The American Repossessor

Over the past decade, the role of the recovery agent has been in flux.  Margins in the core recovery business have eroded, competition from national forwarders has increased and service expectations from lenders have continually increased.  At one time, agents were able to balance low profits from recovery by playing a larger role in the process of selling vehicles, but issues of trust and transparency caused lenders to shift to physical auctions for this vital service.   Today, more often than not, an agent’s role is solely to recover the vehicle and wait for it to be taken to a sale.  Gone are the days of providing significant value-added services.  However, if an agent is willing to make changes to adapt to this new environment, opportunities do exist that can restore the recovery agent to a “full service” provider, specifically through adding online remarketing to your suite of services.   In fact, partnering with the right online auction can help grow your business, as others fail.

Online Sales—A New Remarketing Channel

Online remarketing auction sites, such as OPENLANE.com, have begun to offer programs aimed directly at helping recovery agents “recover” lost business through facilitating the online sale of lender vehicles after the redemption period expires .  In partnership with American Recovery Association (ARA), OPENLANE recently launched a joint program that allows agents to sell lender vehicles through their online auction site at www.openlane.com.

The beauty of such a program is that it provides recovery agents a way to sell lender vehicles directly from their own lots, without the costs and hassle associated with transporting vehicles to the physical lanes.  By auctioning recovered vehicles directly from the recovery agents lot, the time to remarket a vehicle, as well as channel costs, are drastically reduced.  As an additional benefit, agents and lenders also retain greater control over the recovery process.  According to Bob Stankovitch, president of Peak Service Corporation in Moorestown, NJ and an ARA member, not having to move vehicles from location to location is a big benefit of online auctions because it saves his lenders the hassle and significant cost – often hundred of dollars – of moving the vehicle, and the cars are liquidated in a fair, transparent, commercial manner.  OPENLANE’s Recovery Remarketing Program has also been deemed a “commercially reasonable sales method” by a nationally recognized law firm specializing in consumer financial services.

Online auctions also offer many other benefits to recovery agents. In addition to keeping the vehicle on their own lot, which can lead to higher redemption rates by keeping the car local longer, agents can charge a remarketing service fee to cover the cost of managing the online sale, helping to price the vehicle and facilitating title transfer.

Many online auctions offer third-party inspection services that provide  an added level oftrust for  the buying dealer and the lender.   Stankovitch says the ability to have an inspection service come to his lot to inspect vehicles for damage and take photos provides an extra layer of assurance for the banks he works with because it provides an independent assessment of any problems the vehicle has before it goes to auction.  The ability to upload numerous digital pictures also helps him better market the car to potential buyers.

Unlike physical auctions, online auctions also offer a nationwide audience for selling vehicles, rather than just a regional one.  Stankovitch says that the ability to put his vehicles in front of thousands of buying dealers rather than just those attending the local physical sale on any given day really makes a difference. As a result, his vehicles can get the attention of dealers who might otherwise not have known they existed.  In addition, he doesn’t have to deal with the problems of cars being tainted by weather issues or auction attendees migrating to one end of the lanes to bid on one particular car and missing the one he’s trying to sell.  And if the car doesn’t sell at a weekly Wednesday auction, he doesn’t have to wait a full week to try to get the vehicle sold.  Since online auctions are 24/7 and are refreshed daily, vehicles can be sold faster.  Many of the vehicles Stankovitch has listed on the online auction have sold within 48 hours – compared to 30 or more days through a physical auction.

Because most dealers who buy used cars online search for the vehicles they want by make and model, even small lenders cars get great visibility among potential buyers (vs. poor lane placement and timing at a physical auction), and agents can also see how many bids or “looks” have been placed on the vehicle at any given time.  Some online auctions even provide end-to-end post-sale services, from taking care of all the paperwork associated with floorplanning, title processing and arbitration to providing guaranteed vehicle transport (and GPS tracking along the way!) to the purchaser.  Dynamic pricing provides optimal sales options, and streamlines the process because agents can list the vehicle as soon as it’s ready to list rather than wait for it to be run through the lanes.

“It allows us to compete much more directly with what the forwarders and physical auctions are offering,” said Stankovitch.  “It’s a really exciting new tool and my success so far is encouraging.”

A Way to Add More Client Services

Dick Frame, president and owner of Midland Auto Recovery in Columbia, SC and also an ARA member, began looking for a new way to remarket his recovered vehicles because his clients were increasingly experiencing high remarketing costs.  As an agent who serves local banks and credit unions as well as national auto finance companies and lenders, many of his clients have been looking for ways to save costs  - particularly transportation – and sell vehicles more quickly.  Frame, who also holds a dealer’s license, had previously purchased vehicles from online auctions as part of his retail sales operation and was looking for additional revenue streams to add to the services he already offers.  Frame already offers a number of value-added services to his recovery clients, including repairs and readying vehicles for sale.  Now, he has been able to add online remarketing to his services mix, benefiting both his own business and streamlining the sales process for his clients.

“Partnering with OPENLANE gives me the opportunity to offer all my clients, whether they are a smaller credit union or a major captive finance company a faster and more profitable way to remarket their vehicles,” Frame said.

Frame also notes that for small local banks, the ability to remarket recoveries online actually levels the playing field for them in the sales process.  Vehicles sold online are predominantly searched by make and model, so a small lender’s cars will appear alongside larger financial institutions instead of being relegated to an undesirable lane and run-time at a physical sale.  National lenders tend to benefit most through a reduction in transport cost and improvement in the value retained during sale. Online searches also allow buyers to pick and choose the vehicles they’re looking for rather than have to wait in line for that one $2,000 vehicle they want to see roll through the lane, Frame said.

According to Frame, the most attractive part of being able to remarket recoveries online is that it offers recovery agents a way to provide a “one stop,” repossession-to-remarketing service to their clients.  Many agents, have not had the opportunity to offer clients much more than recovery and delivery services.  Online remarketing can also create an additional revenue stream for recovery agents, through services such as clean-up, detailing, repair and reconditioning.  The ability to sell vehicles faster also provides a differentiator that can set agents apart with their clients, Frame says.

Savings for Agents and Clients

Although OPENLANE’s Recovery Remarketing Program has only recently launched, both agents and dealers are already realizing an estimated savings of approximately $300 per vehicle remarketed online.  Lenders benefit from both the transparency of the entire sales process from posting through sale and transport, as well as exposure to a national base of more than 12,000 dealers.  In addition to giving agents the chance to add more to their service portfolios, they can grow and retain their client base through the combination of added services, faster sales, lower costs and reduced vehicle depreciation.  With the economy squeezing all sectors these days, recovery agents need new ways to save time and money and to set themselves apart with their clients and are finding the answer in online remarketing.