Our ARA Executive Director, Les McCook, was recently interviewed by Automotive Digest at a trade show. In this video, he provides crucial advice to dealers regarding the repossession process, and warns that choosing the cheapest option can have dire consequences. Watch the video below, or click here to view it.
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Cross Country Automotive Services (Cross Country) wants to bring the Walmart business model to the repossession business. Our industry is mostly made up of mom and pop operations and we have seen how many of those are no longer in business in our communities today.
Our industry has long dealt with competition so this is not an anti competition piece, but it is intended to question the thought process behind this idea. We have been a very strong proponent of education and certification in our industry and will continue to be but it is still important that we recognize the difference between a towing operation and a full service repossession agency. Some of our members own both and they confirm a huge difference in each sector and none of them utilize personnel from one business in the other.
A large part of a towing operations income is derived from the sale of abandoned vehicles. Many times these cars sell for thousands of dollars. If a tow company is in the repossession business, does the towing agent make an extra effort to contact the lender to get him/her to pay the storage fees, probably hundreds of dollars, or just operate as usual and sell the car at his monthly auction? If the towing agent chooses to sell the car, what are the chances he will ever repossess for that lender again?
If the towing agent is working as a repossession agent for a major lender and he has to store the repossessed car because the customer never came to pick it up, will the agent agree to waive all of the storage fees and reduce his repossession fees for the client? Is the towing agent going to accept 10 days of free storage and then five dollars a day after that? I have never been to a towing facility that operates with that as a business model. The agent will have to or he will not work repossessions for that lender again.
What would be the cost to an average towing operation to have a direct primary policy on every car in his yard? How much for the added expense of wrongful repossession coverage for their operation? We have been told that a towing operation that chooses to add repossessions to their menu of services will realize an increase of their insurance cost of anywhere between 60% to 100%. Today many of the underwriters for the towing industry will not take the repo exposure. Is this worth the few extra dollars that an organization like Cross Country would bring to them?
The towing business has a nearly 100% pickup rate. The vehicle is either wrecked, inoperable, abandoned or illegally parked when the tow truck is on the scene. In the recovery industry, we are lucky to repossess 50% of the cars we are assigned to find and many of those repossessions are not on the first run at a given address. How will the towing operator deal with his drivers searching all over, knocking on doors looking for the car? What happens when his driver is busy chasing a skip and he misses a rotation or service call? How happy is the auto company going to be when their knight in shining armor is too busy chasing someone else’s bad paper and their customer that just bought one of their $60,000 cars is sitting somewhere waiting on a service truck to assist them?
It sure seems as if the executives in the ivory tower in Massachusetts have a brilliant idea. After all, adding repossessions to its service providers sounds like it would maximize the productivity and earning power of Cross Country’s fleet. I think Cross Country may need to consider the additional costs and the additional demands on their providers’ employees. Did I mention the additional element of danger involved?
I am sure, as a large data company, Cross Country has plotted a strategy to leverage the repossession industry to its benefit. However, dreams and reality seem to be far apart in the recovery industry. I am sure when some of these issues arise the auto manufacturers that have spent years and millions of dollars building a positive customer experience with their company will soon find out those very few (as a percentage) of their customers that fall into the repossession category can cause issues for the good guys as well. Speaking of good guys, isn’t that what the Cross Country’s of the world are seen as today? After all, isn’t Cross Country there for its customers when they are stranded? However, now when a Cross Country customer needs roadside assistance and calls Cross Country to get it, the customer may need to worry whether the Cross Country towing agent might repossess their car instead. This would make me feel uneasy as a customer. Is this the kind of “support” Cross Country provides to its “76 million loyal customers?”
ARA Members –
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OPENLANE’s Recovery Remarketing Newsletter: A new opportunity for Recovery Service Providers (RSPs)
Below is a link to the first issue of the OPENLANE Recovery Remarketing Newsletter. Every month, they’ll bring you fresh news, important tips, and exciting offers to help you leverage the power of online remarketing of your clients’ recovered collateral.
To read the full newsletter, please click here.
It was clear to us from the conversations at the North American Repossessors Summit (NARS) that this industry is being dragged to the alligator pits under the weight of the recent fuel price increases. Since mid-February, ARA has been researching various fuel surcharge formulas that could be applied to our business model. Although it may not be perfect, we have found one based on numbers that clearly demonstrate the added burden that recovery agents nationwide are currently enduring. (more…)
OPENLANE and Recovery Database Network (RDN) to Exhibit, Offer Promotions at North American American Repossessors Summit
REDWOOD CITY, Calif., February 28, 2011 – OPENLANE, Inc., a leading online auction company in North America for automotive dealers to buy and sell wholesale vehicles, today announced continued momentum within its programs and services geared toward providing online remarketing services for recovery agencies, with quarter-over-quarter growth of more than 200 percent in its program during the first year of operation. OPENLANE’s recovery remarketing programs grew 230 percent in the last two quarters of 2010 and that momentum has continued into this year with growth of 360 percent since the beginning of 2011. (more…)
Sign up to participate in phase two of the industry scorecard!
The industry scorecard is an important and innovative tool for the recovery and lending industries. It is an effective way to identify and measure your company’s best-demonstrated practices and how you compare to other companies. Having an industry scorecard gives your company a unique, competitive edge. Your participation is crucial to help raise the standards of the recovery industry. (more…)
OPENLANE, the leading online wholesale auction in North America, has a limited-time offer for RSPs who list and sell recoveries on OPENLANE.com. List and sell your first recovery on OPENLANE’s Open Auction, and you’ll receive a $400 AMEX Gift Card!* It’s a great way to get started remarketing your recovered collateral – easily and profitably. This offer ends February 28, 2011, so act quickly! (more…)