ADT Automotive Inc. has teamed with Penske Auto Centers to create places where lease customers can drop off their vehicles at the end of their contracts.
ADT is opening Service Solutions lease return centers where ADT employees inspect end-of-lease vehicles, get documents signed, collect fees for damage and/or excessive mileage from consumers and then transport the vehicles to auction - all in the same day.
ADT will operate the lease return centers to handle off-lease vehicles owned by banks and other financial institutions that are ADT clients. ADT is a vehicle remarketing and logistics company in Nashville, Tenn., that operates 28 wholesale auto auctions.
At least 25 lease return centers will be open by Nov. 11 - the day ADT officially will launch the centers. About 50 lease return centers will be open by year end. Fewer than a dozen of the initial centers will be freestanding; the rest and will be inside Penske stores, said Don Reig, vice president of strategic planning and development at ADT. The first centers will open in New York, Philadelphia, Chicago, Detroit, central and sou thern Florida, Los Angeles, San Francisco and San Diego.
Reig said the lease return centers will cut the time between a vehicle's lease termination and arrival at the auction from an average of 20 to 28 days down to one day.
That time reduction saves several hundred dollars per vehicle in interest, vehicle depreciation and collection expenses for banks and other financial institutions that must remarket the vehicles, Reig said.
'This is a completely new service; we're integrating the lease return (process) into one event' Reig said.
ADT paired with Penske because the aftermarket service centers are virtually everywhere, Reig said. Penske operates about 650 service centers at Kmart stores in the United States. 'They're (Penske) a national chain in neighborhoods where we live and work. There is a high degree of familiarity,' Reig added.
GOOD FOR PENSKE, TOO
Peter Klein, senior vice president of business development at Penske, said having lease customers drop off their vehicles at Penske creates floor traffic for the aftermarket store and enhances the services offered at Penske.
Klein said Penske is doing preinsurance vehicle inspections for two auto insurance companies and that 'being connected with a company like ADT positions us well for future opportunities in the vehicle inspection business.'
ADT CEO Tony Moorby said the Penske name, its national reach and its reputation will help ADT establish the program quickly.
ADT plans to open more centers as demand dictates, Reig said.
Each ADT lease return center will have specially trained staff and equipment. ADT employees will document each step as a vehicle is processed. This enables ADT's clients to use the Internet to track their vehicles' progress from the time the lease customer is initially contacted until the vehicle reaches the auction.
Reig said it generally takes so long between lease termination and the time a vehicle gets to the auction because everything is done separately. For instance, the person who inspects the vehicle does not collect fees for damage or excessive mileage.
The ADT processing centers consolidate all of these tasks, saving the financial companies time and money, Reig said. Also, the centers collect fees from consumers on the spot.
The explosion of retail leasing in recent years - from 500,000 units in 1990 to 3.5 million in 1998 - coupled with vehicle residual values that are often higher than vehicle market values, has created a glut of off-lease vehicles. Dealers buy about 25 percent of those off-lease vehicles, Reig said.
That means that banks and other financial institutions have more used vehicles that must be processed and sent to auction, thus creating a need for the Service Solution centers, Reig said.