Philadelphia Business Journal | Peter Key | August 24, 2012
VINtek Inc. founder, President and CEO Larry Highbloom realizes his company isn’t glamorous.
“Let’s face it, it’s a niche business,” he said. “Sitting around a table, you wouldn’t say, ‘Gosh, I want to be in the vehicle-title business,’ but it’s got a lot of potential given the trend.”
The trend of which Highbloom speaks is the adoption by state departments of motor vehicles of electronic-lien-and-title (ELT) programs.
Eighteen states now have ELT programs and Highbloom expects that number to increase to 20 in two years.
More important to VINtek’s business, the states that have them represent two-thirds of all motor-vehicle registrations in the country.
“It’s all the big states” by population, including Pennsylvania, New York, Ohio, Florida, California and Texas, Highbloom said.
VINtek, whose name is a shortened version of Vehicle Identification Number technology, provides software over the Internet that allows auto lenders to deal with all the states’ ELT programs through their Web browsers. The company also will do all the vehicle title work, in states that don’t have ELT programs as well as ones that do, for lenders that want to outsource that function.
“We will store the physical paper titles for lenders who are still getting those titles from states that have not yet gone electronic,”
Actually, the titles are stored by Berkheimer, a Bethlehem-based transaction-processing company whose software is integrated with VINtek’s software. The integration enables lenders to use VINtek’s software to manage paper auto liens and titles in the same way they manage electronic ones.
“It’s seamless to the lender,” Highbloom said
The move to ELT programs has enabled VINtek to increase its revenue by 10 percent or more in each of the past four years and Highbloom sees that growth continuing for the forseeable future, although he wouldn’t disclose the company’s revenue.
VINtek employs 65 at four locations — its Center City headquarters and operations centers in Troy, Mich.; Las Vegas; and Sacramento, Calif. — and is closing in on its 3,000th customer.
Decision Dynamics Inc., a competitor of Vintek’s that is based in Lexington, S.C., just landed its 2,000th customer, according to its president, Glen Thames. The other two big players in the field are companies that primarily serve auto dealers: Hunt Valley, Md.-based PDP Group Inc. provides them with insurance, and DealerTrack Holdings Inc., a publicly traded company based in Lake Success, N.Y., provides them with Web-based software.
PDP is the oldest of the four, having been in business nearly 40 years according to its website.
VINtek was founded in 1990 by Highbloom in the basement of his home in Bala Cynwyd. An accountant, he was working as a controller at Colonial Nissan in Feasterville, when he saw a way to reduce the risks for the companies that provide financing to auto dealers so the dealers can buy cars from the manufacturers they work with.
VINtek initially provided data over phone lines that enabled its customers, who were lenders, to track VINs so they could better monitor their loans to dealers. It also developed software that enabled lenders to decode VINs so they can tell the makes, models and years of the cars that the numbers represent, as well as software that enables them to value cars.
“We were having some success, but we weren’t really growing the business, and it was our research into the ELT business that really started the company down the path to growth,”
VINtek began researching the ELT business as a result of meetings it was having with officials in the Pennsylvania Department of Transportation about its existing products. The PennDOT people told VINtek they were thinking of implementing an ELT program and asked if VINtek would be interested in developing software for it.
“We looked at it nationwide and decided to pursue it based on our belief in the trend towards paperless processing in state agencies and commercial businesses and even consumers,” Highbloom said.
Prior to ELT, lenders used to get paper titles from DMVs for the vehicles they financed for consumers. They put the titles on shelves in their vaults and sent them to the consumers when the loans on the cars to which they held the titles were paid off.
With ELT, companies such as VINtek get electronic versions of the titles and communicate to lenders that they have them. They also communicate to DMVs with ELTs that there are liens on the titles they have electronic records of.
Letting DMVs know when cars have liens against them is important for two reasons. One is that, if someone defaults on an auto loan, having the fact that there’s a lien on the car recorded in the DMV where the car is registered enables the lender to legally reposses the car. The other is that if someone tries to sell a car that he hasn’t paid off the loan on, the buyer can find out from the state where the car is registered that there’s a lien on the vehicle.
Lenders don’t have to use VINtek or its competitors to communicate with DMVs with ELT programs. They can develop, or pay to have developed, software that enables the communication.
The problem is that not all ELT programs are alike. As a result, they’d have to write multiple versions of the software — or one version with multiple interfaces — to communicate with each one.
VINtek provides them with software that allows them to communicate with all ELT programs through a Web browser.
“We’re talking to all the DMVs across the country that are doing this and we standardize the data so a lender sees one screen and is using one software app delivered over the Internet no matter what state … is issuing the title,” Highbloom said.