Remarketing is Key to Success in Leasing
The CU Xpress Lease is the nation’s number 1 credit union lease program – key to the success of the program and what distinguishes it from any other residual based financing or leasing program is remarketing. Companies that convinced credit unions to participate in leasing programs in the past did not have any remarketing strategy, infrastructure, or process. Instead, they focused on the ease and low cost of entry – this enabled acquisitions to grow in the short term but as a business model was not sustainable over time without having a true and dedicated remarketing operation.
Fusion, unlike most independent lease companies, was built from the back forward. Core competencies in residual value analysis and lease-end account management help mitigate the two most challenging risks associated with automotive leasing. Remarketing is the foundation for the company – the four key principals of Fusion each have more than twenty-five years’ experience in the finance, lease, and remarketing businesses.
For more than a decade, Fusion has provided lease remarketing management to banks, leasing companies, and large fleet companies. Fusion has been consistently successful in providing management of leasing portfolios and the final disposition of more than 65,000 leased vehicles. Within the CU Xpress Lease portfolio, our credit union partners have been paid in full on every vehicle lease maturity. Fusion incorporates a proprietary remarketing strategy with residual value insurance, disciplined financial controls, and resale centers that focus on customer care and maximizing value for our vehicles.
Residual Value Management
Fusions’ management of the lease-end timeframe includes an active remarketing process – this begins at 360 days prior to maturity and requires full support of the credit union partner throughout. Successful remarketing necessitates a consistent credit union environment of competitive finance rates, no down payment required, 36-60 month finance terms, pre-approved credit for residual financing, and excellent member service. The working relationship between Fusion and its credit union partner is truly solidified during these remarketing campaigns – the credit union enjoys the benefits of satisfied members, a solid yielding secondary retail portfolio, and a financially sound leasing product to continue offering prospective new members for years to come.
Residual Value Insurance
With the CU Xpress Lease program, the credit union is named additional insured and has all rights to step into the place of the insured if necessary. Fusion places insurance on each vehicle effective the date of the lease agreement and has a monthly listing provided by our residual value insurer with complete detail for each vehicle funded.
In the past, credit unions were lured into leasing as a low-cost program with no upfront fees or obstacles to entry. This approach is not sustainable in the long-term and is only masked during times of increasing volume – when business slows down the leasing entity has no way to support the infrastructure necessary to manage the value risk. The result is that the value risk is passed to the credit union.
Fusion is a residual value risk company and utilizes its expertise to conservatively plan and manage lease portfolios. Cost items such as residual value insurance, contingent liability insurance, and maintenance fees are factored into the pricing model that determines the customer payment – this allows Fusion to provide and sustain an infrastructure for remarketing, insurance tracking, title management, Gap claim management and other key business practices that are critical to the program’s success.
Vehicle Return and Resale Facilities
Fusion Auto Finance operates a 45,000 square foot warehouse facility in Hauppauge, New York as a lease return center for credit union members at the maturity of their credit union lease. Fusion representatives provide an excellent customer service experience for members including a vehicle inspection, finance and lease extension options, and final lease maturity billing reconciliation. This Lease Return and Resale Center (“LRRC”) is also a licensed New York State motor vehicle dealer.
A central part of the Fusion remarketing strategy for maximizing resale on all returned vehicles is the marketing of “member-only” sales events for low-mileage off-lease vehicles. Credit unions are offered an opportunity to provide financing to current or prospective members during these sales events. Additionally, Fusion will consider utilizing its facility and other sales channels to assist credit union partners with disposing of repossessions to help minimize credit losses.
Fusion opened a second LRRC facility in 2011 in Bedford, Texas and a third return location in Manville, New Jersey in 2013. As the footprint of the CU Xpress Lease program continues to grow, Fusion will duplicate this vehicle return and resale facility model in other major markets.
Fusion Auto Finance and GrooveCar have partnered to bring credit unions a leasing program like no other. The CU Xpress Lease program is a “full-circle” business with every detail considered, from origination to servicing to resale and disposition. Credit unions can focus their efforts on making good credit decisions and growing membership while Fusion diligently focuses its remarketing expertise on managing vehicle value risk and protecting its credit union partners.
Fusion Auto Finance, LLC
210 Airport Freeway
Bedford, TX 76022