LAFAYETTE, Ind. — For a subprime dealer, going to auction can be particularly challenging. Not only does he need to meet his inventory needs, but the vehicles he buys also must fall within specific lender requirements.

For instance, Shawn Foster, president and owner of dealership Car Nation in Lafayette, Ind., generally deals with older, higher mileage inventory. And the non-prime lenders he works with offer guidelines as to what type of inventory they will approve for his subprime customers.

So not only does Foster need to keep in mind what will sell well in his market, but also what his lenders will approve. And if he hires a wholesaler to help his business, he needs to ensure this individual is properly prepared.

And as volumes are down at auctions, it's very important he avoids costly mistakes in what he is buying for his lot.

Recognizing this challenge to his business and for other subprime dealers, Foster took the step of founding Vision Advantage, which is a parent company to new auction tool called bidzpin that caters specifically to the subprime dealer.

Bidzpin, a mobile application currently available for the iPhone, iPad and iTouch, provides a system where dealers can make calculations involving book values, amounts financed, lender fees and more with what Foster calls an "incredibly simple" program.

"This product allows you as a dealer to put every decision you would have made at the auction into your phone, and you don't have to worry anymore when you send the buyer off with your checkbook and a spending limit," Foster told SubPrime Auto Finance News in an interview this week.

Foster also noted the application will be available for other mobile platforms, such as Blackberry and Android, as well, in the near future.

"Dealers around the country have buyers go and buy cars, and the buyers then hand buy tickets to the finance manager, and they start placing them with the different lenders that they use. And the lenders will say, ‘You are good on this one, and this one, but this one doesn't fit.' All because the books that the dealer was using are not the same ones that the bank was using," Foster said.

With bidzpin, a dealer can match the particular value book with the lender that uses it, and consequently, will potentially have a better chance at correctly calculating gross profits.

"We all stand in the auction lanes, and we used one book, and we go sell the car to a bank that uses another book. Bidzpin is the only product that can tell you all about a car or auction product and how it is going to work for your dealership before you buy it," Foster claimed, stressing what he sees as one of the most important perks of his new product.

He also went on to highlight that the total amount of calculations a subprime dealer or buyer has to do while standing in the auction lanes to decide for sure whether or not a car will suit his dealership is nearly "impossible."

"It (calculations needed to decide when a unit suits a dealership) is not possible. When I went and developed this product, my programmer has a doctorate in math, but when I showed him all the calculations that are necessary to figure a deal he looked at me and asked, ‘Are you kidding me?' Nobody has the ability to make those decisions in a timely fashion by themselves," Foster asserted.

A Dealer's Touch

Foster, who notes he "grew up" in the automotive world, says this product is particularly helpful because it was designed "for dealers, by dealers."

Though he says his father, who was also a dealer, sent him to college so that he would not end up in the "car world," there was no getting away from it for Foster.

And now, after serving in roles such as general manager, sales manager and finance manager before owning and running his own dealership – which serves 60 percent subprime customers, 30 percent prime and the rest "a mix of everything" – today, Foster says he designed this product based on a lifetime of experience.

After opening up his first dealership in 2003, Foster expanded his business to include a second 15,000 square-foot facility, opening about 90 days before the market crashed in 2008. Foster explained that this new and bigger Lafayette, Ind., store was supposed to be "the one."

Unfortunately, due to the economic downturn, he was forced to close the new store in 2009, a curve in the road that Foster says paved the way for the bidzpin product.

"I had to cut half my staff and cut my inventory; we were blindsided, but because we had to reduce inventory by basically 65 percent, I had to start a process where we couldn't afford to speculate on inventory.  What I mean by that is I couldn't afford to buy a single car that didn't work for my dealership," Foster said.

After the downsizing, Foster said picking the "perfect" units at auctions became even more crucial to his remaining store's success.

"That started a process of trying to make sure that every car we bought was exactly right for the lenders that we used. After two years of using that philosophy, I struggled dramatically but I did save the store," Foster continued.

"Then, in March of 2011, when I was on my way home from the auction one day, frustrated because I couldn't get any cars bought using this process -you know, with excel spreadsheets and the like — and I am looking at my phone and just like a lightning bolt out of the sky, it hit me.

"I realized that everything we had been doing, this question we had been asking in subprime all our lives, ‘If you buy that car on the auction lot today for 10 grand, what does that really mean to my bottom line' wasn't necessary. And that's when the idea for bidzpin was formed."

How Does Bidzpin Work?

"It is so simple it's disgusting," Foster said laughingly.

A dealer need only download the app for 99 cents at the Apple app store then go to www.bidzpin .com to start sharing what Foster calls a dealership's DNA (Dealers Known Ability) to get started with the program.

For Foster, a dealer's "DNA" includes information regarding a particular store's inventory, customers, lenders and lenders' books.

After gathering the information particular to each different dealership, the app — which is set up with a bid wheel as well as a traffic-signal like alert system and costs $395 a month for used-car dealers and $495 for new-car dealers — will then "do its job" said Foster. 

Further explaining his new product, Foster said, "We preset a dealer's genetic makeup into the phone, his lenders, products, etc. The lenders are then listed at the top of the screen, coded in green, yellow or red.

"The bid on the bid wheel is the bid at the auction, and after setting a bid, the boxes up top will show you in color if the car fits and if you will make money. Basically, green means go, yellow means think twice and red means no way," he continued. "And then, when you turn the bid wheel, the gross profits that are displayed with each lender change, and if you touch the lender box up top it will tell you the deal structure details of how you are going to make the profit — book value, amount financed etc.

"Basically, I put the dealers' lenders into the phone, and it matches the car to the dealership, along with the bank they use," Foster added.

Moreover, when three of the lender boxes are green and this number falls down to two, the traffic-light like icon will go from green to yellow, telling the buyer to put his hand down. 

Also, when the bid increases, and a dealer no longer has any options for lenders that would allow him or her to reach the  target profit for their dealership, it turns from yellow to red.

"Literally, my 17 year old son can go to the auction and as long as the car has four wheels and it hasn't been wrecked, he can buy cars that are matched exactly to my dealership," said Foster.

Tangible Results, A "Mindset Change"

Lastly, Foster told SubPrime Auto Finance News that with an average retail price of a unit on his lot sitting at $11,000, after using bidzpin last month, his dealership saw an average gross profit of $3,800 per unit.

"I also cut my inventory in half. When every car on your lot fits, you just don't need as many," Foster surmised.

He also went on to explain that the product will make sense to dealers, "if they change one mindset."

"There are a ton of products out there, but they teach a dealer to go out and buy cars and sell them for the cheapest price possible; my product does just the opposite.

"My product teaches dealers to buy cars and sell them at the most profit you can. What makes more sense?" Foster asked. "This product will change the industry if we are willing to change our mindset as to why and how we buy cars.

"We should not be buying cars to sell them as cheap as possible or cheaper than the next dealer. That is a program that sooner or later will put all of us out of business. You should be buying to sell them for as much profit as possible," he concluded. 

For more information, see www.bidzpin.com.