Dealers who do not want the hassle and cost of investing in new computer systems and software are turning to application service providers.
Sonic dealers are using ADP Dealer Services and Reynolds and Reynolds Co., long-time vendors of dealer management systems, as their application service providers. Ultimately, most Sonic dealers will use ADP or Reynolds for their technology needs, Boatman said.
Dealers are recognizing that Web technology and software can make their operations more efficient and bring them closer to customers. Areas that are affected include payroll, accounting, parts inventory, parts invoicing, service, repair order invoicing, and finance and insurance.
But dealers are confused about whether to invest in technology or to use suppliers.
"I believe the ADP model is the future for all dealers — not just the large megadealer groups," Boatman said. As the economy softens, he said, dealers will look for ways to cut costs.
Mike Martone, president of ADP, predicts a significant increase in the number of auto dealers seeking application service providers. ADP, which provides application services for 22 dealerships, is adding 74 more, he said.
Gregory Collins, general manager of electronic markets at Reynolds, said his company has more than 1,000 dealer clients.