At Used Car Week 2020, DRN’s sister company MVTrac participated in a panel discussion about effects of the pandemic on the repossession industry, and keys to how it will recover in 2021 and beyond.
Some of COVID-19’s most significant impacts on the vehicle repo industry include:
- Decreased volume: General business shutdowns and government restrictions on collection activities in some states halted repo activities almost overnight. This created a shock to agents’ business models, which had been based on volume but quickly had to shift to focus on profitability, preserving operating capital and managing liability.
- Staffing: Forwarders and repo agents were forced to reduce staff, and some closed their doors altogether. MVTrac saw a 10-20% reduction in the number of active repo agents during the height of the pandemic.
- Operating procedures: Forwarders and repo agents had to change their ways of working to accommodate lower volume and reduced workforces. Justin Zane from ClearPlan & RDN said that, at the time of UCW in late 2020, agents were running at 80-83% of their 2019 volume, but with an average 30% reduction in staffing. Even small staffing reductions make agents’ ability to recover vehicles more difficult and more expensive as fixed costs, administrative tasks and compliance activities remain the same. Businesses had to search for ways to streamline and become more efficient, while also increasing focus on employee and customer safety.
Looking forward, the group agreed on a few key focus areas for the recovery industry as it continues to rebound, normalize and emerge stronger following the pandemic.
- Technology: Without question, lenders, forwarders and agents must embrace technology, data and predictive analytics to improve performance and handle the increased capacity that’s expected as the economy continues to bounce back from the pandemic. In 2020, 1.4 million vehicles were recovered; in 2021, it’s estimated that number will grow to around 2.3 million vehicles. Use of data and analytics tools like MVTrac’s Case Claim and DRN’s Advance Alerts can enable the entire industry to be more efficient and make smarter decisions.
- Compliance: While compliance always has been critical, the speakers agreed that there will be even more focus on lender standards and government restrictions on recovery processes. They also agreed there will be a push for a much needed and long overdue standardization of compliance practices across the industry.
- Optimization: The panelists also pointed to a “mad dash” for optimization in which lenders, forwarders and recovery agents will push for operational efficiencies. Becoming lean and streamlined through improved processes and use of technology will likely be a focus industry-wide.
While we’re all ready to see the pandemic and its effects in the rearview mirror, I think there are valuable learnings and opportunities for all of us. If you’re ready to learn more about how DRN and MVTrac can help your business as you look ahead, visit our website and fill out our contact us page and someone will get back to you shortly.
– Jeremiah Wheeler, EVP & GM
