Dealers are cool to cut-rate management systems
 | Reynolds' Ron Lamb: Dealers want "game-changing technology." |
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EDITOR'S NOTE: This story has been corrected to note that Quorum Information Technologies Inc. is offering a management software promotion to new dealer customers that guarantees no price increase in monthly support fees for as long as the dealer uses the system. The original story said the price guarantee was for 10 years.
Dick Luman says he's sticking with Reynolds & Reynolds as his dealer management system vendor no matter how appealing the deals get from smaller players.
Luman, CFO of two stores in the Kansas City area, said he's not drawn to a new four-year price guarantee being offered by DealerTrack Inc. or a lifetime price lock recently rolled out by Quorum Information Technologies Inc. Those deals were announced last month at the National Automobile Dealers Association convention.
Luman is not alone. Despite pricing by DMS upstarts over the years that is 25 to 50 percent lower than Reynolds and ADP Dealer Services, the two giants combined still control more than 80 percent of the DMS market.
Luman is CFO of both Dale Willey Automotive of Lawrence, Kan., and Lotspeich Automotive of Warrensburg, Mo. The General Motors-brand stores sell a combined 150 to 175 new and used vehicles a month.
"We consider ourselves to be top-tier stores, so we need top-tier tools," Luman said of a decision two years ago to renew for five years a DMS contract the stores have with Reynolds & Reynolds.
DMS is the core accounting, business and customer-retention software that dealers use to operate their stores.
Software upgrades
Luman said he has stayed with Reynolds for the critical software, despite years of deal-making by upstarts such as DealerTrack, Quorum, Auto/Mate Inc. and AutoSoft International Inc.
Luman said he stays with Reynolds because of the annual software improvements and the reliability in servicing his account.
He said advances in Reynolds' customer relation management program have helped the stores stay in touch with current customers and court new ones.
The Reynolds system also permits Luman to use one server at its Dale Willey store to manage the business at the Lotspeich store as well.
He said he believed the $8,000 in monthly service fees charged by Reynolds is "fairly priced" for the applications available. "We use the whole system," Luman said.
Reynolds President Ron Lamb said dealers, as survivors of the automotive recession, are looking for DMS that will help them sell more vehicles and products, rather than the least-expensive software. "They want game-changing technology," he said.
Trying for 'wow'
DealerTrack and Quorum are promoting their systems as having nearly comparable capabilities as Reynolds and ADP at a fraction of the price. "We're trying to create some wow in the market," said Mark Allen, Quorum vice president of marketing and sales.
Quorum charges monthly rates 25 to 50 percent lower than the rates Reynolds and ADP customers pay.
As part of its new price-guarantee program, Quorum is offering 10 years of no monthly increases, and no charges for software upgrades or the integration of those applications, Allen said.
Quorum is largely a DMS provider to GM dealers, especially in its native Canada. The company is based in Calgary, Alberta.
Under the program, a dealer also can pay an additional $169 a month subscription for no-charge forms and the automatic replacement after 60 months of the dealer's computer server, Allen said.
DealerTrack, which has slightly less than 10 percent of the DMS market nationally, is offering new DMS customers four years without an increase in monthly support fees.
The company has made waves in the DMS market with its aggressive marketing. A year ago, it offered to pay a dealer's next month DMS bill if it couldn't save the dealer 50 percent or more by switching to DealerTrack from ADP or Reynolds.
You can reach David Barkholz at dbarkholz@crain.com. -- Follow David on 
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