The Consolidation of the Automotive Industry Providers – And Soon Only Six

The Situation: Over the past year or so, at least 5 major automotive dealer systems and services providers have systematically acquired smaller companies with emerging technologies. These “buying binges” have formed large, consolidated systems platforms with the capability to provide virtually all the tools, software and support a dealership operation needs.

Who are now and will be the “Systems & Services Survivors?”

ADP Dealer Services ADP bought Cobalt in late 2010. The company has made a number of “quiet” acquisitions almost every year. This past year –vAuto, Kelley, HomeNet and now VinSolutions. has been making small acquisitions to fuel “internal growth.”  They’re now on to Social Media.
DealerTrack eCarlist moves DealerTrack further down the retailing chain to dealer inventory management and an interface with other partnerships. AAX got them into used vehicle inventory management.
Dominion Dealer Services They have been quiet since NADA; could be having issues or is just quietly stalking for opportunities.
Reynolds & Reynolds ReyRey bought CallBright and Who’s Calling a while ago; The UCS merger brought new “life, leadership, and the pursuit of DMS happiness” to the company.

What does this mean to dealers?

Automotive News thinks the most recent buying binges will “make it easier for online (dealer) sales.” Companies like have sought to provide dealers with all the tools they need to market and sell vehicles including video production resources for their web sites. Things may not be as “easy” as the buyers may think.

But what does this really mean?

  1. One “Does-It-All” provider for a dealer or dealership group;
  2. Multiple sales, training, and consultants from one of these providers in the dealership working right alongside showroom and Internet sales teams;
  3. Five or six consolidated technology-based systems companies dominating the automotive dealer services market;
  4. Higher systems cost for dealers, justified by more services, great support, and whiz bang systems upgrades;
  5. The gradual demise, absorption, and hopefully acquisition of small systems and services companies over the next two years;
  6. There will be headaches and heartburn for both dealers and these consolidated providers as they spend more money and commit more people to the process of integrating the systems technology, organizations, and egos into each dealership;
  7. Many of these acquired companies “worked” because the founders and a team of exceptionally hardworking, bright people delivered what dealers needed— solutions, sales successes, and 24/7 support.  It will be virtually impossible to retain this consultative, participative, and supportive “touch” that these teams and their inspired founders provided;
  8. The corporate “mothers,” “bean counters”, and either the VCs or the banks that put up the “cash” to buy these companies will soon by demanding financial and payback results.  Where did all this money to buy come from anyway?  How much was it?
  9. Where are Microsoft, Oracle, IBM, SAP, Google, and even eBay in all of this? Is the automotive industry delivery channel finally appealing to the major technology companies? Will one of them be buying DealerTrack one of these days?

10. Who is next? OneCommand, DealerSocket, CallSource, VinTek, DealerMine, DealerRater, Valuinsight, FirstLook, ActivEngage, AutoSoft, Compli and or maybe even JM&A Group?


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