CDK Global plans to buy AutoMate: What will it mean for dealers?

CDK Global plans to buy AutoMate: What will it mean for dealers?

Earlier this month, CDK Global announced that it had signed an agreement to acquire AutoMate. The sale is subject to approval by the Federal Trade Commission, but approval is considered likely. The transaction is expected to be completed by late summer.

When CDK broke from ADP and went public as a separate company in 2014, it immediately attracted investment from powerful groups whose interests were primarily increasing the value of the companyês stock. Since then, CDKês value has more than doubled and the future looks promising.

For many years, dealers tried to avoid switching DMS vendors even if they were dissatisfied. The high direct costs of change combined with the disruption it would cause had the effect of protecting CDK (formerly ADP) and Reynolds & Reynolds and limiting other vendors.

But in the past two years, DealerTrack and AutoMate have won the business of many larger dealer groups. Smaller dealers have also been enticed by AutoMate. That company offered a viable alternative to CDK and Reynolds & Reynolds at about a third the cost. In addition, AutoMate has dealer-friendly policies such as free system enhancements for life, no long-term contracts, low fees to integrate with other solutions, and exceptional personal service.

CDK recognizes AutoMateês value and has promised to allocate considerable resources to further AutoMateês success. CDK has a salesforce of more than 300 compared with just 13 at AutoMate. And CDK has committed itself to a robust R&D, especially in developing a more comprehensive and accessible CRM.

Thanks to the Gillrie Institute (www.gillrie.com) for providing this information.