2014 is shaping up to be an eventful year in the automotive retail systems market. A recent story in Automotive News pointed out last week, there has been a “frenzy of merger and capital-raising activities among auto-retailing vendors”. Last week, ADP announced its plans to spin-off its Dealer Services business into an independent public company later this year. TrueCar announced plans for a $125 million initial public offering of common stock. DealerTrack Technologies completed auto retail’s biggest acquisition for the year so far with the purchase of Dealer.com for $1billion in cash and stock. And Bloomberg has reported there are plans to sell Cars.com.
Exactly what all of this will mean for dealers and for the automotive retail market more broadly remains to be seen. It is however, very exciting and encouraging to see the market thriving and new investments being made.
For some years we have maintained that dealers deserve software which works well together. Perhaps this M&A activity is also based, in part, on this conviction. DealerTrack CEO Mark O’Neil spoke specifically on this point, “Dealers are frustrated that their (software) solutions don’t talk with each other.” Motive would agree that the market should provide solutions to this problem, and certainly single vendors offering a range of integrated systems is one way to do it. Nonetheless most dealers run their businesses with a variety of systems from a range of vendors and automakers. Third-party integration/certification programs such as Autosoft’s Flex Connect, ADP’s 3PA and DealerTrack’s OpenTrack are intended to address this real-world scenario.
As Mr. O’Neill points out, enabling dealer systems to work together efficiently and in harmony continues to be one of the market’s biggest challenges. Investment in efficient and effective third-party integration/certification programs may be the best way to overcome it.