In light of more than 37 million vehicles being recalled so far this year, the team at Black Book Lender Solutions went to work considering the impact these campaigns are having on the auto finance industry.

Analysts acknowledged the psychology of a vehicle recall — particularly one garnering national headlines — has the propensity to keep finance companies from expanding their portfolios with the vehicle in question.

However, historical collateral data trends have shown that recalls typically do not adversely impact normal retention patterns of a vehicle, immediately after the recall is initiated as well as into the future. Black Book arrived at that assertion in a white paper the company released on Tuesday.

“Lenders typically look at depreciated value somewhere in the neighborhood of about 24 months out to really determine if that vehicle either represents a profitable candidate for their portfolio,” said Jared Kalfus, who is the vice president of data licensing at Black Book Lender Solutions, which will be sponsoring the Auto Finance Executive of the Year Award again this year the SubPrime Forum.

“Collateral data is a key element in identifying these trends for lenders and can help detect particular vehicles that offer opportunities for increased risk,” Kalfus continued. “Historical, current and forecasted vehicle value data offers the right amount of insight for loan originations, loan-to-value levels and where to be more aggressive within the portfolio.”

Kalfus indicated any negative impact to vehicle retention immediately following a recall — or even several months later — can affect a finance company’s ability to identify certain vehicles that represent an opportunity for profitable portfolio expansion.

In the white paper, Black Book examined four different examples of vehicle recalls and equipment replacements that have made headlines dating back to 2000. Each example offered collateral data trends that showed the recalls themselves did not offer a negative impact to typical vehicle retention patterns.

Those instances included:

1. August 2000 Ford Explorer – Bridgestone-Firestone

2. December 2009 Toyota – Unintended Acceleration

3. November 2013 Ford Escape – Engine Issue

4. February 2014 General Motors – Ignition

When asked by SubPrime Auto Finance News about what triggered the research project, Black Book senior vice president and editorial director Ricky Beggs said, “It was a general overall conversation in the industry where people were worrying and wondering about what’s going on and if there’s been an adverse effect.

“Instead of just looking at what’s been going on with the recalls now — which has been from not just one or two manufacturers, but so many — we just looked back to find what was the trend back in the past with recalls and how has the market reacted,” he continued. “We just thought it was an interesting viewpoint to put out there in the industry since there’s been so many recalls out there in front of everyone’s mind right now.”

The complete white paper titled “Total Recall: Is There Additional Risk From Recalled Vehicles in Your Portfolio?” can be downloaded at http://www.blackbookauto.com/lender-solutions/total-recall/.