In letters, Reynolds told dealers it will end support for the LP1000r ERA server on Dec. 31.
The dealers with the server are on month-to-month contracts, but Reynolds is asking at least some of them to sign long-term contracts of as long as seven years with their new servers. Some dealers would prefer to stick with the server they have. Others question the cost of a new server.
"They are trying to put me in a long-term contract, and that's what I don't want to do," says Patricia Sofia, office manager at Becker Motors Inc., a Lincoln-Mercury dealership in Canandaigua, N.Y.
For some dealers, the letter revived memories of a dispute between scores of dealers and Universal Computer Systems Inc. over replacing aging servers. Universal Computer Systems purchased Reynolds in 2006.
Reynolds spokesman Tom Schwartz said the company is working with a small number of customers on a server upgrade. Reynolds has an estimated 6,000 servers in U.S. dealerships.
The group of servers in question is no more than 2.5 percent of the entire server base that Reynolds supports in the field, Schwartz says. That implies about 150 servers.
"This has been an ongoing practice at Reynolds for decades — server life cycle management," Schwartz says. "We're approaching this set of upgrades the same way Reynolds has always done business."
Timing: Reynolds says the old servers can't support new software. Some dealers would rather not spend the cash in a weak economy.
Length: Reynolds wants up to 7-year contracts, replacing monthly contracts.
Cost: Reynolds has quoted prices as high as $40,000. Similar servers can cost less than $5,000.
Reynolds quoted one dealer just under $40,000 for a new server, says MacDonald, founder of the TriMac Automotive Advisory Group. A Dell server costs about $3,600 to $5,000, he says.
"The dealer's saying, 'My business is terrible right now, and I don't want to get in a commitment for a long-term relationship, especially with the changing market,' " MacDonald says.
Bob Armstrong, business office manager at Patriot Buick-Pontiac-GMC in Williamsburg, Va., also must replace the aging Reynolds server.
Reynolds is asking about $5,000 for the new server, Armstrong says. "They are throwing in some incentives to continue to stay with Reynolds," he says. "All in all, we're OK with this."
The servers in question are 6 to 14 years old and will not support new software from Reynolds, Schwartz says. Reynolds is offering options, he says, so customers can make the transition to a new server seamlessly.
"This has no connection to the old UCS server arbitration issue," Schwartz says. "Different circumstances: Apples and oranges."