CDK Global Inc. is launching a new dealership management system with a downturn-sensitive pricing model as it tries to appeal to smaller retailers and stem customer defections, the DMS giant said Thursday.
Instead of a flat monthly charge, the new DMS, called Drive Flex, comes with a fee that varies each month depending on the number of vehicles sold by the dealership, the volume of repair orders written by the service department and the number of employee users on the system.
It’s a “pay-by-the-drink” plan, CDK CEO Brian MacDonald said in an interview.
If sales fall because the overall market tanks, the dealership’s brand runs into headwinds or even if that month is always a weak one, the monthly fee will drop in tandem.
“With this variable pricing model, we are putting ourselves in a position to benefit when dealers are having a good month and also to ride the downturn with them,” MacDonald said. “We’re aligning ourselves with the dealer’s success.”
Drive Flex represents CDK’s latest step in its increasing efforts to address two weaknesses that rivals have exploited: complicated billings and a perception that it is overpriced, especially for smaller dealership groups. The move comes as the DMS market dominance of giants CDK, of Hoffman Estates, Ill., and Reynolds and Reynolds, of Dayton, Ohio, is being challenged by systems from Cox Automotive, Dominion Dealer Resources and others.
1, 2 rooftops
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While Drive Flex is tailored particularly to smaller dealerships with one or two rooftops and priced competitively for that segment, it is a full DMS with all the technology a dealership today needs, CDK executives said.
“It’s a full functioning DMS that runs the store out of the box,” said Ron Frey, CDK chief strategy officer.
He noted, though, that CDK had found that some smaller dealership groups didn’t need all of the functions that larger groups utilized in CDK’s other DMS offerings. So for the smaller prospective clients of Drive Flex, “we found the balance for them” while providing all of the core functions most used at a dealership, he said.
That is just one way that Drive Flex reflects CDK’s recent “We’re Listening” campaign, Frey said. “This is what the market is asking for: more variations in pricing.”
Because the system was designed around the dealership-user experience, he added, the time required for implementation and training when the system is installed will be “remarkably different.”
For example, MacDonald told Automotive News, the system was built so as to slash the time needed for data migration from a prior DMS to a newly installed Drive Flex system from “weeks [with earlier systems] to hours.”
With Thursday’s announcement, CDK will release Drive Flex to an already-selected group of dealerships to pilot the system through June. CDK will demonstrate it at the NADA convention in Las Vegas March 22-25, and begin taking orders after NADA. The actual rollout to buyers will come after June.
Drive Flex is a cloud-based DMS with new interfaces and enterprise-level security, CDK Chief Technology Officer Rajiv Amar said.
For most of the DMS offerings on the market, “the usability is challenging — you’ve got to go to five different screens to do an action,” Amar said. “We said workflow really matters. Make it possible on a single screen.”
The system also offers “modern application programming interfaces that enable easy integration to other software offerings, to put the dealer in control for future growth and innovations,” CDK said in a statement.
Drive Flex has no ties to Auto/Mate, a DMS provider that is especially strong among one- to two-rooftop dealership groups. CDK is in the process of acquiring Auto/Mate, in part to better serve that niche. The deal is still going through regulatory approvals.
Separate from the Auto/Mate move, “we’ve been innovating this, knowing there’s a need for innovation in DMS,” MacDonald said.