The Storage Problem: Diving Into the Data

The definitive formula to calculate costs for agents and what it tells us

For the last few years, the industry as a whole has discussed the storage topic at length. The topic continues to be at the top of every agent’s list due to increased volumes and vehicles being stored longer than ever and the relative inability to capture enough revenue to offset the costs of increased storage. There doesn’t appear to be an end in sight.

It has been difficult for agents to properly explain this burden to clients and lenders because until now every agent calculated their “costs” differently. Costs have been relatively subjective and undefined.

The lenders try to listen and understand but they will collectively say they can’t fix the problem if the industry cannot provide them with black and white hard numbers. The agents have failed to this point to supply that exact information.

So late last year the presidents of 15 state repossession associations got together to discuss and solve this very problem. Through those collective efforts the president collaborated over many meetings and phone calls to design a simple and effective formula where they can show the hard numbers that the lenders are asking for. Of course, fees have never and will never be discussed in these meetings for obvious legal and ethical reasons, the basis is to strictly determine average costs.

Through this collaborative effort a formula was born, this “plug and chug” excel sheet allowed for any agent to input factual numbers into specific sections whether they had one lot or ten. The worksheet would then average the numbers down to a single parking space and what that space cost that agent per month and per day. The results for many were jaw dropping when considering how long a car might sit in that parking space. You will find a sample of that worksheet here:

So, what were the results? To date the group had participants submit their individual worksheets and the information was compiled. As of this writing there were more than 20 participants representing 16 total states.

Here is what was found:

Combining the monthly cost of rent/mortgages, taxes, labor, utilities, insurance and basic operation consumables, divided by total available parking spaces the average numbers are as follows.

Monthly cost per parking space $134.60 average, topping out as high as $507.90 per space per month.

Daily cost per parking space $4.13 average, topping out at $13.93 per day per space.

When you put actual dollars to the parking space it really does put the sheer amount of money being spent into perspective. For example, if a lender’s days on lot average is 15 days, it costs $61.95 for every repo the agent completes, now multiply that across the entire portfolio. Those numbers start to get large.

So, what’s next? First, I would encourage every agent reading this article to download the worksheet and complete the numbers for yourself and see where your business falls in this average. Then, armed with this knowledge, begin having informed conversations with your clients and educate them accordingly.

Lenders reading this article, you are encouraged to reach out to your vendor network and ask the questions you feel appropriate to further this conversation. When both agent and lender understand the problem solutions begin to present themselves.

Jeremy Cross