Auto repossessions are as American as apple pie. Normally, there are about two million repos per year. That number spiked to almost three million during the depths of the Great Recession, but is declining.
But there’s a catch: It’s taking longer for the number of repossessions to decline during this recession than in others.
Ordinarily, those statistics wouldn’t concern credit unions much. “Historically, credit unions have been much more stable financial institutions than banks—they did a better job of underwriting loans and, therefore, suffered fewer defaults,” says Don Meadows, president/CEO of Auto IMS.
“But as credit unions’ auto loan volume has grown, they’re experiencing an unfamiliar volume of repossessions,” he continues. “In the past they typically made loans for cars sold from nearby lots and then resold them to the same lots if they had to repossess them. Now, more repossessions occur outside their market area. It’s still not as high a volume as banks’, but it’s becoming a problem.”
Meadows says that when a credit union did only three or four repos a month, it often was a case of, “Let Betty handle this.”
“But when repo volume goes up,” Meadows says, “and Betty has moved to another job, do you know how to handle repos? One option is to rely on an auto remarketing service provider that can serve as an ‘institutional memory’ even if your onsite expert moves on.”
He adds that outside help doesn’t replace people on-site. It simply frees up their time to do more important things.
Remarketers also give credit unions sales muscle as they deal with a greater number of vehicles outside their trade areas.
“They need to band together when it comes to repossession efforts and work with somebody who has expertise,” says Claudia Plascencia, senior vice president at Repo Remarketing.
Credit unions often lack the clout of larger players, she adds, making it more likely that the cars they repossess are put at the end of the auction sales line where they rarely sell for a premium price.
“We can bring 60 or 65 cars into a premium lane at the start of the day, working beside the likes of Bank of America, Enterprise, General Motors, and other rental or fleet players who command choice auction spots,” Plascencia says. “Working with us, a credit union’s cars show up in a premium lane versus a dealer lane where the quality of the cars is unknown.”
Another advantage remarketers offer is technological savvy. “License plate recognition—our proprietary tech-nology—is superior for generating and capturing business,” says Scott Jackson, CEO of MVTRAC. “But the technology bleeds into remarketing without substantial investment in cloud programming and integration sys-tems.”
This image-capture technology has been installed nationwide in parking lots, garages, toll booths, law en-forcement vehicles, and traffic cams, creating a huge database of license plate numbers that allows repo agents to more accurately track cars’ likely locations.
“Basically,” says Jackson, “remarketers like us provide ‘cradle-to-grave’ services—from technology such as li-cense plate recognition to strategic alliances with agencies, to skip tracing, to recovery, to liquidation. We have reps at the auctions to represent our clients at sale. Getting the best money for the vehicle and getting the funds to the client quickly is paramount.”
Repo Remarketing, also a “one-stop shop,” provides niche specialties, too, Plascencia says. These include “knowing how to work on various Indian reservations, which have their own rules, as well as different rules among states and cities.”
Plus, clients can have the company’s Recovery Management System software labeled with their own logo.
Meadows says it’s fair to call the best remarketers technology companies that can handle any aspect of the re-possession process. “When a credit union’s repo business gets big enough, especially if it’s dealing with out-of-state repossessions, that’s when it comes looking for third-party help.”
Next: Agent relations