With DM services, look before you leap

Donna Harris covers finance & insurance and retail for Automotive News.
Mark Pelafos, COO of Worden Martin, a group of six dealerships in Champaign, Ill., had to hire a consultant to help him shop for the new dealer management system he just bought. He was with Reynolds and Reynolds for 30 years and shopping for computers has become just too complicated.

Years ago the choice was easy: You went with ADP Dealer Services or you went with Reynolds. But now a host of other smaller vendors entered the fray and the big boys are defending their turf.

Pelafos is like a few other dealers I bumped into on the show floor. They want to save money and maximize this jump they're making into the Internet Age. But these days they feel they've got to go shopping with a consultant or a lawyer.

Two computer consultants I just took to breakfast said dealers could easily lose some big bucks in the switch to another computer vendor.

For example, a vendor might offer an enticing "no payments for the first six months." Better look before you leap, because those vendors can raise future fees to offset the price break.

Your current vendor contract also may make it difficult -- and costly -- to convert to a new supplier. Some contracts have automatic renewal clauses that extend your term unless you speak up.

Your contract might even forbid cancellation. So even if you lose your franchise, you're still on the hook for maintenance fees.

Clearly, you can't leap blindly from vendor to vendor.