusively on the "Integrated Auto Sales and Finance" segment of the used car market. References to the Company typically include the Company's consolidated subsidiaries. The Company's operations are principally conducted through its two operating subsidiaries, America's Car Mart, Inc., an Arkansas corporation ("Car-Mart of Arkansas"), and Colonial Auto Finance, Inc., an Arkansas corporation ("Colonial"). Collectively, Car-Mart of Arkansas and Colonial are referred to herein as "Car-Mart". The Company primarily sells older model used vehicles and provides financing for substantially all of its customers. Many of the Company's customers have limited financial resources and would not qualify for conventional financing as a result of limited credit histories or past credit problems. As of October 31, 2012, the Company operated 117 dealerships located primarily in small cities throughout the South-Central United States.

Car-Mart has been operating since 1981. Car-Mart has grown its revenues between 3% and 21% per year over the last ten fiscal years (average 13%). Growth results from same dealership revenue growth and the addition of new dealerships. Revenue increased 4.2% for the first six months of fiscal 2013 compared to the same period of fiscal 2012 due primarily to a 3.2% increase in retail units sold, a 0.5% increase in average retail sales price and a 13.6% increase in interest income.

The Company's primary focus is on collections. Each dealership is responsible for its own collections with supervisory involvement of the corporate office. Over the last five full fiscal years, the Company's credit losses as a percentage of sales have ranged between approximately 20.2% in fiscal 2010 and 22.0% in fiscal 2008 (average of 21.1%). Credit losses in fiscal 2008 were 22% of sales as the Company continued to focus on operational initiatives, including credit and collections efforts. In fiscal 2009, the Company saw the benefit of continuing operational improvements despite negative macro-economic factors and experienced a reduction in credit losses to 21.5% of sales. Improvements in credit losses continued into fiscal 2010 as the provision for credit losses was 20.2% of sales for the year ended April 30, 2010. The Company experienced credit losses of 20.8% of sales for fiscal 2011 and 21.1% of sales for fiscal 2012. In fiscal 2011 the higher credit losses primarily related to credit losses during the second fiscal quarter as the Company did experience some modest operational difficulties. In fiscal 2012 the Company experienced slightly higher credit losses; however, the losses were within the range of credit losses that the Company targets annually. The credit losses as a percentage of sales for the first six months of fiscal 2013 were 23.1% compared to 21.6% of sales for the prior year period. The increase as a percentage of sales was partially the result of the effect of sequentially lower average selling prices as well as anticipated higher losses at newer dealerships as these dealerships represent a higher percentage of the total dealerships as of the end of the second quarter of fiscal 2013 versus the same period last year. Additionally, the Company did see increases in losses as a percentage of sales for some older dealerships due in part to the negative macroeconomic environment and sequentially lower average selling prices.

Historically, credit losses, on a percentage basis, tend to be higher at new and developing dealerships than at mature dealerships. Generally, this is the case because the management at new and developing dealerships tends to be less experienced in making credit decisions and collecting customer accounts and the customer base is less seasoned. Normally the older, more mature dealerships have more repeat customers and on average, repeat customers are a better credit risk than non-repeat customers.

The Company believes that the proper execution of its business practices is the single most important determinant of credit loss experience. The Company does believe that higher energy and fuel costs, general inflation and potentially lower personal income levels affecting customers can have a negative impact on collections. However, negative macro-economic issues do not always lead to higher credit loss results for the Company, because the Company provides basic affordable transportation which in many cases is not a discretionary expenditure for customers. The Company continues to make improvements to its business practices, including better underwriting and better collection procedures in a continuing effort to improve collection results. The Company has installed a proprietary credit scoring system which enables the Company to monitor the quality of contracts on the front end. Corporate office personnel monitor scores and work with dealerships when the distribution of scores fall outside of prescribed thresholds. The Company continues to invest in its corporate infrastructure within the collection area. The Director of Collection Practices and Review provides timely oversight and more accountability on a consistent basis. In addition, the Company now has several Collection Specialists who assist the Director of Collection Practices and Review with monitoring and training efforts.

The Company's gross margins as a percentage of sales have been fairly consistent from year to year. Over the last five full fiscal years, the Company's gross margins as a percentage of sales have ranged between approximately 42% and 44%. Gross margin as a percentage of sales for fiscal 2012 was 42.3%. The Company's gross margins are based upon the cost of the vehicle purchased, with lower-priced vehicles typically having higher gross margin percentages. In recent years, the Company's gross margins have been negatively affected by the increase in the average retail sales price (a function of a higher purchase price) and higher operating costs, mostly related to increased vehicle repair costs and higher fuel costs. Additionally, the percentage of wholesale sales to retail sales, which relate for the most part to repossessed vehicles sold at or near cost, can have a significant effect on overall gross margin percentages. The negative effect from wholesale sales was higher during the first part of fiscal 2008 due to the increased level of repossession activity coupled with relatively flat retail sales levels. Higher retail sales levels and lower repossessions activity during the latter part of fiscal 2008 and for fiscal 2009 helped to bring gross margin percentages back up. Gross margin percentages in fiscal 2010 benefitted from higher retail sales levels and from a strong wholesale market for repossessed vehicles due to overall used vehicle supply shortages. The gross margin percentage in fiscal 2011 and fiscal 2012 was negatively affected by higher wholesale sales, increased average retail selling price, higher inventory repair costs and lower margins on the payment protection plan and service contract products. For the first six months of fiscal 2013, the gross margin as a percentage of sales was 42.8%, up slightly from 42.6% for the first six months of fiscal 2012. The increase is primarily due to improved margins on the service contract products and slightly lower cost of sales expenses. The Company expects that its gross margin percentage will not change significantly in the near term from the current level (42%-43% range).

Hiring, training and retaining qualified associates are critical to the Company's success. The rate at which the Company adds new dealerships and is able to implement operating initiatives is limited by the number of trained managers and support personnel the Company has at its disposal. Excessive turnover, particularly at the dealership manager level, could impact the Company's ability to add new dealerships and to meet operational initiatives. The Company has added resources to recruit, train and develop personnel especially personnel targeted to fill dealership manager positions. The Company expects to continue to invest in the development of its workforce in fiscal 2013 and beyond.

                            Consolidated Operations
                   (Operating Statement Dollars in Thousands)

                                                                         % Change            As a % of Sales
                                              Three Months Ended           2012            Three Months Ended
                                                 October 31,               vs.                 October 31,
                                             2012           2011           2011             2012          2011

Revenues:
Sales                                      $  98,194      $ 100,128           (1.9 ) %        100.0 %      100.0 %
Interest income                               12,025         10,679           12.6             12.2         10.7
Total                                        110,219        110,807           (0.5 )          112.2        110.7

Costs and expenses:
Cost of sales, excluding depreciation
shown below                                   56,204         57,807           (2.8 )           57.2         57.7
Selling, general and administrative           17,351         16,721            3.8             17.7         16.7
Provision for credit losses                   23,647         22,623            4.5             24.1         22.6
Interest expense                                 708            575           23.1              0.7          0.6
Depreciation and amortization                    696            565           23.2              0.7          0.6
Total                                         98,606         98,291            0.3            100.4         98.2

Pretax income                              $  11,613      $  12,516           (7.2 ) %         11.8 %       12.5 %

Operating Data:
Retail units sold                              9,814          9,919
Average stores in operation                      116            109
Average units sold per store per month          28.2           30.3
Average retail sales price                 $   9,515      $   9,557
Same store revenue change                       (4.8 )%        13.7 %

Period End Data:
Stores open                                      117            111
Accounts over 30 days past due                   4.3 %          3.9 %

Three Months Ended October 31, 2012 vs. Three Months Ended October 31, 2011

Revenues decreased by $588,000, or 0.5%, for the three months ended October 31, 2012 as compared to the same period in the prior fiscal year. The decrease was principally the result of (i) a revenue decrease from dealerships that operated a full three months in both periods ($5.2 million, or 4.8%), partially offset by
(ii) revenue growth from dealerships opened during the three months ended October 31, 2011 ($1.5 million), and (iii) revenue from dealerships opened after October 31, 2011 ($3.2 million). The decrease in same store revenue during the quarter ended October 31, 2012 as compared to the quarter ended October 31, 2011 was due primarily to fewer retail units sold and a lower average selling price. The Company believes the amount of credit available to customers in the sub-prime auto industry has increased during recent months and that this additional credit availability had a negative effect on the Company's sales during the second quarter of fiscal 2013, especially at its older, more established dealerships.

Cost of sales as a percentage of sales decreased 0.5% to 57.2% for the three months ended October 31, 2012 from 57.7% in the same period of the prior fiscal year. The decrease from the prior year period relates primarily to the pricing efficiencies due in part to the lower average retail sales price, improved margins on the service contract product and slightly lower cost of sales expenses. The average retail sales price for the second quarter of fiscal 2013 decreased $42 from the second quarter of fiscal 2012. The Company will continue to focus efforts on holding down purchase costs (and the related selling price) and expects to see gross margin percentages generally in the 42% - 43% range over the near term. Average selling prices and top line sales levels in relation to wholesale volumes, resulting from credit loss experience, can have a significant effect on gross margin percentages.

Selling, general and administrative expenses as a percentage of sales were 17.7% for the three months ended October 31, 2012, an increase of 1.0% from the same period of the prior fiscal year. A portion of the percentage increase results from the overall lower sales levels during the quarter. In dollar terms, overall selling, general and administrative expenses increased $630,000 in the second quarter of fiscal 2013 compared to the same period of the prior fiscal year, consisting primarily of increased payroll costs, incremental costs at new dealerships as well as higher marketing and advertising costs.

Provision for credit losses as a percentage of sales increased to 24.1% for the three months ended October 31, 2012 compared to 22.6% for the three months ended October 31, 2011. The increase as a percentage of sales was partially the result of the effect of sequentially lower average selling prices as well as anticipated higher losses at newer dealerships as these dealerships represent a higher percentage of the total dealerships in second quarter of fiscal 2013 versus the same period last year. Additionally, the Company did see increases in losses as a percentage of sales for some older dealerships due in part to the negative macroeconomic environment and sequentially lower average selling prices. The Company continually pushes for improvements and better execution of its collection practices. However, the continuing negative macro-economic environment continues to put pressure on our customers and the resulting collections of our finance receivables. The Company has made considerable investment in the corporate infrastructure within the collection area which is continuing to have a positive effect on results by providing more oversight and accountability on a consistent basis. The Company believes that the proper execution of its business practices is the single most important determinate of credit loss experience.

Interest expense for the three months ended October 31, 2012 as a percentage of sales increased to 0.7% compared to 0.6% for the three months ended October 31, 2011. The increase resulted from higher average borrowings during the three months ended October 31, 2012 ($90.4 million compared to $72.8 million in the prior year), which were partially offset by lower interest rates on the Company's variable rate debt.

                            Consolidated Operations
                   (Operating Statement Dollars in Thousands)

                                                                        % Change           As a % of Sales
                                              Six Months Ended            2012            Six Months Ended
                                                 October 31,              vs.                October 31,
                                             2012          2011           2011            2012         2011

Revenues:
Sales                                      $ 196,491     $ 190,452            3.2 %         100.0 %     100.0 %
Interest income                               23,728        20,879           13.6            12.1        11.0
Total                                        220,219       211,331            4.2           112.1       111.0

Costs and expenses:
Cost of sales, excluding depreciation
shown below                                  112,389       109,369            2.8            57.2        57.4
Selling, general and administrative           35,207        32,918            7.0            17.9        17.3
Provision for credit losses                   45,310        41,157           10.1            23.1        21.6
Interest expense                               1,361         1,018           33.7             0.7         0.5
Depreciation and amortization                  1,358         1,103           23.1             0.7         0.6
Total                                        195,625       185,565            5.4            99.6        97.4

Pretax income                              $  24,594     $  25,766           (4.5 ) %        12.5 %      13.5 %

Operating Data:
Retail units sold                             19,567        18,968
Average stores in operation                      115           108
Average units sold per store per month          28.4          29.3
Average retail sales price                 $   9,549     $   9,502
Same store revenue change                        0.1 %         8.5 %

Period End Data:
Stores open                                      117           111
Accounts over 30 days past due                   4.3 %         3.9 %

Six Months Ended October 31, 2012 vs. Six Months Ended October 31, 2011

Revenues increased by $8.9 million, or 4.2%, for the six months ended October 31, 2012 as compared to the same period in the prior fiscal year. The increase was principally the result of (i) revenue growth from stores that operated a full six months in both periods ($291,000, or 0.1%), (ii) revenue growth from stores opened during the six months ended October 31, 2011 and stores that opened or closed a satellite location after October 31, 2011 ($3.8 million), and
(iii) revenue from stores opened after October 31, 2011 ($4.8 million).

Cost of sales as a percentage of sales decreased 0.2% to 57.2% for the six months ended October 31, 2012 from 57.4% in the same period of the prior fiscal year. The decrease from the prior year period relates primarily to the pricing efficiencies, improved margins on the service contract product and slightly lower cost of sales expenses. The Company will continue to focus efforts on holding down purchase costs (and the related selling price) and expects to see gross margin percentages generally in the 42% - 43% range over the near term. Average selling prices and top line sales levels in relation to wholesale volumes, resulting from credit loss experience, can have a significant effect on gross margin percentages.

Selling, general and administrative expense as a percentage of sales was 17.9% for the six months ended October 31, 2012, an increase of 0.6% from the same period of the prior fiscal year. Selling, general and administrative expenses are, for the most part, more fixed in nature. The overall dollar increase of $2.3 million related primarily to higher payroll costs and to incremental costs related to new locations opened after October 31, 2011. Additionally, many of the Company's compensation arrangements are tied to financial performance and as such, more payroll costs are incurred during periods of improved financial results.

Provision for credit losses as a percentage of sales increased 1.5% to 23.1% for the six months ended October 31, 2012 from 21.6% in the same period of the prior fiscal year. Continuing negative macro-economic conditions continue to put pressure on our customers and the resulting collections of our finance receivables. However, despite the increase in credit losses during the first six months of fiscal 2012 compared to the prior year period, the credit losses for the current year period were generally in line with historical experience and within an acceptable range. The Company continues to push for improvements and better execution of its collection practices. The Company believes that the proper execution of its business practices is the single most important determinate of credit loss experience and that the credit losses in both the current and prior year periods reflect the improvements in oversight and accountability provided by the Company's investments in our corporate infrastructure within the collection area.

Interest expense as a percentage of sales increased 0.2% to 0.7% for the six months ended October 31, 2012 from 0.5% for the same period of the prior fiscal year. The increase was attributable to higher average borrowings during the six months ended October 31, 2012 as compared to the same period in the prior fiscal year ($86.2 million compared to $63.3 million) partially offset by lower interest rates on the Company's variable rate debt.

Financial Condition

The following table sets forth the major balance sheet accounts of the Company
as of the dates specified (in thousands):

                                           October 31, 2012       April 30, 2012
Assets:
Finance receivables, net                   $         268,811     $        251,103
Inventory                                             27,463               27,242
Income taxes receivable, net                           1,624                1,444
Property and equipment, net                           28,149               27,547

Liabilities:
Accounts payable and accrued liabilities              22,070               20,701
Deferred payment protection plan revenue              11,544               10,745
Deferred tax liabilities, net                         17,476               16,721
Debt facilities                                       91,256               77,900

Historically, finance receivables tended to grow slightly faster than revenue growth. This has historically been due, to a large extent, to an increasing weighted average term necessitated by increases in the average retail sales price over recent years. The weighted average term for installment sales contracts at October 31, 2012 increased as compared to October 31, 2011 (28.3 months vs. 27.5 months). Benefits related to software and operational changes made in an effort to shorten relative terms by maximizing up-front equity and scheduling payments to coincide with anticipated income tax refunds have helped maintain the overall term length in the face of the increasing average retail sales prices. However, in response to current competitive and economic conditions, the Company is considering structural changes to its customer contracts which may include further increases to the overall length of contract terms. Revenue growth results from same store revenue growth and the addition of new dealerships. The Company currently anticipates going forward that the growth in finance receivables will be slightly higher than overall revenue growth on an annual basis due to the overall term length increases offset by improvements in underwriting and collection procedures which are expected to result in strong collections.

During the first six months of fiscal 2013, inventory increased 0.8% ($221,000) as compared to inventory at April 30, 2012. The increase resulted from additional inventory for new dealerships and an expected increase in demand for the type of vehicle the Company purchases for resale as well as the Company's desire to offer a broad mix and sufficient quantities of vehicles to adequately serve its expanding customer base. The Company will continue to manage inventory levels in the future to ensure adequate supply, in volume and mix, and to meet anticipated sales demand.

Income taxes receivable, net, remained relatively constant at October 31, 2012 as compared to April 30, 2012 as the tax payments for the current year have been made and the receivable related to the fiscal year 2012 has not yet been received.

Property and equipment, net, increased $602,000 during the six months ended October 31, 2012 as compared to property and equipment, net, at April 30, 2012 as the Company incurred expenditures related to new dealerships as well as to refurbish and expand existing locations.

Accounts payable and accrued liabilities increased $1.4 million during the first six months of fiscal 2013 as compared to Accounts payable and accrued liabilities at April 30, 2012 due primarily to the amount and timing of cash overdrafts.

Deferred tax liabilities, net, increased $755,000 during the first six months of fiscal 2013 as compared to April 30, 2012 due primarily to the increase in Finance Receivables partially offset by increases in deferred tax assets related to increased share based compensation.

Borrowings on the Company's revolving credit facilities fluctuate primarily based upon a number of factors including (i) net income, (ii) finance receivables changes, (iii) income taxes, (iv) capital expenditures and (v) common stock repurchases. Historically, income from continuing operations, as well as borrowings on the revolving credit facilities, have funded the Company's finance receivables growth, capital asset purchases and common stock repurchases. In the first six months of fiscal 2013, the Company had a $13.4 . . .