Six months after crowing about a "fantastic win," CDK Global CEO Brian MacDonald admitted that Hendrick Automotive Group has decided against switching to the company's dealership management system from Reynolds and Reynolds' system.
In May, CDK and Hendrick said Hendrick's 102 stores would move from the Reynolds platform to CDK's by mid-2017.
But during a conference call last week, MacDonald said Hendrick -- the largest privately held dealership group in the U.S. -- "has decided to not move forward with the installation" after all.
MacDonald's remarks suggested that there may have been difficulties in the switchover to the new system, which had already begun. A Hendrick Automotive spokesperson declined to comment, but the company acknowledged in May that "there's going to be things that we didn't anticipate and bumps along the way."
Rivals CDK and Reynolds are the two giants of the DMS market, with a combined market share of 70 percent.
"The reality is that switching DMS providers can be very difficult," MacDonald said during his company's third-quarter earnings call with analysts. "It will be quite a process change and takes time, which is part of the reason that many dealers are hesitant to switch."
MacDonald said the company is still in active dialogue with Hendrick. Hendrick of Charlotte, N.C., ranks No. 6 on Automotive News' list of the top 150 dealership groups based in the U.S., with new-vehicle retail sales of 116,831 units in 2015.
Two Hendrick stores that opened earlier this year -- BMW of Kansas City South in Missouri in April and Rick Hendrick Chrysler-Dodge-Jeep-Ram Duluth in Georgia on May 3 -- were launched with CDK's Drive DMS already installed. But the Hendrick spokesperson wouldn't confirm whether the stores will continue to use CDK's system.
The transition for other Hendrick stores had been slated to begin in June, according to statements in May by Robert Taylor, vice president of information technology for Hendrick Automotive. The process had been expected to continue into April or May of 2017.
At the time, Taylor said cost wasn't a driving factor in the switch. He said Hendrick considered flexibility, integration, data access, availability and partnership during the selection process.
Hendrick had bought the Drive system as well as other CDK applications, including Electronic Repair Order, that build on it, Robert Karp, CDK Global's president for automotive retail, North America, told Automotive News in May. Electronic Repair Order assigns repairs to service technicians automatically and can transfer paperwork among service advisers, technicians and cashiers.
It's not uncommon for large groups to put their stores on a common DMS. Lithia Motors Inc. and Sonic Automotive Inc. use CDK's DMS across all their stores, while Penske Automotive Group Inc. uses Reynolds' offering.
MacDonald said CDK, of Hoffman Estates, Ill., is locked in a competitive landscape. "There is no easy deal," he said Wednesday. "There is no easy win and everybody is fighting for that share."
In the fiscal first quarter that ended Sept. 30, CDK Global's net surged 30 percent to $76.9 million, as revenues rose 7 percent to $550.7 million.