Tekion looks to build a better mousetrap

Jay Vijayan's bad experience at a dealership in Silicon Valley years ago planted the seed for him to co-found startup DMS provider Tekion in 2016.

Vijayan knew the vehicle he wanted, including the price he was willing to pay, but still spent nearly eight hours in a dealership before taking possession. At the time, Vijayan was leading the product development teams at software company Oracle. He later became chief information officer at Tesla, a position he held from 2012 to 2016.

At Tesla, he saw how the company was disrupting traditional norms in the auto industry with its vehicles, its method of connecting with the customer and its over-the-air vehicle software updates.

"The thought process I had, the seed of the original idea of a cloud-native SaaS (Software as a Service) started at Oracle but expanded and validated at Tesla where I could build a platform for Tesla," said Vijayan, Tekion CEO. "I found an opportunity to solve the [DMS] problem comprehensively for the auto industry which, in my view, needed this technology platform."

While a DMS is used across the dealership, it is especially important in the service and parts departments. Service directors and parts managers are constantly searching for a dealer management system that is easy to use, seamlessly connects the adviser to the technician to the parts counter, handles scheduling, allows for the efficient transfer of data between different software used on the drive, expedites the check-in processs and lets customers approve work and pay with no face-to-face contact.

From his perspective at Oracle, VMware, Tesla and elsewhere, Vijayan saw the auto industry as one of the fastest evolving — with electric cars, autonomous vehicles, subscription services and ride-hailing initiatives among other breakthrough ideas shaping the future.

But at the same time, he said, the dealership tech system had not even come close to catching up on the retail side of the business. More than just selling the car, the retail side is where car buyers do their shopping, financing, servicing and maintenance of the vehicle.

Tekion's biggest challenge was breaking into the competitive DMS market where established companies such as Reynolds and Reynolds and CDK Global have been with some dealerships for years. Moving from one DMS provider to another can be an onerous process. "We've converted dealers that were on the same DMS systems for 40 years," Vijayan said. "It's almost impossible to convince them to switch.

"We need to convince dealers why we are different and can make a fundamental difference to their business to help them level the playing field with this technology and have an edge to operate today and in the future."

Vijayan said Tekion's Automotive Retail Cloud software is "super simple and beautiful."

"It's how I feel software should be," he said. "Humans do much of the work, but this technology makes that work simple and easy. If it makes the work more complex, there is really no use for it."

More than 1,000 dealerships have signed on with Tekion and the company says about 50 more join each month. There also are a few hundred dealers on its platform through enterprise programs.

Plus, the investment arms of automotive and manufacturing companies such as BMW i Ventures, Airbus Ventures, General Motors, Hyundai Motor Co. and Mitsubishi-Renault-Nissan Alliance, among others, have financially backed the company. The value of Tekion tripled to $3.5 billion in 2021 from more than $1 billion in 2020, according to a case study by UX Reactor, which worked with the company for 18 months on the development and launch of its Automotive Retail Cloud software.

Steven Jarrell, director of group operations at Walt Massey Auto Group, which has eight stores in the Gulf Coast region of Alabama and Mississippi, had seen demos of Tekion and talked to the company's executives at GM events.

"We had conversations and talked about their vision of one tool or system," Jarrell said. "Most DMS providers spend their time telling you what they can or can't do. The DMS space for us had become so stale. We were looking for something that cut down on our need for multiple vendors.

Tekion "had a vision that intrigued us in the long term."

When Jarrell and Walt Massey Auto Group decided to make the switch, the installation took place at four stores at a time. The lead-up to the rollout took about 45 days with representatives from Tekion behind the scenes. When the designated stores were ready, Tekion representatives spent two weeks in the stores before flipping the switch and then another four weeks on-site after the launch.

"Another deciding factor for us when choosing Tekion is that you get a Tekion Dealer Performance Manager assigned to your stores," Jarrell said. "That has helped us tremendously in staying cutting edge with Tekion. They are constantly updating, as most [dealership management systems] are, but we have access to someone. They have plenty of manpower to assist us."

Tekion assigned four people to assist Massey's service departments and another four to accounting and sales.

More than two years after the switch, Jarrell continues to see the benefits.

"Everyone is logging in and using the tool," he said. "It is by far the best I've ever used. It's intuitive; it operates like navigating around a website. For the younger, newer people who have not been in the business, onboarding them has gotten so much easier. It looks like what a phone looks like and reacts like navigating with a phone."

Russell Wickham, a lead technician at Country II, a Buick-Chevrolet-GMC-Toyota retailer in Pampa, about 60 miles northeast of Amarillo in the Texas Panhandle, has used a number of DMS platforms during his nearly 10 years turning wrenches.

"Tekion is the most user-friendly of those I've used," Wickham said. "It allows me to track my hours, the vehicles I've worked on, and I can easily go back and look at previous repairs on a troublesome vehicle. I can request parts directly from my workstation and communicate with the advisers without having to go hunt them down. It has freed me up to focus more on repairing vehicles and I really appreciate that." Tekion says its growth is happening from word-of-mouth referrals in addition to the efforts of internal and external sales and marketing departments.

"We are soliciting referrals from existing dealer [customers] and get introductions from dealers who have heard customers talking about us at Dealer 20 Group meetings," said Napo Rumteen, Tekion's chief commercial officer. "We are in a fortunate place where a lot of dealers are asking about and aware of Tekion."

He said Tekion's booth at last year's NADA Show was busy with demos and conversations about its Automotive Retail Cloud with 14 percent of new-car franchise retailers receiving demos of the Tekion DMS.

The price tag of the Tekion software is structured as a monthly subscription based on the size and complexity of dealership operations, Rumteen said. One of the base criteria is the number of users and the scope or size of the operation in areas such as sales of vehicles per year.

"We're able to provide the proper pricing based on store size," Rumteen said. "The operation that sells 600 vehicles a year will be different than the operation that sells 400 vehicles a year. It's a subscription model based on the SaaS platform."

He said Tekion does not mark up implementation and has no monthly markups on hardware or integration with third parties.

"The cost is purely based on monthly SaaS subscriptions that dealers appreciate," he said. "It's monthly subscriptions based on store size and the products they subscribe to."

As an example, pricing by legacy DMS providers typically involves a five-year contract in the range of $15,000 to $20,000 per year per rooftop that is renewed every five years, said Rick Wegley, a consultant and trainer for NCM Associates in Kansas City, Mo. Wegley worked in the automotive retail industry for 27 years before he went into dealership training.

Vijayan uses the analogy of a dealership switching to Tekion from a legacy DMS provider being like switching to an iPhone from a Blackberry. Apple, he said, made the iPhone simple to use and relevant to people's lives.

"If you can make software intuitive, change will be easy," he said. "Not a walk in the park but significantly easier. Our technology is being validated every day."