CDK Global Inc. sees "huge untapped potential" in the U.S. auto insurance market as an element of the digital vehicle sales process, an executive told Automotive News.
The Hoffman Estates, Ill., dealership management system giant last week said it plans to acquire Salty Dot Inc., an insurance technology company that allows consumers to purchase auto insurance at the same time they're buying a vehicle. Terms of the deal were not disclosed, though CDK Global COO Joe Tautges said the transaction is expected to close in October.
CDK's play for Salty, founded in 2019 by CEO James Hall, is a "strategic bet" that the company's technology will improve consumers' car-buying experience, Tautges said. And CDK says the U.S. auto insurance market, estimated at $311 billion this year by industry research firm IBISWorld, also is a potential new revenue stream for dealerships.
"It's not just about their size, but it's about the change that's happening in each of these [industries]," Hall told Automotive News. "The digital retailing experience in the auto space, it's changing rapidly. The consumers' expectations are changing rapidly. ... It's the same in the insurance technology space. ... And for us, we think this is just a perfect alignment to partner with CDK and grow this market."