Emerging technologies offer credit unions new avenues for marketing assets online. Through the global reach of the Internet, sellers are no longer restricted to regional communities of buyers available through local auctions and marketing.
Credit unions must be sensitive to the needs of their member-shareholder. To reduce losses from charge-offs and offer the debtor (i.e., member) the lowest possible deficiency balance (if one exists), the credit union must obtain the highest possible value for repossessed collateral.
Traditionally, credit unions have marketed vehicles at a branch location or sold vehicles at auction. Selling vehicles at a local branch provides an opportunity to retail the car in an effort to realize higher valuations, but because local buyers are most likely credit union members, it requires extensive reconditioning to assure a positive new buyer experience. When vehicles linger at branches, credit union employees become used car salesmen that escort buyers on test drives, clean vehicles, and broker deals. Cars that are sold wholesale at auctions, on the other hand, are often done so with limited credit union representation, which adversely impacts value. According to recent studies, such limited oversight decreases auction valuations by, on average, 10%-15%.
Today, credit unions are optimizing remarketing efforts and consolidating vehicle assignment volumes through an online community that offers credit unions the buying power and volume discounts typical of much larger portfolios. Such a strategy reduces liquidation costs such as asset transportation, auction fees, and conditioning costs.
Credit unions can then leverage a multi-tier remarketing strategy that complements branch remarketing efforts. In the first tier, credit unions can pre-market assets online and present vehicles to domestic and international buyers during the cure period. This strategy takes advantage of the dead space during which vehicles are held in impound awaiting the legal sale date. Online technologies create a way for buyers to make a contingent offer on the vehicle “if and when” it becomes available for sale. Credit unions can terminate pre-marketing efforts at any time for any reason, such as when a vehicle is redeemed, without penalty. The credit union does not incur costs, as it does not need to transport or condition the vehicle prior to virtual pre-marketing. Vehicles that become available for sale have a standing offer to buy when the vehicle legal sale date matures. This compresses the days to sale and converts the asset to cash in the shortest possible time frame. Most credit unions receive funds within one to two days after the legal sale date.
The second tier, a post remarketing strategy, uses several regional buying communities through private label online auctions. Credit unions can customize these virtual auctions to wholesale or retail buyers, and posting assets once a vehicle legal sale date reaches maturity lifts asset valuations by expanding access to a larger buying community. As with the pre-marketing strategy, this approach complements branch remarketing efforts and runs parallel to other remarketing solutions. It picks up where the pre-marketing solution leaves off, providing a continuous approach to vehicle remarketing.
The third tier, a full-service remarketing solution, provides representation at auction, comprehensive market analysis, and title processing for physical auctions in any geographical market. The core to managing a multi-tier remarketing approach is based on technology that seamlessly processes the logistical information and asset details, and then sends the information to electronic buying communities as well as physical auctions. Such solutions must capture information early in the repossession phase and use comprehensive electronic condition reports, complete with photos, to fuel online auctions. This strategy creates flexibility to rapidly post and manage each unique auction.
Consolidated Asset Recovery Systems developed technology to support the thousands of assets it repossesses and sells each month through a multi-tiered remarketing approach. The company’s community of credit unions benefit from consolidating their smaller numbers of vehicles sold through regional channels into a collective pool of vehicles that draws buyers in.
Consolidated Asset Recovery Systems’ strategy reduces costs through consolidated efficiencies. In turn, the company passes those savings back to the sellers. The strategy also increases the base value the company can earn for clients; auction values are between 8% and 19% higher depending on vehicle location and type. And over the past 12 months, Consolidated Asset Recovery Systems has steadily increased the number of vehicles sold online. Today between 25% and 30% of all the vehicles it repossess sell online, which contributes to fewer days to sell and lower operational costs.
Online remarketing is becoming widely accepted. The number of registered buyers increases daily, the number of vehicles posted online is increasing, and the number of successful sales is climbing. It is no longer a question of if credit unions will sell vehicles online; it is now a question of when. Many credit unions post assets for sale on their websites, but the number of potential buyers that will see the vehicles are limited. Additionally, different sites have different post structures and search criteria, many sites have limited vehicle selections, and most sites do not have dedicated marketing to attract buyers. By itself a website posting is one piece of the puzzle, but it needs to be a part of a larger strategy that combines local presence with a broader community. Today’s online auctions and tools can do just that.
To find out more about online remarketing and virtual auctions, visit www.ez-recovery.com.