Steer Clear of These 4 Remarketing Pitfalls

canstockphoto16288206Just this month, top leaders at Black Book announced a downward trend of retention values on used vehicles triggered primarily by new vehicle incentives, interest rates, and a declining demand of certified pre-owned. With projections of a continued weakening of the used vehicle market ahead, and an excess of supply, every dollar counts when remarketing.

If remarketing is managed internally, lenders must juggle a myriad of moving partnerships and processes to achieve the best results.  Unfavorable trends drive an increased pressure on the effectiveness of a lender’s remarketing program. To counterbalance the downward trend in retention values, lenders should focus on improving four key areas:

  • Data
  • Sales channels
  • Vendor management
  • The overall approach

 Data

Bad data is the root of many bad decisions made in any financial institution. When it comes to remarketing where margins are already tight, operating from solid, reliable data is a key component to success. Without the right market data, lenders are likely to make poor decisions.

Reliable market pricing is critical to enhancing remarketing returns. Under-pricing a vehicle can create adverse selection. Over-pricing a vehicle will lead to “No Sales” in the lane and lengthy delays selling the vehicle.  By completing proper vehicle valuation and leveraging proprietary data providers, lenders can ensure the most accurate market values are assigned to each vehicle.

Sales Channels

Too often auto remarketers limit their sales channels to either an online or a physical channel only and in turn limit the breadth and depth of their resale effectiveness.  A diversified sales channel that includes pre and post-sale cyberlots and physical channels increases visibility of the asset and enhances competitive bidding.  Upstream online remarketing channels can also provide additional value by eliminating transport fees and reduced sales fees.

Vendor Management

Title companies, vehicle transportation agencies, and auctions are just a few of the vendor types critical in the remarketing value chain. Without a strong vendor management program in place a lender may experience poor performance and communication breakdown between parties delaying the time it takes to complete the resale.  With the right partner oversight and clearly defined performance expectations, a four day transport turn-time and 35 day sale cycle is achievable and as with all good vendor management programs, regulatory and compliance requirements are met and regulatory risk is mitigated.

The Overall Approach

The final remarketing pitfall for lenders to avoid is taking a one size fits all approach. Instead, use a personalized touch to the process to earn trust and build partnerships. Leverage dedicated account representatives deployed out in the field and online to yield greater vehicle returns.

It’s not just a desirable asset that drives quick sale.  Working with the right data and partners, using numerous sales channels and taking a personalized approach lenders can realize a higher return in the face of the current trend of declining retention values.

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