Today's towing companies are being driven toward new types of diversification by a variety of factors.  This diversification sometimes includes moving into the asset recovery industry and that can spell trouble for those who think it is as simple as adding new customers for their existing fleets.

While it is true that the equipment is sometimes the same it is also true that repossession is a completely different business from towing.

It is no secret that the economy has had an impact on most industries and the towing and recovery industry is no different than any other. The towing industry depends on vehicles being on the road. Whether it is a passenger car or a tractor trailer hauling freight, vehicles must be in motion for most towing needs to be created. The more miles driven by these vehicles, the greater the likelihood there will be a need for towing services. The other contributing component is the age of these vehicles. It is generally true that the older the vehicle, the fewer miles it will have to travel on average before a towing service is needed. In our current economy there is a weakened demand for products and as sales decline for goods in stores, trucks are needed less frequently. This reduced trucking traffic slows the need for heavy duty towing. The economic decline also reduces our consumer need to drive to shopping centers while increased unemployment means less commuting to work as well as other driving reductions such as vacation, dining out and activities that require additional expense for individuals and families. The overall average age of vehicles on the road also decreased in recent years due to our past high flying economy, zero percent financing, low unemployment and government incentives. Most of these functions have been curtailed now but the impact takes time to reverse. The fact that so much of the towing industry is made up of companies dependent upon light duty towing such as passenger vehicles has also been greatly impacting financially as manufacturers, insurers and many other programs have centralized the purchasing of towing services. These forces and the consolidators of the services have commoditized towing to the point that a large percentage of towing done today is done by towing companies who still believe it is acceptable to run less than profitable calls to maintain cash flows. Because price decreases have been so successful for the consolidators, they have found themselves in a difficult position by reducing their own profits to maintain their client bases or grow. Now they are looking for new areas to consolidate and they are looking squarely at two areas involving tow trucks that both appear to have large margins: police towing contracts and the asset recovery industry. Make no mistake, movement by any of these groups into either of these areas will be detrimental to those who perform service in these industry segments.

Many may wonder why repossession is a target industry for these groups and for towing companies looking to diversify. The answer is simple on both counts… money. The motor clubs and the towing companies are looking for ways to expand their businesses and the ‘per tow’ rate is often several hundred dollars in asset recovery which is very appealing to both groups. When this rate ‘per tow’ is compared to the current average motor club paid rate of thirty five dollars, there seems to be an enormous profit margin in repossession. When this perceived windfall is coupled with what many outsiders see as ‘simple’ work, the attraction is like a magnet. The towing industry is a bit of an exception to this but certainly the rates are what is most attractive to that group. The clubs on the other hand look at the rates they currently pay ‘per tow’ and find an easy model to go after lenders and other clients with reduced rates while paying their existing service providers more money and still making greater profits per job. In the end, it boils down to the fact that both of these groups are capable of the work. However, it will take a solid understanding of the differences in the industries and any effort by a consolidator needs to include some understanding of the costs involved (including the intangible elements) in order to be respectful of what is required to maintain the service level the clients expect. Both parties need to clearly understand the many elements required in the repossession process. Often many details are overlooked including the varying legal procedures, training, and the techniques involved in repossession. Skip tracing is not a part of the towing process. Door knocks are not a service offered in towing. There is no issue with misrepresentation in towing. There really is no considerable investigative work, stealth, communication skills, constant client updating, planning and waiting for an opportunity or many other factors that are a daily part of the repossession industry. This is not to say that towing is simple. Far from it. But, the differences are significant. There are commonalities in that both groups have occasion to deal with police departments and both have times where towing is done without the vehicle owner’s knowledge or consent. The similarities are far outweighed by the differences though and adequate training is a serious requirement before towing companies proceed with involvement in the repossession industry. At the same time, it should be noted that not all repossession is involuntary and often vehicles do not have to be tracked down and acquired through special investigative research and stealth tactics. Further, repossession is not stealing and television shows that misrepresent the industry as allowing persons to earn a living through a constant parade of excitement, adrenaline rushes and what often amounts to vehicle theft are doing a disservice to anyone who views them as anything more than staged entertainment. The towing industry suffers from adverse media coverage that is almost always one sided much like the asset recovery industry suffers from stereotypes that make everyone in the industry appear to be tattooed freaks who get lucky and find vehicles they can take while causing commotion and creating confrontation for a camera crew. There is nothing wrong with tattoos, or even the fact that commotion or confrontation occurs, but it is obvious the editing room for the televised version of the industry is staffed by persons whose job is to entertain rather than provide a realistic viewpoint. It is amazing that this occurs yet the shows are still called ‘reality television’.

The word recovery probably does not factor into the confusion much but it should be noted that the asset recovery professional is recovering an asset from a debtor on behalf of a client who actually owns the asset while a towing and recovery professional is recovering an asset for his client after what is usually at least a mishap and often is a catastrophe. No matter the definition of recovery in these two worlds, the real similarity ends with the fact that there is a customer involved. The ability to do either function well does not pre-qualify a company to be able to do the other.

The most common misconception is the belief that if a company has tow trucks they can do work in either industry. This viewpoint has caused more than one company in both industries to attempt to take on the other industry. In truth, other than some private property impound tow trucks, the trucks used in towing and recovery are not well suited for repossession. The tow trucks are often outfitted to support many other functions such as the towing version of recovery. In addition to having been designed with other functions in mind, most tow trucks have considerably more ‘gear’ than the average repossession truck. While both may share something as simple as ‘Go Jacks’, the tow truck also likely has dollies which are generally not practical in repossession, at least not at the point of repossession. Trucks utilized specifically for towing also often have extras such as jacks, brooms, buckets and all manner of ‘gear’ not needed for repossession. There is also the standard wheel-lift wrecker in the towing industry that requires backing up to the vehicle, getting out, attaching ‘spoons’, straps and safety chains. This equipment and its use is very different from the video camera enabled self-loaders in the repossession industry. These are designed to allow the agent to stay in truck while performing his duties or at least to allow him to hook up to the vehicle and take it elsewhere to add the safety equipment.

It is not common for a tow truck operator to have the training required of an asset recovery agent and very few towing operators hold CARS (Certified Asset Recovery Specialist) certification. This is similar to the opposite comparison which would certainly indicate that very few repossession companies send their agents to be TRAA (Towing and Recovery Association of America) certified or to take training from Wreckmaster. These industry standard training and certification programs in both industries are completely foreign to those in the other industry.

In addition to the significant differences in training and certification in the two industries, the skills required of their operators are equally different. There are similarities in having to be able to route oneself around a community and perform the general operation of a tow truck but the commonalities end here. The towing operator has to be very timely with contracts that often require response times of fifteen minutes or less. The asset recovery agent on the other hand has to be timely in In addition to the significant differences in training and certification in the two industries, the skills required of their operators are equally different. acquisition of a vehicle once it is located but can take time in making a careful search for the target car, truck, boat, motorcycle, etc. The towing operator often has to deal with tragedy at accident scenes and must be able to perform complex recovery work while the asset recovery specialist must know how to find debtors whose only goal is to hide from the “repo man”. This requires research, communication, active searching and often equates to long hours without any ‘towing’. This work is also part of the same job that generally has a higher ‘per tow’ rate. All in all, there are many differences in the groups of people driving repossession trucks and those driving tow trucks. From laws about self help repossession to breaches of peace, the asset recovery industry has special requirements to follow. The clients are also different. Towing companies work with repair shops, dealerships, trucking companies, motor clubs, etc. The repossession companies deal with car lots and some similar groups but the bulk of the business comes from lenders. These banking folks create a whole new dynamic in how to deal with customers from what the average towing company is used to.

The look of the trucks and the facilities of repossession companies and of towing companies are also usually different. While the towing company often earns business by advertising their name on their trucks in bright colors and creating a brand, the asset recovery group is just as likely to have their name displayed in tone on tone on their trucks to keep it from being seen. The towing equipment portion of the truck is often hidden in the repossessor’s world. Towing companies generally have their name on a sign outside of their facilities and asset recovery companies generally do not because they do not want the debtor’s to visit them. It is common for both parties to have an impound lot but the way they present themselves or advertise is very different and this is usually for good reason.

In short, there are many differences, and some similarities, between those in the towing profession and those in repossession. It is possible for either party to cross over and do the work on the other side but there are many things to consider in the process.

It is not as simple as starting to take calls for the other business type. First, the company owner must make a conscious decision to get into the other business and then it is important that he send the people in the operation responsible for the conversion to training and/or trade events to learn about the new business. It is equally important, if not more so, that the vehicle operators become certified in their new industry. There are companies who are successful in both functions and they can be a good guide for newcomers hoping to make a move into a new area. For those planning to diversify, just take your time, don’t oversimplify the new industry in your mind and engage a quality consultant to assist you in your efforts.

In the end, we do all have tow trucks and we should stand united despite the differences in our work.