"Look at those cars. Theirs (is/are) really ugly"

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I have been doing some serious studies in pronoun for SC, and I found this sentence from a grammar site on the Internet.

"Look at those cars. Theirs is really ugly."

Why does the posessive, theirs, use is instead of are when it's clearly talking about "cars."

Is this just one of those English rules?

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"Look at those cars. Theirs is really ugly."

I believe this sentence discusses several cars in the first sentence, but in the second it is possessive to a group. Categorizing in a group makes it singular. That is the best analysis I can give. I believe the sentence is correct