4 ms·

Why don't they have any competition?

toomuchtodo 2y ago
My hot take is auto dealers are a notoriously painful enterprise sales cycle due to network effects aka "good 'ol boys" club (anecdotally from folks in tech who have to deal in this industry).
- mrfairrunheight 2y ago
  can confirm. also the high cost entailed to retrain folks from one system to a newer one.
  - deleted 2y ago
    [deleted]
- SoftTalker 2y ago
  Many are also not tech-savvy. Many dealerships are inherited within a family that has owned them since the 1950s if not longer. They are cash cows for the owners and there's little motivation to try new things. When they are forced to, like when internet sales and marketing became a thing they had to deal with, they just go with the same system that all their fellow dealers are using.
  - mywittyname 2y ago
    There also isn't space to grow. It's not like running a dealership with hyper efficiency is going to lead to being able to open another dealership. The market is largely saturated and in the rare event that an existing dealership comes for sale, you'll be competing with massive PE-backed conglomerates that can pay nonsense prices for them.
- brodouevencode 2y ago
  Maybe 30 years ago. That's not the case with big dealer groups or young small independents.
  - mistrial9 2y ago
    Japanese-origin management for US Nissan dealers?
- jrs235 2y ago
  It's still very much a dinosaur industry. I suspect the names (i.e. Tony Jone's Toyota) in dealerships and dealership gorups are typically 70+ years or older by now. Children might be taking over and running things now but dad is still likely "chairman of the board" and makes final expense decisions.
mrfairrunheight 2y ago
they do. there are a couple of large competitors and several small ones. the reason there are not more boils down to: a high barrier to entry, since software suites (not individual products) are often needed, and the high cost of retraining folks using older systems in order to use your new, better product.
- tkahnoski 2y ago
  Another way of looking at it is CDK's main product is an ERP tailored to the automotive industry. These aren't systems with short setup times and there is major risk to trying to replatform you're accounting system. How do you pull of an ERP migration while you're existing one is down? Further, almost everything the dealer does from inventory management to service is integrated to this system of record either directly or via data integrations. Some of the smaller mom-and-pop stores just use small business accounting systems like quickbooks but those get pretty tedious to maintain with any sizable number of sales or employees per month.
mywittyname 2y ago
Who would invest in building a company to compete in this market? It's limited in size, has deeply entrenched competition, and technological progress hasn't unlocked an obvious improvement or efficiency that can be capitalized on. Best case, this startup gets bought out by a larger competitor. Worst case, they get crushed by it. Oligopolies going to oligopoly.

My hot take is auto dealers are a notoriously painful enterprise sales cycle due to network effects aka "good 'ol boys" club (anecdotally from folks in tech who have to deal in this industry).

mrfairrunheight 2y ago
can confirm. also the high cost entailed to retrain folks from one system to a newer one.
- deleted 2y ago
  [deleted]
SoftTalker 2y ago
Many are also not tech-savvy. Many dealerships are inherited within a family that has owned them since the 1950s if not longer. They are cash cows for the owners and there's little motivation to try new things. When they are forced to, like when internet sales and marketing became a thing they had to deal with, they just go with the same system that all their fellow dealers are using.
- mywittyname 2y ago
  There also isn't space to grow. It's not like running a dealership with hyper efficiency is going to lead to being able to open another dealership. The market is largely saturated and in the rare event that an existing dealership comes for sale, you'll be competing with massive PE-backed conglomerates that can pay nonsense prices for them.
brodouevencode 2y ago
Maybe 30 years ago. That's not the case with big dealer groups or young small independents.
- mistrial9 2y ago
  Japanese-origin management for US Nissan dealers?
jrs235 2y ago
It's still very much a dinosaur industry. I suspect the names (i.e. Tony Jone's Toyota) in dealerships and dealership gorups are typically 70+ years or older by now. Children might be taking over and running things now but dad is still likely "chairman of the board" and makes final expense decisions.

mrfairrunheight 2y ago

they do. there are a couple of large competitors and several small ones. the reason there are not more boils down to: a high barrier to entry, since software suites (not individual products) are often needed, and the high cost of retraining folks using older systems in order to use your new, better product.

tkahnoski 2y ago
Another way of looking at it is CDK's main product is an ERP tailored to the automotive industry. These aren't systems with short setup times and there is major risk to trying to replatform you're accounting system. How do you pull of an ERP migration while you're existing one is down? Further, almost everything the dealer does from inventory management to service is integrated to this system of record either directly or via data integrations. Some of the smaller mom-and-pop stores just use small business accounting systems like quickbooks but those get pretty tedious to maintain with any sizable number of sales or employees per month.

mywittyname 2y ago

Who would invest in building a company to compete in this market? It's limited in size, has deeply entrenched competition, and technological progress hasn't unlocked an obvious improvement or efficiency that can be capitalized on. Best case, this startup gets bought out by a larger competitor. Worst case, they get crushed by it. Oligopolies going to oligopoly.