There are a lot of things dealers don’t have control over.
Their OEMs decide on the models and types of vehicles they will produce, set the MSRP, determine the inventory mix they will provide to the dealership, and even dictate the look, feel, and building designs needed to sell and service their vehicles.
That’s just part of the game of being a franchised dealer.
One area dealers do have a lot of control over, though, is determining the right mix of technology and software platforms they need to run an efficient, profitable, and consumer-centric business.
There is growing pressure from OEMs, however, to intrude — or maybe intervene is a kinder word — in the decisions over which tech dealerships should be using. As with many of these issues, the level of OEM intervention varies widely between brands, and many have had firm hands on the tech stack wheel for years.
Some OEMs dictate directly, others set up a vetting process and narrow down a shortlist of pre-approved providers, but the dealers ultimately have the choice. After all, they’re spending their own money on these systems.
But there’s growing frustration among some OEMs over the many varied tools dealerships are bolting onto their operations — and valid concerns over issues like privacy and security, data access and transferability of information, and whether these tools are delivering an experience consistent with the OEM’s brand standards.
With the emergence of so much AI tech, those concerns are only going to increase.
The Canadian Automobile Dealers Association (CADA) recently commissioned and released the first-ever Canadian Automotive Retail Technology Study (CARTS) to explore the wild world of dealership software tech. It had some revealing findings that should ring some alarm bells for the industry.
The study, conducted by Clarify Group and sponsored by RBC Automotive Finance, offers dealers a peek under the hood of the tangled mess of wires and interconnected software systems dealerships have added over the years.
In an interview about the study with Bruce Rosen, CADA’s Executive Director of Industry Affairs, he said he knew there was a problem when dealers taking part in the study identified more than 110 different software tools in use across the industry.
“We saw dealers running 20 or more systems, often with overlapping functions,” said Rosen. “The tools are powerful, but the people and processes need to catch up. Dealers are doing their best to adapt, but technology integration is still an uphill climb.”
The study didn’t rate one provider or another or suggest dealerships shouldn’t embrace new technologies. It aimed to get an accurate snapshot of the tech landscape. The study featured input from 550 dealer principals and will be conducted annually, at least for the next two years, to measure tech adoption trends, especially in emerging areas like AI.
Now, I like tech as much as the next guy. I attend conferences and trade shows like NADA, where hundreds of providers compete for dealers’ attention, offering all sorts of silver-bullet solutions designed to transform operations. I interview dozens of these well-intentioned tech providers every year, from huge household names to start-ups in tiny booths promising they have the unified solution everyone needs.
There’s no question these tech platforms — whether DMS, CRM, service lane, desking tools, digital retailing, F&I, appointment scheduling, or AI chatbots — can provide value.
The key, though, is for dealers to gain a deeper understanding of which tech they have, which adds value, and which delivers a return on the investment they’re making in these tools.
The study also found that very few dealerships have a person or group who really understand all the tech they have in place. The risk is that different groups in different dealership silos all adopt their own “pet” systems and bolt them on without considering the impact on other operations — and, in particular, on the customer experience.
I encourage you to track down the CART study and dive into the findings. It’s a compelling read and might make you ask tougher questions of your tech providers and your team when they arrive back from NADA, fuelled with excitement over the next great can’t-miss tech!
