National Powersport Auctions saw a “modest rise” in repossession volumes in 2016, Chief Operating Officer Jim Woodruff told Powersports Finance. However, default rates remain stable, even lower than the expectations of many lenders in the space.
Overall, total repossession volume is up almost 10% in 2016, as compared to 2015, he said, and repossession volume from new lenders is up about 5% in 2016.
The rise in repossessions is partially attributable to new banks and lenders that have entered the space, or new powersports finance programs that are being offered, and that number grew by almost threefold, Woodruff said.
“The reason is because they are writing paper, because they are brand new,” he said. “And the feedback we’ve gotten so far from them is that they are very happy with their new business, certainly they are happy with NPA, and the default rates and the math have been equal or less than what they expected, so they are happy with the nature of the paper they are writing.”
NPA expects only “incremental increases” in repossession volume for 2017, and default rates are anticipated to remain “fairly stable,” Woodruff said. “I think that we may see an average default rate that is slightly higher because of greater subprime penetration, so that’s normal behavior,” he said. “Subprime paper is riskier, so if there is more of it, it’s going to drive the average up. But overall for each credit tier, 2017 will be no worse than 2016.”
NPA is “particularly happy” with the new financing sources and new lenders that have entered the market, Woodruff said. “A number of new clients are enjoying doing business with us, and we are seeing nice volumes from them because they are writing paper. I think that’s only going to get better in 2017.”
To that end, NPA opened two new facilities last month. The company’s Carrollton, Texas, facility moved into a new 140,000-square-foot building. The first auction was held on Jan. 13. Additionally, NPA opened a new 35,000-square-foot facility in Philadelphia to serve the northeast region, and held the first auction there on Jan. 11.
“Opening the Philadelphia location was more of a strategic move for us, making product available to dealers and also giving them a more effective way to liquidate stuff that they didn’t need — that was the main driver,” Woodruff said.
The Philadelphia facility accommodates more than 500 units per month and has offices, condition report stations, and meeting rooms like the other NPA operations in San Diego, Dallas, Cincinnati, and Atlanta.