Rick switches off the tow-truck's headlights and idles to the apartment building he was told the motorcycle would be parked behind. Sure enough, there it is — a black 2007 Honda CBR1000RR, a bike that came with a manufacturer's suggested retail price of $11,499. Two minutes later he has the motorcycle securely tethered to the back of the truck and is safely on his way to the garage where he deposits his other bounty.
Rick St. Marie is a recovery specialist, or repo man. He's general manager of Arizona-based National Recovery Network, LLC, a company that finds property and fugitives, and he says his business with powersports vehicles has been stellar.
National Recovery Network has been in business for two decades and employs hundreds of recovery agents across the nation. St. Marie says the company last year averaged around 400 to 500 recoveries per month but now deals with approximately 1,500 recoveries per month.
"Our pick-ups of motorcycles have increased significantly, at least 40%, in the past nine months," St. Marie tells Dealernews. "Our auto repossessions are up about 25%; so we do a lot of motorcycles. The reason is simple: People pay for their house first, and before they allow their car to go away they give away their toys."
Consumer credit delinquencies in the fourth quarter of 2007 reached their highest levels since 1992, according to the American Bankers Association's Consumer Credit Delinquency Bulletin, so it makes sense St. Marie?s business is experiencing growth.
St. Marie says his clients include "everyone from mom-and-pop stores to leading financial institutions."
"We're not usually the first source creditors go to," he explains. "They usually first go to their local repossession agency. Then, we come in if they can't obtain the property. Our usual targets are hard-core debtors who are making a point to conceal their property from their creditor.
"However, with that said, I've found it easier to get property from debtors nowadays. I believe they are often so overwhelmed with debt that they are willing to surrender some property in order to hang on to some other, what they deem more valuable property."
Is there a "typical" debtor? "I think the recent increase we've experienced is predominantly with people aged in their 30s to late 40s; we've always had the kids who've defaulted — and that'll always happen with irresponsibility," he says.
St. Marie says he believes one factor fueling the increase in repos is financial institutions apt to recoup property in a more timely manner. "I think the banks are getting sketchier on the clients," he says. "A lot of the stuff we used to do with the powersports vehicles was related to fraud, identity theft, youngsters who just wouldn't give it back — the tough stuff. We used to be getting calls when the payments were 90 days or six months out whereas now we're getting calls when they're 45 to 60 days out."
What are among the more popular powersports vehicles being repossessed? "People seem to like the Harleys, and we're getting a lot of the rice rockets and ATVs and sand rails, a bunch of toy-haulers…everything," he says.
Recovery specialists do one of two things with a repossessed powersports vehicle. Depending on the wishes of the creditor, they can either 1) liquidate it on their client's behalf or 2) send it to a local auction to be liquidated on their client?s behalf.
Repo Business Big At Auction
"Our repo volume is up year over year," says Justyn Amstutz, a partner in National Powersports Auctions (NPA).
NPA maintains relationships with several large lending institutions and liquidates many of the nation's repossessed motorcycles, ATVs and other powersports vehicles.
Amstutz says he believes the growth in repos stems from the retail growth the powersports industry experienced over the past several years. "When more retail deals are sold, the institutional portfolios grow; when the economy slows, the number of repos increase."
While the current rate of repos is unprecedented, Amstutz says he believes smaller, consistent ebbs and flows of repo portfolios benefit the industry long term.
"More units means additional revenue," he says, adding that the same holds true for dealers: "Today's dealer has a greater availability of used product for purchase. If said dealer understands the profit opportunities in pre-owned, said dealership is still growing and maintaining profitability in today's market."
Lenders Disclose Little
What do lenders have to say about what appears to be a growing number of consumers turning delinquent on powersports vehicle payments? Very little. Lending institutions keep information pertaining to delinquencies close to the vest, usually deeming it "proprietary."
The folks at HSBC decline to comment. "We'll sit this one out," says Cindy Savio, Manager, Public Relations, HSBC.
David Smith, Marketing Leader, GE Money, says financing follows market dynamics, but otherwise keeps his reply reserved: "Our challenges with delinquencies mirror the market," he tells Dealernews.
Those working in conjunction with lenders appear to understand the score. Even repossession specialists prove difficult to glean information from. Chuck Cowherd, VP, Action Auto Recovery of Southern California, summarizes what seems to be a prevalent modus operandi in the repo business. His response: "Our clients do not like us to talk about the industry."