Information technology vendors typically promote the new features and functions of their dealership management systems.
But this year, dealers also will find vendors pitching the price of their systems.
Inc., for instance, was at the recent National Automobile Dealers Assn. convention telling dealers how it can save them 50% on the annual cost of their current system, compared with a DMS from Reynolds and Reynolds Co. or Dealer Services.
If it can’t produce that kind of savings,pledges to pay for one month of the dealership’s existing DMS bill.
Another DMS vendor, DealerStar Inc., was offering dealers six months of free DealerStar customer-relationship management software in exchange for their $200voucher, which all registered dealers received to spend on the exhibition floor.
Some believe that DealerTrack’s new marketing campaign is the start of a broader price war in the marketplace, which will pull in even the two largest DMS vendors, Reynolds and.
“I think we’re already seeing it,” says Mark Allen, vice president- sales and marketing at Quorum Information Technologies Inc.
He sees the current market as price driven. “A lot of those dealers that have survived the horror of the past year are now knuckling down and saying, ‘I need to save money,’ and DMS is a big expense for them.
“In many cases, they are looking to improve the technology at the same time.”
DealerTrack dubs its marketing campaign “Switch & Save.”
But Ralph Paglia, ADP’s director of digital marketing, is not used to seeing this kind of turbulence in the marketplace.
“Usually dealers are pretty loathe to change DMS,” Paglia says. “I think it’s about saving expense. So with this type of recession we’ve been in, you can imagine the amount of dealers looking to cut a big expense like DMS.”
Different system providers have different business models, says Steve Anenen, president of ADP Dealer Services.
“All the competitors are good,” he says. “Some go for price point, and that’s fine. If you can sell volume at a decent price, that trumps all.”
ADP is trying to do just that. Its pitch is that it can lower dealerships’ IT bills by bundling its array of services into a single package.
“The average dealer today uses 12 different vendors just for customer contacts,” Anenen says. “Consolidating vendors can reduce redundant costs.”
DealerTrack’s promotion is targeting dealers with an ADP or Reynolds system so that it is an apples-to-apples comparison, says Rich Holland, DealerTrack vice president. DealerTrack considers itself as a Tier 1 DMS vendor.
The DealerTrack campaign is meant to clarify its position as a low-cost, full-featured provider in the crowded marketplace, Holland says. The vendor also rebranded its system from the former Arkona name to DealerTrack DMS.
tracks seven DMS vendors, but there are at least 13 others active in the market.
AutoSoft International Inc. is a vendor not surprised that price has become an issue.
For the last several years, the Tier 2 vendors have been adding new features and functions into their software, says Charlie Prophet, AutoSoft’s chief operating officer.
“We’ve all had to build functionality into our programs, whether it’s us or DealerTrack or Auto/Mate or whoever, to stand head and shoulders with ADP and Reynolds,” Prophet says. “Now it’s come full circle, back to pricing.”
Reynolds says it continues to take a different path than price.
There have been low-cost providers and that probably will not change any time soon, says Reynolds spokesman Tom Schwartz.
Reynolds is focused on what it calls a total retail solution, he says.
“Our focus has always been on being able to help a dealership maximize their revenue and improve their operations doing more than just providing core applications,” Schwartz says.
DealerTrack has been a leader of low-cost providers and its positioning has not fundamentally changed, Schwartz says.
“Nor has ours in terms of the value we believe we can provide and do provide to the dealers,” Schwartz adds. “So I think it’s a fundamentally different position in the marketplace.”
There are fewer dealerships as a result of auto makers’ consolidation plans and other market forces. But the dealerships that are left are expected to sell more cars. They also tend to be larger and more sophisticated operations.
Many remaining dealerships are well capitalized “and talking about ways to achieve greater efficiencies,” Anenen says. “This plays well for us.”
(Steve Finlay contributed to this story.)