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Recently, an article in Credit Union Times discussed a survey conducted by CUNA that showed a large number of credit unions are dissatisfied with their current auto remarketing results. According to the article, the “2009 Vehicle Repossession Liquidation Survey” found that not only are credit unions being forced to spend a greater amount of time each month processing repossessions but the resale cycle is getting longer and more cumbersome for credit unions due to the high numbers of repossessions currently in the market. There’s no question the current economic climate is forcing many sectors to reexamine many of the traditional ways they’ve conducted business. In the automotive remarketing business, one option that has gained widespread adoption over the past ten years is the use of online auctions for buying and selling wholesale used inventory. Physical auctions, although still widely used, are becoming cost prohibitive for both lenders and recovery agents. The costs associated with transporting vehicles to an auction house, plus additional fees-and particularly the time to sale-are amounting to hundreds of dollars per vehicle. The longer the car sits on the auction lot, the more expensive it becomes. With credit unions taking on a growing number of repossessions without adding staff to handle them, they need to look to new channels for handling this extra inventory. Remarketing vehicles online allows credit unions to remarket vehicles from their desks quickly and easily, lowering costs, while receiving full transparency around the transaction. The best online auction houses offer a comprehensive set of services to help repossession consignors and their agents move online, including the ability easily order a third-party inspection, a national audience of active bidders, transparency around the transaction , dynamic pricing and partnerships within the recovery industry. New programs available on the market today give lenders the ability to have recovered vehicles inspected and sold online while the vehicle remains on the recovery agent’s lot. One such example is the recently announced “RMI Liquidation Solution” from Recovery Management Inc. The inspection is conducted at the recovery agent’s location by a third-party inspector so lenders can still be assured of an independent evaluation. Following inspection, lenders can sell the vehicle directly from the recovery agent’s location using an online auction for a seamless and quick process. In the case of the RMI Liquidation Solution, vehicles are sold through OPENLANE, one of the nation’s largest online auto auctions. Another advantage to using online auctions is the nationwide exposure for vehicles. Instead of a small credit union receiving less desirable lane placement and timing at a physical sale, most buyers online search by make and model, allowing any credit unions’ cars to appear in the same list as national consignors. Lenders who use online auctions also benefit through access to critical sales and search data on each vehicle, such as how many people looked at it, how often they looked, how many bids were placed, what the sale price was and all associated fees. When selling online, lenders have full access to all the relevant sale information. In today’s economy, a fluid and flexible pricing strategy is also essential for remaining competitive and off loading inventory in a smart and efficient manner. More and more online auction companies are now employing dynamic pricing models for lenders and consignors to turn used vehicles into cash faster and cut vehicle disposal costs. The best online auctions have in-house analytics departments that systematically scrutinize the current marketplace and advise their customers how to optimize dynamic pricing strategies. An online dynamic pricing model enables consignors to adjust their prices in real-time so they can move their vehicles faster. By using a combination of algorithms and analytics, consignors are able to exercise flexibility in their pricing, based on dealer demand and interest. Rather than waiting for bids to come up to a fixed floor price, the price is flexible, based on whether dealers respond to it or not. Tough times require flexibility and with this pricing model, both dealers and consignors win. In considering which online venue to work with, lenders should look to auctions who know the repossession business well and have established partnerships with the top industry trade groups, like the American Recovery Association and National Finance Adjusters. For independent agents participating in this superior model, the benefit is a published fee structure and the promise of continued business from lenders who have seen this impressive ROI delivered time and time again. For lenders and recovery agents, the most compelling part of this model is time saved – the average recovery-to-liquidation time is just 15 days, less than half the time of the traditional physical auction model and half the time the CUNA survey found it took credit unions to sell through wholesale channels. Although long touted as a boon to dealers who want a more effective and efficient way of procuring inventory, online auctions have quickly risen in popularity with consignors of all stripes in the auto industry. The many benefits to these consignors, ranging from reduced cost of capital and vehicle depreciation to placement within a nationwide inventory, are invaluable for anyone that is streamlining their automotive business to remain competitive in this current economy.

Peter Westerman

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