The United Auto Group, the nation’s second-largest automotive retailer, has chosen Reynolds and Reynolds Co. to be its sole dealer management system (DMS) provider.

The deal will be announced later this week in a press release, according to a UAG spokesman. Reynolds officials, meanwhile, declined to comment on the deal.

In an internal memo obtained by Ward’s, Roger Penske Jr. tells UAG employees that the company is working on a transition plan that should take 12-18 months to complete.

UAG operates 138 franchises in the U.S. Company officials will not say how many dealerships need to migrate to the Reynolds system. All of the stores using systems other than Reynolds will migrate to the Reynolds’ ERA system.

Although the DMS market is known for its competitiveness, specifically between the two information technology giants, Reynolds and Automatic Data Processing Inc., the competition this year has reached new levels, as some of the large public retail groups look to consolidate all of their IT systems with one vendor.

Ward’s reported in January that the Sonic Automotive Group and two other major retail groups were preparing to consolidate all of their DMS systems with one vendor. (See related story: A Shoot-out at the IT Corral?)

As it turns out, UAG was the first to make the move. The contract is a big win for Reynolds and could provide an edge in negotiations with other automotive dealer groups.

Many dealer groups have grown bigger by acquisition in recent years and, as a result, find their IT needs being serviced by multiple vendors. In an effort to reduce the complexity of trying to get several systems to work together, dealer groups are beginning to consolidate their activity with one vendor.

Using one vendor also can reap significant financial savings for dealer groups.