Both CDK, of Hoffman Estates, Ill., and Reynolds, of Dayton, Ohio, say the tools add more robust functionality than they previously offered to dealerships. Executives say the acquired businesses will grow because of the tie-ups, and the digital retailing products won't be exclusive to dealerships that use CDK's or Reynolds' DMS platforms.
When you start a company, "you always have an exit in mind," said Gubagoo CEO Brad Title, who will continue to run Gubagoo as its president under an independent brand within Reynolds. "It's a dream come true to have a global leader in this space want to have us be a part of their solution and their vision."
Gubagoo was founded in 2010 as a chat provider and expanded into virtual retailing about four years ago, Title said. Its technology powers Asbury Automotive Group's Click- lane omnichannel retailing tool, which launched last year. Omnichannel retailing refers to a seamless transaction whether buyers are online, at the dealership or using some combination to make a purchase.
Title said joining Reynolds will allow the company to access the resources needed to expand the reach of its retail tool.
Roadster was founded in 2014 and shifted its business model two years later from a consumer-focused company to one that works with dealerships. Its products include Express Storefront, which enables an omnichannel buying experience, as well as chat and lead response tools.
Gubagoo employs 443 people and counts more than 5,200 U.S. dealership customers. Roadster has 158 employees and works with nearly 2,000 dealerships.
Analysts who watch auto retail say CDK's and Reynolds' acquisitions make sense given how online auto sales accelerated during the pandemic, and the DMS companies now can quickly scale the technology as a complement to their product suites instead of building it internally.
"I think it's an example of kind of buying your competition out while you still can afford to, rather than letting them get too big and too powerful," said David Whiston, a U.S. autos equity analyst with Morningstar Research Services in Chicago.
"They need to have digital capabilities, and rather than try to come up with their own systems and spend all that time and money, you can just buy the expertise of one of these other companies and then integrate it," Whiston said.