As AuSM continues to report on the wholesale remarketing strategy of commercial consignors, the story would be incomplete without the inclusion of credit unions. CU Direct said member auto-loan originations by the 1,100 credit unions using the CUDL auto lending platform, as an aggregate, have led the auto lending industry.
(Author Disclaimer: I provide media consulting services to CU Direct; they did not participate in this story other than providing the above data, and a data point below).
The wholesale credit union market is driven by repossessions. The leading consignor for the nation’s credit unions is Element Fleet Management. It also remarkets vehicles under its fleet contracts, including RVs and other vehicles. Paul Seger, executive vice president, asset remarketing said Element consigns 70,000 vehicles a year, of which 90 percent originate as vehicles repossessed by credit unions.
This figure is somewhat remarkable, given the average credit union auto loan customer presents with a 700 or higher credit score, according to CU Direct and AutoCount. In other words, credit union-member car buyers typically don’t fall into the subprime category; one would assume these consumers would have a lower default rate than the average for the auto finance industry.
Some news outlets, reporting recently on the Federal Reserve Bank of New York’s consumer delinquency trends, were anything but encouraging: “More Americans than ever are struggling to pay their car loans as overall debt rises in the U.S.,” noted USA Today in its headline.
Yet as reported by a AuSM publication afterwards, this news, seen in the right perspective isn’t grim.
“At first blush, it might look inflammatory that the New York Fed data fueled by Equifax showed that more than 7 million people had an auto finance contract at least 90 days delinquent by the time 2018 finished,” reported AuSM’s sister publication SubPrime Auto Finance News. “However, the data set also pointed out that more than 89 million people have some form of auto financing — a lease or retail installment contract. That’s the highest figure ever recorded, according to the Fed data from Equifax that goes back to 1999.
“All told, auto financing surged by $53 billion year-over-year to close 2018 at $1.27 trillion; again, the highest figure ever recorded.” The report went on to mention that auto financing is just part of what’s pushing overall debt to new highs.
Element relies on a multi-channel remarketing strategy. However, its primary channel is its Element Mega Sales live event it conducts routinely in 45 to 50 markets nationwide and runs these through the mainline auction houses.
“We make a decision based on the market strength of that particular facility,” Seger said.
“We have seen over the last two years a huge movement toward the online course, so I anticipate this channel is going to evolve to bring efficiencies to the overall remarketing process,” Seger said.