The Walmartization of the Repossession Business


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?”

2 Responses to “The Walmartization of the Repossession Business”

  1. Thomas Vargo says:

    For those interested about learning the tactics to stop a car repossession – see Stop Car Repossession

  2. lucas johnson says:

    Hi i have a car that i sold and i would like to repossess it because payments have not been made and i am in north dakota and the car is in Alabama i was wondering how much it would cost to get the car back up to me or to sell it down there and get the money for it you can call me at 7018988442

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