Daily Auto News In This Economy, Even the Repo Man is Hurting
Daily Auto News
Few people whose jobs are connected to selling or owning cars can feel secure these days. At least the repossession industry is recession-proof, right.
Apparently, no. According to the Wall Street Journal, “The repo industry faces a surprisingly sour outlook, especially companies working for subprime lenders. Nationwide, repo orders rose to 1.67 million last year, from 1.49 million in 2007, reflecting defaults on cars bought over the previous 12 to 24 months, according to Manheim, a used-car auction company. But, in an ominous sign for repo men, vehicle financing is down 32% from a year ago, according to Experian Automotive. Repo firms hired by subprime car lenders are already hurting, while those working for the finance units of car makers can expect to see business decline in coming months, says Tom Webb, Manheim’s chief economist.”
It’s not just the long-term trend that worries auto repossession companies. They’re actually having a hard time making money today as well. “When credit was easy, many delinquent borrowers just handed over the keys. They could always get another car. Now, many debtors are desperate to keep their vehicles.” As a result, it takes more time and effort for repossessors to locate each car.
Tony Cooper, owner of a repo company that operates 24 tow trucks in the Carolinas, tells the Journal that his “revenue fell 23% in 2008 from the previous year. Competition has driven his per-car fee from the $350-to-$400 range to as low as $250. He’s trying to save money by selling his lot but can’t get a decent offer. He’s laid off five of his 45 employees.”
Worse, the business is getting more violent. Autoblog reports, “With repossessions predicted to exceed 1.7 million vehicles this year, and the industry itself loosely regulated, violence during lawful repossessions is also predicted to rise. Only California, Florida and Louisiana license and keep track of ‘recovery agents,’ which leaves the rest to operate in a vacuum as far as limits are concerned. Federal law states only that they can’t ‘breach the peace,’ but it’s left to judge and jury to determine when that has happened.”
The AP profiles one such incident in Alabama, where a repossessor faces murder charges after a late-night confrontation with a car owner turned violent. Joe Taylor, whose Florida-based company insures repossession companies, told the AP that “licensing and training is the answer to avoiding such violence.” Taylor continued, “If a guy is just put right on the street without training, the potential for violence is very, very high.” Choctaw County Sheriff James Lovette, meanwhile, thinks the industry needs regulation. He “is asking the Alabama Sheriff’s Association to push a bill limiting the hours when repossession companies can operate and requiring them to contact local law enforcement before working in an area.”
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