This post is part of a series that will present a brief recap of the major issues highlighted at this year's NADA (National Automobile Dealers Association) Convention and Expo, held February 9-12 in beautiful San Francisco. This is the largest event in the world held specifically for automotive dealers.
The day before the event, accounting and advisory firm Dixon Hughes and industry magazine Ward's Dealer Business hosted a panel titled "Choosing your DMS: What You Need to Know", where the major North American DMS providers answered predefined questions, and even a few from the audience (which put a couple of providers on the spot).
In a nutshell, the DMS scenario in North America looks like this: on the one hand you have Reynolds & Reynolds (recently merged with ex-#3 UCS) and ADP as the clear and historical leaders. On the other you have all other DMS providers, though some seem to be a bit ahead of the pack, like AS/400 based Arkona (now owned by DealerTrack) and ACS (current #1 in customer satisfaction).
Reynolds (some 10,000 clients) and ADP (around for 35 years) are enormous companies with systems that have been around for a while, which is to their advantage regarding stability and acceptance. But their systems are not Windows-based, and there are some database issues that work to their disadvantage.
The newer players, in my opinion, have a hard time differentiating among themselves: it's not very clear why (if) one is better than the other, or how they position themselves against each other.
Major issues discussed in the DMS Panel
Third party access to data.
The issue can be reduced to a simple question: to whom does a dealer's data belong? Some DMS providers are seen as not very cooperative when it comes to letting a dealer give access to data to third parties. DMS firms who do this say they are just protecting data integrity, and reminded that they have paid third-party certification processes in place to address this issue and safeguard dealer data. Pull vs. push strategies were discussed.
Contract terms.
Reynolds and ADP typically have long (60 month and more) term contracts. Some of the newer players have zero month obligations. Of course both sides defend their position on this issue: the former cite client preference for longer terms, better terms, and the "stability" factor; the latter highlight flexibility and confidence in their product that allows them to provide shorter contracts.
Pricing.
Everyone was put on the spot by the panel moderators to cite pricing for a "typical" dealership (200 units a month), though somehow ADP suavely managed to sidestep the issue :).
There is a marked difference between the top two (Reynolds & Reynolds, ADP) which can reach $10,000-15,000 per month , while for the rest it was mostly in the $1500-2000 range. As was expected, all sides cited the justifications and benefits of their pricing models.
DMS contract disputes.
What happens when a dispute between a DMS provider and a dealer reaches an impasse? Some providers cut off the system. Some smaller providers took the opportunity to state that they do not.
Dealers are not taking advantage of their DMS system.
This is an extremely important issue, though it was not addressed at length as it was not really the focus of the panel.
The Dixon-Hughes moderator, Wayne Fortier, stated that dealers on average feel they use about fifty percent of what their DMS has to offer. From our own experience, this problem holds true all around the world, though I'd say dealers probably take even less advantage of their DMS system outside North America.
Reynolds and ADP stressed their training capabilities via CBT (computer based training) and virtual classrooms, plus their armies of people in the field.
The Windows-based DMS providers focused on their ease of use and thus shorter learning curves (which I think is in many ways true, but can be argued both ways), and some mentioned specific measures they take to improve utilization, such as annual or bi-annual visits to each dealership, plus online help tools.
Final comments.
Each DMS supplier was asked to close out the panel with their final thoughts, prompting a marked difference between how the old and the new players feel about their position, and how they position themselves in the marketplace.
As expected, Reynolds and Reynolds and ADP's closing remarks were based on their longevity and stability. "Customers have been with us for 20 years," said ADP's Robert Karp.
Meanwhile, the common thread that ran through the other DMS's final comments was "There are alternatives."
Other NADA Highlight posts:
Tags: DMS, dealer management systems, auto dealer software, ADP, Reynolds and Reynolds, Reynolds, UCS, ACS, Arkona, DealerTrack, Dixon-Hughes, NADA, NADA 2008
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October 2007
