Column: DMS providers in line with dealers as they seek growth

Just as auto dealerships are looking at more acquisitions in 2023, the major technology companies that sell them dealership management systems are contemplating the same.

Automotive News has reported that rising interest rates and the chance of a recession won't prevent another robust year of buy-sell activity among dealerships. In other words, they're going full speed ahead with realignment and consolidation. That's something that DMS providers such as Reynolds and Reynolds, CDK Global and Cox Automotive are surely keeping in mind as they mull new rounds of tech company acquisitions throughout the year.

While vague on details, leaders of all three organizations told Automotive News they were either seeking or contemplating acquisitions that would fit into their current frameworks or boost the services they provide.

"If there is technology we think is going to [give us an advantage], I am always looking at that," Cox Automotive President Steve Rowley said during the NADA Show last month.

Dealers are going for greater scale, efficiency and revenue growth as sales slow and recession fears increase. Retail tech giants want to grow their businesses and diversify their offerings as well. But they are also trying to adapt to retailers' changing needs as they grow, and to consumer demands for smoother (or any) digitization and a quicker car-buying process.

Reynolds announced its first deal of the year Jan. 26, with its acquisition of finance and insurance product provider American Guardian Warranty Services. Who will be next?