Las Vegas — Compliance and transportation, in the face of increased volume at auctions, are two top concerns for both Santander Consumer USA and Wells Fargo Dealer Services, execs for the companies said during a panel at the Conference of Automotive Remarketing last week.
“There has been a lot of production in the last two years — probably since 2013 — but there has been a lot of upstream absorption that has been working very well,” said Howard Segal, national remarketing manager for Wells Fargo. “If you look at it now — probably ‘17 and even into ‘18 — there’s going to be some depression on pricing, so you have to get more creative with the cars you are offering.”
However, those sales shouldn’t take precedence over compliance, he added. Wells Fargo faced a $24 million consent order for illegal repossession of 413 service member vehicles back in September, and the company has renewed its focus on repossession compliance, a Wells Spokeswoman told Auto Finance News.
The auctions, too, are under increased scrutiny, not just from regulators, but also from consignors who are asking for procedural and digital changes, Segal said. For example, changes to detailed complaint policies at the auctions, security issues, and onsite due diligence that have never been done before at auction levels, he added.
“It’s a perfect storm: You have increased volume and we’re also asking more of the auctions than we ever have before,” he said. “Forget the volume for a second — just the fact that they [auctions] do business has never been more detailed and under the microscope in any of the years that I’ve been in the business.”
Volume is increasing due to growing off-lease portfolios and greater production overall, but Santander said it’s able to deal with it, in part by moving vehicles to where they’ll sell better — as challenging as it can be.
“There are instances where it’s tough to get cars picked up from the dealerships, probably because we have 600 [lease maturities] in one day, said Brian Smith, vice president of asset remarketing at Santander.
The majority of Santander’s off-lease volume is in Michigan and it can be difficult to get to the lots and move — for example — trucks to Texas, where they sell better, he added.
“Transportation is the greatest variable in the market for us. It can absolutely help you or hurt you,” Smith said. It can be challenging, he said “but it’s something you have to do. You can’t just put it in an envelop and get there overnight — It doesn’t work like that.”
