The coronavirus pandemic continued into a second year. A shortage of microchips led to a shortage of new vehicles on dealership lots. Some of the nation's largest dealership groups became even larger through an unprecedented surge in buy-sell activity.
Each of those events that came to define auto retail in 2021 also played a role in the digital transformation underway inside dealerships. The arrival of the pandemic last year sped up dealerships' shift toward e-commerce, and the industry collectively dipped its toes into the water to try out digital sales tools, remote e-signing, home deliveries and concierge services.
The pandemic's continued presence has forced the industry to get creative to sell cars, as has the dearth of new vehicles. Digital retailing is maturing beyond the placement of a checkout button on a website into a broader examination of a dealership's processes, with a greater emphasis on omnichannel capabilities, which are aimed at enabling seamless transition between transacting online, in person or in some combination of the two.
Automakers, dealership groups and third-party software vendors have all, to one degree or another, placed bets on that evolution continuing as they roll out their own online sales platforms or buy up others. It promises to be another interesting ride in the year ahead.
As this year winds to a close, here are our picks for the top retail technology stories of 2021.
1. The transition toward electric vehicles, state legislative efforts to allow direct vehicle sales and increased momentum around online sales are putting pressure on the franchised dealership model.
2. The decades-old duopoly in the dealership management system market — made up of CDK Global Inc. and Reynolds and Reynolds Co. — may be cracking as auto retailers have more choices of providers.
3. The tax evasion and wire fraud case against former Reynolds and Reynolds CEO Bob Brockman continued, culminating this year in a hearing in November to help determine whether Brockman is competent to stand trial.
4. Incidents of ransomware and other cyberattacks escalated, bringing more attention to dealerships' cybersecurity practices and making it harder to obtain cyber insurance coverage.
5. Amid an unprecedented wave of buy-sell activity, the nation's public dealership groups developed and launched their own digital retailing platforms that they say will allow them to reach into more markets.
6. CDK Global and Reynolds and Reynolds bought digital retailing providers Roadster and Gubagoo, respectively — a big bet by the DMS giants on the continued importance of online vehicle sales.
7. CarMax, the nation's largest used-vehicle retailer, acquired all of vehicle listings company Edmunds in a deal valued at $404 million.
8. The Federal Trade Commission updated the Safeguards Rule, which outlines how auto dealerships and other financial institutions must protect consumer data.
9. Colorado and Virginia followed California's lead in enacting consumer privacy laws.
10. After the pandemic pushed more vehicle transactions online, some dealerships began to explore how to bridge the online-to-in-store sales process, known as omnichannel retail.
This is our last Retail Technology newsletter of 2021. Thanks for reading. Have a happy holiday, and we'll see you next year.