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FONTANA, Calif. — Dealers might not necessarily be asking auctions specifically about repossessed vehicles. But when a repo unit comes down a lane, it's likely headed to a dealer's inventory soon.

Several auction executives discussed repossessions recently with Auto Remarketing. All shared how repossessed vehicle volume is generally up, and how an overall tight wholesale supply is making this segment even more desirable.

"The point the dealer likes is the fact that there is no story with the car," explained Tim Van Dam, general manager of Manheim Southern California, in an interview with Auto Remarketing.

"What we mean by that is people want to know where this car came from," Van Dam continued.

"It's a good story — not in the sense that someone lost their car because that's a horrible thing — but in the sense they can say this car was repossessed," he went on to state.

"We all know people who have struggled. For whatever reason, the public likes to buy repossessed vehicles," added Van Dam.

Numerous reports have shown about 2 million repossessed vehicles went though auctions last year. About the same amount is expected this year. That volume has prompted auctions to sharpen practices regarding repossessions, especially in the reconditioning area. Sal Terranova is national remarketing manager at Carolinas Auto Auction in Anderson, S.C., an operation affiliated with ServNet.

"Critical to the price a dealer will pay for the car is the condition of the car," said Terranova, who's been involved with the remarketing industry for more than 25 years.

"Wherever there is risk, someone has got to ensure for it. If the dealer has a question about the condition — how much he can really put into the car before he can sell it with his name on it — he's got to cover for it," he continued.

"So the condition report, the detailing, the reconditioning for a lot of these certification programs all have become more and more important," Terranova stressed to Auto Remarketing.

Terranova and Van Dam both explained detailed processes each of their operations use to prepare repossessed units for the lane. Each noted that they work closely with lenders and financial institutions so baseline prices are met in order to satisfy legal and accounting stipulations.

"We have a special program at Manheim called Insight ECR, a new program that's been developed in the last two years," explained Van Dam, who's been an auction general manager for nearly 20 years.

"We try to get a condition report to our clients in less than a day," he continued.

"The quicker they can get that information, the quicker they can make a determination as to what they want to do with the car, when they want to sell the car, what the value of that vehicle is, a floor price, a bottom floor and what they can accept," Van Dam noted.

Large companies such as Manheim aren't the only ones with a specific plan in place. At Grand Rapids Auto Auction, an independent operation in Michigan, executives have a similar strategy because they run a special weekly sale that's just for repossessed vehicles.

Nate Simonson, general manager of Grand Rapids AA, indicated that the special repossession sale has been one of his top priorities since he joined the operation about four years ago. Extensive recondition reporting completed by several individuals capped off by a personal inspection by Simonson himself are all part of the process for several hundred vehicles monthly.

"The big thing with repossessions is gaining the trust of your buyers," Simonson told Auto Remarketing.

"Every vehicle that we get in for our clients goes through a full and complete inspection. A lot of auctions will have one person doing a condition report on the vehicle looking for damages. A lot of things can come up between all that. We go through a three-step process," he went on to explain.

"Once you build up that relationship with your buyers and they have your trust, then you get all of the money for those vehicles, which we do here," Simonson pointed out.

"All our estimates and condition reports are true actual numbers. It's not anybody just guessing," he continued.

"At that same time you have to build up trust with clients as well. We've done that. The numbers show we rank with our clients consistently in the top three," Simonson added.

Auction executives who did speak with Auto Remarketing shared a similar sentiment about repossessions. Economic indicators such as unemployment likely will contribute to a steady stream of repossessed vehicles this year. And traditional factors will keep them highly sought after by dealers.

"Prices were strong last year for all of these cars based on just Economics 101 — demand outpacing supply," Terranova said.

"That probably will continue this year because demand is driven by the fact that these stores are trying to keep going on used cars," he concluded.

Auto Remarketing also contacted ADESA to get the perspective of its auction general managers; however, due to the company preparing to release earnings, it is currently running in silent mode. No comment was available at this time.