What can dealers do?
Reynolds, of Dayton, Ohio, and UCS say each company's dealership management system would be marketed to dealers under the Reynolds brand. The new company will provide technical support for both systems.
Reynolds has 10,000 dealership customers in North America; Universal Computer has 750.
The dealership group that backed away from Reynolds after the UCS bid was fed up with UCS' long contract periods and "completely inflexible" contract terms, the manager says. "They'd rather litigate than negotiate."
So the group is turning to ADP for its software, hardware and services. It's too bad, the manager says, because UCS has good software and superb service technicians.
Carousel Toyota in Glen Mills, Pa., signed a new contract for a Reynolds system the day after the merger announcement "partly because I had committed to it and also because I thought Reynolds would be the surviving entity," Dan Diskin, president of the dealership, said in an e-mail.
But now that more information has come out - and key information is lacking - "I am a little less comfortable with the situation," Diskin said. "But not so uncomfortable that I will try to get out of the new contract. I'm sure that whatever changes happen will not take place overnight. And if the merged company fails to deliver adequate service, I'll look to make a change then."
Dealer principal Joe Catania at Southern Ford in suburban Houston says UCS was inflexible and expensive. But he has seen the vendor change its tactics.
"In the beginning it was an absolutely atrocious relationship," Catania recalls. "It was their way or the highway."
About five or six years ago, "I basically exploded," blasting them for the poor way they treated customers, Catania says.
"After I did that, it seemed like the company made an about-face. We renegotiated my contract. They are now very responsive."
His monthly bill from UCS was slashed from about $20,000 a month to about $7,000 a month, Catania says. "I think they have made a philosophical and cultural change to understanding that the customer does have some rights."
Dan Chernault, CFO of Russell & Smith Auto Group, a Ford-Honda-Mazda dealership group in Houston, uses UCS systems in all three stores and has no plans to switch. "Bob is a very opinionated person, and he expects to get his way," Chernault says. "But I've never found him to be unreasonable."
While the relationship can be difficult at times, Chernault says, he is satisfied with UCS products and his relationship with the vendor. Chernault likes the merger plan because the combined company will be in a better position to make continual improvements to the UCS system.
Consultant and dealer Paul MacDonald tells his clients that if they are considering a Reynolds system, now is the time to act before the merger is completed.
"The question is: Those dealers coming off their current contracts, what's going to be the business model presented to them? That's the unknown," says MacDonald, president of TriMac Automotive Advisory Group and vice president of Bountiful Mazda and Bountiful Lincoln-Mercury in Bountiful, Utah.
The guinea pigs will be those dealers with expiring Reynolds contracts in the next six months to a year, MacDonald says. "It's a great window of opportunity because it still is Reynolds. So now would be the time to contract with them."
You may e-mail Ralph Kisiel at [email protected]