Over the past decade, there has been a significant shift toward migrating the wholesale vehicle remarketing process online. There are many reasons for this growth.

The online channel offers numerous benefits for the remarketing process, such as reduced expense and time to sale, less need to transport vehicles, travel cost savings to and from the physical auction and greater visibility for vehicles via a nationwide marketplace.

Due to the popularity of online auctions within the dealer community, there is also a need for additional wholesale inventory sources to augment the numbers of vehicle turn-ins, off-lease and off-rental vehicles that make up the majority of the wholesale market.

The variety of consignors selling vehicles through online auctions is impressive, ranging from dealers, to rental car fleets, motor credit companies, banks and more.

But one area, in particular, that is gaining incredible traction is the sale of repossessed vehicles online.

The reasons for this delay were numerous. There had been concerns about the “commercial reasonableness” of selling repossessions online,  title issues often slowed the sale process down and the remarketing approach largely relied on physical auctions picking up vehicles directly from recovery yards, leaving little opportunity or financial incentive for online sale.

More recently, however, recovery companies have begun to adapt their business to the new technology and data-driven environment expected by their customers. With this change, recovery companies have begun to capitalize on new opportunities to restore their status as “full service” providers who can help lenders both recovery and remarket their collateral.

One of the biggest opportunities in the repossession industry right now is the adoption of online auction companies as a valued partner for achieving this goal.

In addition, by integrating both online auctions and recovery assignment software packages into the process, agents can now make and receive recovery assignments and remarket vehicles at one location. For recovery agents and lenders alike, the most compelling part of this model is time saved — the average recovery-to-liquidation time online is just 15 days — including the redemption period (typically 10 days) — less than half the time of the traditional physical auction model, according to a recent survey conducted by Credit Union National Association.

The many benefits to consignors, ranging from reduced cost of capital and vehicle depreciation to placement within a nationwide inventory, are invaluable for anyone that is streamlining their automotive business to remain competitive in this current economy.

Partnerships with recovery agents and technology providers benefit dealers directly as well. Although many dealers may have existing relationships with local recovery agents, bringing online auctions into the mix not only provides an additional and broader source of used vehicles to choose from, but also opens the possibility of sourcing nationwide.

For dealers who are searching for used inventory, this should result in greater number of vehicles available for sale on online wholesale auctions as recovery companies continue to work with lenders to remarket vehicles online directly from the recovery facility or lot. For dealers, particularly those offering buy-here, pay-here financing and who want to remarket repossessed vehicles, the process becomes significantly more efficient and cost effective because they can also market the vehicles online.

Dealers can also maximize exposure for those vehicles nationwide and even remarket directly from the recovery agent’s lot thereby starting the remarketing process earlier and reducing both depreciation and the costs associated with moving the vehicle to physical auction.

Although some dealers may think buying and selling repossessed vehicles online could be risky, there are a number of mechanisms in place to help protect the dealer. Prudent dealers will order a third-party, post-sale inspection after they purchase a vehicle for additional peace of mind.

Conversely, dealers who are selling vehicles online can also purchase a third-party, pre-sale inspection as a marketing tool to help their vehicle standout.

For further reassurance, dealers may also want to make sure the online auction they are working with has fair arbitration policies designed for online buying and selling.

Having a dedicated sales rep at the online auction to help walk you through the process can also help you maximize the buying and selling opportunities.  

With the economy squeezing all sectors these days, everyone in the automotive industry is looking for new innovations to help streamline their vehicle acquisition and disposal process and keep them one step ahead of their competition. As the shift toward greater online remarketing continues and more and more repossessed vehicles are remarketed online — dealers, lenders and recovery companies all stand to gain.

Zach Hallowell serves as the business line director for OPENLANE.