Solera eyes growth in dealership tech

Solera is not a household name in the auto retail technology world.

It aims to change that.

Solera, of Westlake, Texas, wants to introduce the dealership customers it gained in its 2021 acquisition of DealerSocket — with products such as dealership management and customer relationship management systems, websites and inventory management tools — to its existing technology suite. Those products are focused on vehicle repair, fleet management and insurance claims processing, said Alberto Cairo, managing director of vehicle and fleet solutions for Solera.

DealerSocket was "really a great acquisition because we felt that the product portfolios were extremely complementary," Cairo told Automotive News in March. "The two sets combine extremely well to provide all of the components that we believe dealers need to run their business effectively, from sales to marketing, fixed ops and internal operations."

Solera plans to differentiate itself from rivals through the creation of Solera Auto Finance. It offers used-vehicle loans as a "captive-like" lender for its dealer customers.

The program started this year in seven states. As of early June, it was operating in 25 states, largely in the Southeast and on the East Coast, with the goal of being nationwide by the end of 2022, a spokeswoman said via email. The company anticipates that about 900 dealerships will sign on with Solera Auto Finance by the end of June, she said.

Dealerships won't need to be existing Solera customers to use the financing tool, though retailers who use other Solera products will notice workflow benefits, Cairo said. And participating dealers who send loans through Solera Auto Finance will qualify for credits that can offset the cost of a DMS — "being able to basically get a DMS for free, depending on volume," he added.

Solera inherited DealerSocket's DMS for independent dealerships and the Auto/Mate system for franchised stores that DealerSocket had acquired in February 2020.

Solera and DealerSocket both were portfolio companies of private equity firm Vista Equity Partners before Solera acquired DealerSocket. Vista bought a stake in DealerSocket in 2014, and according to Vista's website, a Vista fund took Solera private in 2016.

In June 2021, Solera acquired DealerSocket and Omnitracs, which provides fleet management software. It added Spireon, which provides aftermarket telematics tools, in March.

Bloomberg last year reported that Vista Equity Partners was considering taking Solera public through a special-purpose acquisition company before the deal was halted. The Solera spokeswoman said via email this month that "Solera has a longstanding policy not to comment on market rumors or speculation."

Solera eliminated an unspecified number of positions following its acquisition of DealerSocket.

The spokeswoman said that "there was a period of restructuring and changes within the organization. While there were positions that were consolidated, there were also many more created since that acquisition."

The company says it has more than 7,000 employees today. Solera did not break out the number of employees in its dealership technology business.

Cairo said Solera has more than $2.5 billion in revenue, though the company did not break out revenue for the dealership business.

Solera says it has more than 20,000 franchised and independent dealership customers, but it did not say what percentage are franchised stores.

When DealerSocket acquired Auto/Mate more than two years ago, the combined company had more than 9,000 dealership customers and pitched itself as a one-stop shop for dealership software.

Cairo said the one-stop approach is continuing under Solera. The company is having conversations with customers about new products, such as those focused on mechanical repair for dealership groups that have collision operations, he said.

"Solera was an unknown entity," Cairo said.

"The scale and capabilities that we can bring to engineering, product, deployment environments are very different from those that smaller companies can bring to bear," he added. "Once you get through that discussion, it ends up being a very positive conversation with customers because they recognize that the product they loved and still love is backed by a much bigger enterprise."

Since customer overlap initially was low between Solera and DealerSocket, he added, "there's a lot of cross-sell opportunity, a lot of upsell opportunity."

The company brands its tools with both the Solera name and the individual product name, though that will evolve over time so that all of its products are identified with Solera, he said.

Cairo said Solera has a full product lineup in its dealership business but that the company is "always open to evaluating new things that can add value."

"The dealer segment is a focal point for us," he said.