LPR Version 2.0: Plate Recognition Technology Capturing Attention

Eleven of the top 25 automotive finance contract originators in the U.S. have secured relationships with a relative newcomer in the automotive recovery industry — Digital Recognition Network (DRN) — the latest being Santander Consumer USA, a national lender with an $8.6 automotive finance portfolio.

DRN has been operating as a joint venture for 18 months, but just 10 months as a stand-alone corporation. The firm utilizes digital license plate recognition technology cameras mounted on a fleet of vehicles, currently approaching 800, in metropolitan areas across the U.S.

At any given time, DRN’s fleet of affiliate-operated vehicles is searching for more than 250,000 vehicles wanted for repossession. It currently has a database of approximately 3 million license plate numbers of vehicles scheduled for repossession. When one of the camera-equipped vehicles “spots” a wanted vehicle the finance company and recovery agent are notified and the vehicle is repossessed.

Cort DeHart, president of Fort Worth, Texas-based DRN, said he has been pleased by both the acceptance of the new technology among finance companies and the improvements of the systems and processes in a relatively brief period.

“In addition to Santander, we have agreements with Mercedes-Benz Financial Services, Toyota Financial Services, Chase Automotive Finance, Regional Acceptance and other major finance companies,” DeHart said.

He said this new agreement with Santander allows the finance company to immediately implement DRN’s national LPR2.0/Locate, Pickup, Real-Time platform – the only “recover it now” service available to automotive lenders.

While acceptance by finance companies has been strong during DRN’s first year of operation, buy-in from the nation’s buy here-pay here dealers has been somewhat less, but DeHart admits marketing to independent dealers has been minimal.

“Any time you bring a disruptive technology to an industry that is used to have things done one way for a very long period of time, you will find skepticism,” DeHart said. “We believe the success we have achieved with major finance companies and the dealers we do have relationships with will be a huge catalyst to tapping into the huge independent dealer market.”

Buy here-pay here dealers using starter-interrupt and GPS tracking devices, or a combination of both, can typically find a vehicle with some effort where the customer has stopped making payments and cannot be contacted through the usual methods. However, dealers who do not use the devices or have had a consumer remove the tracking devices from the vehicle, have a harder time finding the vehicles. They usually enlist the help of a recovery agent or a skip-tracing service.

“What we have done is build a partnership of people including forwarding, repossession, skip tracing and finance companies, which has resulted in a network of affiliates focused on locating these vehicles.

This latest partnership with Santander will allow DRN to showcase its latest system upgrade, LPR2.0. Whereas the previous generation technology often required a longer time period between a “search” vehicle spotting a “wanted” vehicle and securing the order to repossess it, the new system allows the search vehicle to almost immediately effect the repossession once the vehicle is located.

“We had 2 million plates of wanted vehicles in our database when we started out in April-May 2009,” DeHart said. “We now have more than 800 cameras, scanning in excess of 9 million plates per month, searching the streets and public parking lots across the country 24 hours per day, seven days per week.. With the LPR 2.0 platform once a wanted vehicle is spotted, we have a 93 percent chance of recovering the vehicle.”

DRN facilitates the physical execution of recovering the vehicle at the time it is located. In real-time, once a vehicle is located, the information is passed along to these repossession management companies who can immediately confirm the status of the order and authorize the repossession of a vehicle. LPR2.0 creates value for all parties involved in recovering “lost” vehicles by reducing the time and expense associated with traditional recovery practices and increasing recovery rates.

DeHart estimates there are more than 500,000 vehicles being driven by consumers that are scheduled for repossession by finance companies at any given time.

Working with its existing repossession management service providers and DRN’s national network of affiliates, Santander officials said the firm is well-positioned to offset portfolio losses by utilizing the LPR technology and services provided by DRN that are rapidly changing the face of the recovery industry.

“As Santander continues to improve its collections and recoveries process, forging this new relationship with Digital Recognition Network will be a critical component of our long-term operational strategy,” said Tom Dundon, Santander CEO. “The strength of both their technology and affiliate network was an integral factor in our decision to move forward with DRN.”

DeHart said his goals for the DRN’s second year serving the repossession industry will be to continue growing the camera vehicle and partnership network, and focus on the buy here-pay here industry to grow its marketshare.

“Once I sit down with a dealer and explain how the system works and how there’s no financial cost to the dealer unless their vehicle is recovered, dealers get it,” DeHart said.

He said dealers could enter as few as 10 vehicles or 500 or more into the DRN database at no cost. Only when a vehicle is recovered will the dealer pay for the service.

“Cost of a recovery ranges from 5-10 percent of Black Book USA’s rough wholesale values,” DeHart said. “The cost is based on a sliding scale determined by the value of the vehicle and the volume of recoveries done with DRN.”