SAN BERNARDINO, Calif.-Arrowhead Credit Union said it no longer needs an outlet for large numbers of low-mileage repossessed automobiles, and therefore has ended its relationship with Arrowhead Motors.
As reported earlier in Credit Union Journal ("
A longtime member of Arrowhead CU owned an auto dealership that went out of business when General Motors shut down thousands of franchises during the height of the recession. Gene Shabinaw, Arrowhead CU's senior vice president of lending, said the credit union partnered with the owner of the empty auto lot to sell voluntary repossessions from members who could not keep up with payments. The cars were in much better condition than typical repos, therefore selling them at reduced prices via auction did not make financial sense.
The relationship was not exclusive-some of the cars on the Arrowhead Motors' lot were from other financial institutions.
With local conditions getting better, Shabinaw said the partnership with Arrowhead Motors has lost its importance.
The credit union ceased sending repos there earlier this year.
"We sold a number of units through Arrowhead Motors at a very nice price compared to what we would have received at auction," he related. "When we were sending inventory there it was very profitable. We increased the return to the credit union about $1,500 per automobile, after expenses.
"But as the economy improved we were contributing less and less inventory. Fewer cars were front-line ready. The repossessed cars we are getting now are not as well taken care of, and those are more typical of what is sold at auction."
Another factor in ending the relationship with the repo lot was the fact auction prices have improved, especially for recreational vehicles, Shabinaw continued. He said the market for RVs has "resurged," and Arrowhead CU sometimes takes a handful of high-end repossessed RVs to a large RV dealer in the area to be sold on consignment. "What we were doing with Arrowhead Motors, we are doing on a limited basis," he noted.
Arrowhead Motors has closed because the owner has decided not to stay in car sales, Shabinaw said.
"It was a very good relationship for us. At the time we needed the relationship, but it ran its cycle."
