The two largest dealer computer vendors have teamed up with a leading software supplier to the automotive claims industry to create an online parts exchange for car dealers and collision repair facilities.
Computer vendors Automatic Data Processing Inc. of Hoffman Estates, Ill.; Reynolds and Reynolds Co. of Dayton, Ohio; and Chicago software developer CCC Information Services Inc. will form an independent company to develop the electronic parts network.
The goal is to provide lower parts prices and an inexpensive trading process for dealers. Online trading saves the time and money it takes to shop physically for the right parts. And the ADP-Reynolds-CCC venture also has rivals, which could keep trading fees competitive.
ADP and Reynolds are fierce competitors. Each has been working on a proprietary business-to-business Internet parts exchange. But after watching several smaller companies jump into the potentially lucrative online parts trading business ahead of them, the computer giants figured they could offer a better trading system with broader coverage if they joined forces.
'We compete vigorously in other areas, but why not work together in this regard? Everybody wins,' said Mike Martone, president of ADP Dealer Services Group.
The Feds may look
Dealers will be able to access the parts exchange through their dealer management systems or through the Internet when the trading system begins operations this year. ADP estimates that it and Reynolds represent 85 percent of the dealer management systems market, which means the venture is likely to be scrutinized by federal commerce officials.
The two companies already have separate parts locator features that help dealers search for parts in stock. Their locator products will become part of the new company. 'The new company will start with revenue and a customer base,' said Tom Baird, vice president of corporate strategy and development for Reynolds.
The ADP-Reynolds-CCC exchange could be formidable competition for other Internet companies vying for wholesale parts business. Several smaller companies announced launches of similar exchanges during the National Automobile Dealers Association convention in January.
Competitors include Cobalt Group of Seattle, an Internet software company that owns PartVoice.com, the exclusive contract vendor for several manufacturers' national auto parts locators; Parts.com of Sanford, Fla., an Internet company that has megadealer partners as parts wholesalers; and Carstation.com of San Francisco, an online parts exchange that hired former Ford Motor Co. Vice President Ron Goldsberry as chairman.
Shawn Lucas, president, chairman and co-CEO of Parts.com, said he believes his company will be able to offer lower cost trading than the big boys.
And John Holt, CEO of Cobalt Group, believes Cobalt can offer better technology than ADP and Reynolds. 'The parts market is a big market,' Holt said. 'Our job is to be nimble and quick while these guys (Reynolds and ADP) figure out what life is like (working) together.'
Details, including the name of the ADP-Reynolds-CCC operation, are undecided. All three companies will have a stake in the new company, but they refused to disclose specific shares.