Repossessed vehicles can serve as a legitimate asset for credit unions if they properly market the cars to consumers.
As of third quarter 2010, all U.S. credit unions held $228.7 million in repossessed vehicles, which is down from $296.7 million year-over-year. A difficult economy and an increased interest in purchasing less expensive vehicles are possible explanations for the decrease.
As demonstrated in a webinar with Susan Verbeck, vice president of lending at Community First Credit Union ($1.1B, Jacksonville, FL), credit unions can use the power of aggregation to bring in high returns even outside of auctions.
Community First, which at the time of the webinar experienced a 10.9 % growth in repossessed auto assets, acheived remarketing success by partnering with five credit unions from the area for a mass disposition sale, including more than 75 vehicles along with boats and RVs. “We took 22 cars over, and we had sold 18 of them,” Verbeck says. “Most for $500 to $600 above book, but some got as much as $2,000.”
According to a survey sponsored by Repo Remarketing, most credit unions sell an average of 23 vehicles a month. For credit unions with assets between $50 million and $250 million, the number is closer to 10. For credit unions with assets more than $500 million, the number shoots to more than 60.
The average time frame to sell these vehicles is 46 days through retail channels and 32 through wholesale channels, showing wholesale has the quicker liquidation. Dorothy Drake, vice president of business development at Repo Remarketing, advised that 30 days is considered the end of the optimum value window and because average depreciation is $8-$10 per day, time is of the essence, she says.
Most employees in charge of remarketing are already asked to take on a heavy load, but time spent with the vehicles being sold to enhance understanding represents the potential for increased earnings down the line.
While the survey indicates that credit unions still have room to grow in their understanding of the best remarketing paths for their specific situations, the time has never been better, or more profitable, for credit unions to reach out for a bigger piece of the remarketing pie.
To learn more, check out Successful Auto Remarketing Strategies for a Challenging Environment, the full webinar featuring Susan Verbeck.