A surcharge or a needed cost?
Reynolds and Reynolds, which competes with CDK in the DMS business, already has a similar vendor access program. But it’s not yet known exactly how much of an increase in costs dealers will have to bear. The current costs are about $475 per dealership, but in about a year, that number is expected to be about $1,600. If all of the increase is passed onto dealers, they’ll pay about $1,125 more per year.
A vendor executive says the increase is really a surcharge masquerading as an effort to protect data. But CDK maintains that, in light of huge data breaches at companies like Target, the changes are needed.
Dealership employees now rely on as many as 10 software vendors beyond the base DMS to help run operations. The DMS helps dealerships run many aspects of their business, including ordering parts and vehicles and managing payroll and financing. As a result, the DMS stores a great deal of data about the dealership as well as its customers.
This data is utilized by hundreds of third-party software vendors to perform essential tasks such as managing inventory, scheduling service, and posting vehicle listing information on online sites.
DMS providers allow vendors to access data in real time after providing a passcode. Approved contractors also can also batch-collect the data overnight and then extract the specific data they need.
Vendors say nothing will change about the way they get data, except for the increase in price. Some also told Automotive News that they’re been served termination notices by CDK, saying that they would lose access to dealer data if they don’t get certified under SecurityFirst.
One vendor executive estimates that monthly data fees will increase from about $50 per store per month to as much as $600 for customer relationship management software. This cost will be passed along to dealerships, he said.
CDK is increasing the charges because the company determined that it wasn’t adequately covering costs related to managing data-related programs, according to Linda Bartman, the company’s global chief marketing officer. Some vendors’ fees aren’t expected to rise if they’re already paying more than their peers, she said.
One dealer who switched his DMS from Reynolds to a less expensive provider says he saves $450 per month per store on his CRM software bills. The difference comes from no longer having to pay for the company’s RCI, he said.
Thomas Schwartz, Reynolds’ spokesman, said the company has certified 120 third-party vendors, with more than 50 in the process of obtaining certification. The process protects consumer data because it’s exchanged through a secured interface, and since Reynolds maintains the portal, data exchange is optimized, he said.
Ultimately, dealerships that use CDK will need to be prepared for changes that may affect them. They can then decide whether CDK or another company is the best choice in their particular situation.