One would be hard pressed to find a credit union CEO to speak freely about vehicle repossessions and how the process of recovery can often be a nightmare. And that may be part of the problem in educating senior managers on cost-efficient and streamlined alternatives, said Jerry Neeman, executive vice president of CUDL, the Ontario, Calif.-based auto lending service CUSO that has partnerships with 700 credit unions and 9,000 dealerships.
CUDL is hoping to change the stigma. In mid-November, the CUSO announced a partnership with GE Capital Fleet Services to assist credit unions with the remarketing of repossessed assets.
Through the Remarketing by GE program, credit unions can potentially streamline their asset recoveries, improve returns at car auctions and manage repossessed cars, the companies said. GE Capital uses an online platform that consigns a credit union's repossessed vehicles directly to the company. From there, it monitors and manages the remarketing process from beginning to end. The consignment is taken to the appropriate markets and includes electronic condition reports and pictures. Neeman said the usual process involves a credit union putting a car out on a lot with a for sale sign, calling a dealer or taking it to an auction. The major difference with GE Capital is the entire transaction is done via the Web. Once it comes into possession at the company, the disposition process is eliminated.
"A lot of credit unions don't know about remarketing. It's an educational process," Neeman said. "If I'm a CFO or CEO, what does it mean and what does it mean to my collections. We hope this will make the process more efficient."
The Eden Prairie, Minn.-based GE Capital has fleet management operations in the United States, Canada, Europe, Japan, Australia and New Zealand with more than 1.6 million cars under lease and service. The company said its average net returns are $300 higher than the industry benchmark, and 130,000 vehicles are sold each year in the U.S. and Canada. That track record is significant because it aims to help credit unions move repossessions as quickly and efficiently as possible, said Paul Seger, vice president of asset remarketing at GE Capital. He pointed out that the company is the largest commercial fleet management company in North America.
"The team of people that work in the organization have an average of 19 years of experience," Seger said. "They know where to put a Ford versus a Chevy. And, they know what it takes to extract a higher premium."
Since the remarketing program rolled out in July, CUDL has hosted credit union days at auctions, held Webinars and roundtables to bring the industry up to speed about how the process works, Neeman said. More than a dozen credit unions have signed on. Another CUDL Webinar is scheduled to take place soon.
"What I have been floored with is the want for information from people who manage these portfolios for credit unions," Seger noted. "Once they understand how detailed it is to sell a car through an auction, I don't think credit unions really realized how much easier it can be by using a service like the one GE provides."
This is CUDL's first partnership with GE. Several years ago, the CUSO worked with vehicle remarketing company Manheim in an effort to get cars auctioned off faster, Neeman said. After several national meetings, executives noticed that the remarketing was the missing service piece in the puzzle.
"If you're only representing yourself as a lending institution, you're missing out on the number of buyers and opportunities that exist by being with a larger entity. That's when we reached out to Paul at GE," Neeman recalled.
Seger said in mid-2008, GE started looking at strategies to expand its relationships to others like credit unions. When introduced to Neeman, "we quickly found out that [CUDL] was a leader and we wanted to align with credit unions." He remembers the challenges that many had with repossessions and saw a natural fit.
Meanwhile, CUDL is hoping the alliance will help credit unions get their arms around the back end of the business. GE's role may help with the linkage.
"They're represented under the GE brand. Their power as an organization draws more buyers," Neeman explained. "You're going to get better return this way than on your own."