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Are rising repo costs and longer recovery and remarketing cycle times squeezing your auto loan margins? You’re not alone: Respondents to the National Auto Finance Association’s 2004 Non-Prime Automotive Financing Survey reported a 3.7 percent jump in recovery-related losses along with higher remarketing expenses. The total repo-to-resale cycle stretched as well, to an average 42 days.
Rather than accept the increases as the cost of growing your auto loan portfolios, counter with an inventory management system (IMS). Hundreds of auto lenders have realized significant cost- and time-savings by implementing inventory management system built around recovery and remarketing best practices. Automate labor-intensive tasks, streamline data exchanges with repo agents and auctions, and analyze consolidated data to identify areas of improvement as well as opportunity.
Shorten Recovery Times
Electronic inventory management saves time and boosts staff productivity by automating labor-intensive tasks and eliminating timewasters such as faxes, phone calls and paperwork. One lender calculated that AutoIMS had eliminated 64,000 faxes a year in its remarketing department.
Track inventory statuses online and communicate via email and vehicle record notes. Manage “paperwork” electronically, including repo agent documents, electronic condition reports (CRs), transportation forms, title/POA shipping, and more.
Within six months of implementing AutoIMS.com, a web-based recovery and remarketing IMS, one auto lender cut its average recovery time to 33.4 days — 8.6 days less than the industry average. The time-savings, tallied for 29,000 repossessions with an average daily depreciation of $10 per vehicle, cut the lender’s depreciation costs by $2.5 million in a single six-month period.
Automate Tasks, Streamline Workflow
A web-based IMS also provides cost-saving opportunities through inventory visibility, control and accountability. Many clients use AutoIMS to track categorized expenses, set repair limits, monitor charges, and analyze costs. One another lender unlocked a half-million in annual savings when analysis of its vehicle data prompted a simple change to its vehicle re-keying policy.
Further streamline processes by flowing repossessed vehicles straight to auction, which will also eliminate repo storage fees. Include auction assignment information along with pick-up or drop-off instructions in the repossession record. A “Repo Secured” status will trigger automatic auction notification of the assignment as well as any holds and release dates.
With access to consolidated data from all venues, credit unions can analyze every aspect of internal and partner performance using AutoIMS’ ad hoc reporting tool. Additionally, monthly Process Benchmarking reports enable you to benchmark your credit union’s process interval performance against other financial institutions’ as well as the entire remarketing industry. The reports benchmark four key cycle timeframes:
These process intervals, which significantly affect a vehicle’s net sale value, are manageable. Streamlining processes to shorten intervals and reduce days to sell lowers depreciation and net losses.
As historical data accumulates, seek future efficiency gains. Analysis will reveal optimum sale cycles and point to future market trends. For example, even though there’s tremendous pressure to sell vehicles quickly, data analysis will validate holding specific makes/models at certain times to realize the highest overall return.
Visit www.AutoIMS.com to learn more. Access application features and benefits, case studies and client comments. Email Trial@AutoIMS.com to request a system demo or free trial.
This sponsored content article is provided to the credit union community for shared insights and knowledge from a recognized solutions provider in the industry. Please note that the views and opinions offered here do not reflect those of Callahan & Associates, and Callahan does not endorse vendors or the solutions they offer.
If you are interested in contributing an article on CreditUnions.com, please contact our Callahan Media team at email@example.com or 1-800-446-7453.
June 20, 2005
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