A fledgling technology company with financial backing from a group of auto dealers is in the running to provide Lithia Motors Inc.'s next-generation dealer management system.
NeoSynergy LLC, of Wellington, Fla., is competing with incumbent ADP Dealer Services and two other companies to develop a Web-based system for managing Lithia's daily operations, customer-retention efforts and used-car inventory.
If NeoSynergy were to replace ADP as Lithia's system provider, it would rock the $2.5 billion dealer management system market, which is dominated by ADP and Reynolds and Reynolds Co.
ADP and Reynolds together control about 80 percent of the U.S. market.
Lithia, the nation's eighth-largest dealership group, won't install a new system for at least four years because of its current contract with ADP, says Lithia CFO Jeffrey DeBoer.
ADP provides the dealer management system to all of Lithia's 87 dealerships, DeBoer says.
But NeoSynergy says it is on the verge of signing a deal with Lithia to provide a next-generation dealer management system and expects the deal to be completed this month. Lithia won't go that far, saying it has not made its decision.
"We're talking to ADP as well to get what we need, and two other companies," DeBoer says. "I don't want to mention names because we're still in discussions with all four right now."
ADP, of Hoffman Estates, Ill., declined to comment on NeoSynergy.
"ADP values its relationship as Lithia's primary DMS provider," Kevin Henahan, senior vice president of marketing at ADP, said in a written statement. "We strive to provide high-value products, service and support to further strengthen our partnership today and in the years to come."