Pub. 17 2018-2019 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E N O . 2 , 2 0 1 8 18 new jersey auto retailer Dealer Technology 2018 – Not Just DMS D ealers will fondly remember the old days when they thought about technology every five years or so when their DMS contract came to term. When a dealer thinks about technology NOW, the optimal approach had better be somewhat more holistic, as most stores utilize ten or more third party vendors. In larger groups, there may as many as thirty or more vendors in play, with monthly costs that can far exceed the DMS billing. Unfortunately, duplication and waste are similarly common, as dealers add new services without a thorough examination of where they fit into the bigger picture or taking the time to cancel an old provider that is now superfluous. Similar functions may be part of a DMS system from one of the larger DMS vendors and the new third-party provider may add little or no value. Many of these contracts also have provisions that call for auto-renewal and dealers, who may have ceased using the product, continue to pay for these “zombie” solutions. Reynolds & Reynolds and CDK Global, as the vendors who own the most market share in the DMS space, have a vested interest in making sure dealers see them as the source for all their needs. When that’s not possible, they at least want a piece of the action and so “integration fees” are the result. These fees, assessed on “certified” vendors to access the data housed in the dealer’s DMS, have the net effect of making competitor’s products more expensive and less attractive. Many dealers are quite vocal in their opposition to what they see as an infringement on their use of their own data, but since there is quite a bit of ongoing litigation in this arena, dealers must, at least for the foreseeable future, consider these costs when making decisions. (Not all DMS vendors are currently charging these fees but it has historically been the case that plans that produce more revenue for DMS vendors have a way of becoming the industry standard). Fewer vendors? A reasonable plan would seem to be to reduce the number of providers in your stores. In many instances, you may find that companies you are already using have additional capabilities. Bundling functions among fewer providers augments your lever- age and potentially reduces the integration fees that you will be assessed. This is a worthwhile endeavor but it may prove difficult in larger organizations where General Managers have more au- tonomy regarding their individual stores. If a dealership has ten to fifteen vendors and can get down to five or six, they can expect better efficiency and lower costs. The major areas of concentration, in addition to the DMS (and lead providers), are: • Front End: CRM, Desking, F& I Menus, Call Management, Equity Mining & Engagement, Texting and Inventory Solu- tions. • Service: Texting, Online Appointments, Vehicle Mobile Write-up, Multi-Point Inspection and Payment. Note that many OEMs recommend and, in some cases even sub- sidize, specific service applications so dealers should be sure to take advantage of any synergies available. BY PAUL GILLRIE