2022 DMS Report by DealerTech Nerd
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Our 2022 DMS Market Report is the first of its kind, providing market and competitive intelligence on the US DMS industry. The report touches on the DMS category within the entire DealerTech segment, core DMS functions and layered apps, DMS vendors and solutions, DMS vendor revenues based on estimated market share and average dealer spend, DMS total addressable market (TAM), as well as DMS market forces and future trends of the industry, among others. Readers will take away critical insights into the current and trending DMS market. The report offers detailed descriptions complemented with comprehensive data points that may assist: 1) Executives from dealerships and OEMs in DMS decision-making 2) Software leaders in their DMS go-to-market and product strategy 3) Researchers and investors in DMS market and vendor assessments. Key Findings: - The DealerTech segment for dealership software in the US is $7 Bil. strong. - Eight DealerTech value clusters with 40 categories are compassing solutions from 800+ vendors for all dealership departments. - The DMS category for franchised car dealers in the US spans over ten providers resulting in a $1.4 Bil market size. - The significance of a DMS is reflected in its price as the DealerTech solution with the highest monthly spend (~$6,300 pm per site). - ~80% of the US DMS market share is captured by three providers: CDK Global, Dealertrack DMS, and The Reynolds and Reynolds Company (R&R). - The market disruptor Tekion is valued at more than $3.5 Bil. The DMS evolves from a system-of-record to an engagement tool. - DMS providers can be categorized into Dealer (Software) Advocates, Auto Retail Enablers, and Mobility Economy Accelerators. - The DMS category is expected to grow by 6.7% CAGR until 2027, adding $541 Mil. to the market ($1.9 Bil. In total). - Future DMS decisions are increasingly unpredictable as the DMS will be serving more than just dealers: OEMs, DSPs, and Non-Saas.
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2022 DMS Report by DealerTech Nerd
- 1. DMS 2022 Market Report: Dealer Management Systems US Franchised Dealers (Light Vehicle) Stefan Drechsel Dealership Software Expert DealerTech Nerd stefan@dealertechnerd.com | 813-843-6410 Sam ple Report
- 2. © Confidential by DealerTech Nerd | 2022 DMS Market Report Our 2022 DMS Market Report is the first of its kind, providing market and competitive intelligence on the US industry for dealer management systems. The report touches on: • DMS category within the entire DealerTech segment • Core DMS functions & layered apps • DMS vendors & solutions • DMS vendor revenues per est. market share & avg. dealer spend • DMS total addressable market (TAM), as well as • DMS market forces & future trends of the industry, among others. Readers will take away critical insights into the current and trending DMS market. The report offers detailed descriptions complemented with comprehensive data points that may assist: • Executives from dealerships and OEMs in DMS decision-making • Software leaders in their DMS go-to-market and product strategy • Researchers and investors in DMS market and vendor assessments 2 2022 Market Report: DMS US Franchised Dealers (Light Vehicle) Buy DMS Report
- 3. © Confidential by DealerTech Nerd | 2022 DMS Market Report I. Executive Summary II. DealerTech Segment and DMS Product Category: • Value Clusters and DealerTech Categories • Monthly Dealer Spending per DealerTech Category • DMS Purpose and Value-Add • DMS in North America vs. the Rest of the World • DMS Core and Layered App • DMS Revenue Elements III. Providers of DMS Solutions: • Top 10 DMS Vendors Highlights and Market Share Estimates • DMS Vendor Price Overview • High-Level Solution Comparison • DMS Vendor SWOTs and Recent Acquisitions by DMS providers • Strategic Map and competitive matrix IV. DMS Clients & Decisioning • Dealer SaaS Investment • DMS Total Addressable Market (TAM) • DMS Stickiness in Strategic Accounts (Top 25) • Dealer DMS Decision Points • DMS Switching Costs V. DMS Market Forces & Trends • DMS Evolution • Recode Initiatives • DMS Product Lifecycle Implications • DMS Integration & Network Effects • PESTL • Porter’s 5 Forces VI. Future of DMS • DMS Outlook based on Current Trends (EVs, Covid-19) • DMS Trends • 2027 DMS Revenue Predictions (ARPA, ARR) • Next-Gen DMS Outlook Key Words: • CDK Global Drive • Cox Automotive • Dealertrack DMS • The Reynolds and Reynolds Company (R&R) Ignite • Tekion Automotive Retail Cloud (ARC) • Solera • Auto/Mate • Autosoft GO • PBS v10 • DealerBuilt ceDMS LightYear • Dominion Dealer Solutions VUE • Quorum XSellerator • DMS Market Share • DMS ARR, ARPA • Layered Apps • PESTL • Porter’s 5 Forces • Covid-19 • Electric Vehicles (EV) 3 Content & Chapters (70 Pages)
- 4. © Confidential by DealerTech Nerd | 2022 DMS Market Report Wide DealerTech Universe with (8) Clusters & (40+) Categories Online Showroom Vehicle Lifecycle Vehicle Transaction Shopper Engagement Service Experience Mobility Economy Parts Optimization Digital Operations • Online Content & Websites • Social Media & Reputation • Marketplaces & Classifieds • Digital Marketing & Advertising • Vehicle Inventory Suites • Digital Vehicle Merchandising • Vehicle Data Aggregation • Wholesale Auction & Trade • Reconditioning • Registration & Titling • Vehicle History Reports • Aftermarket Accessories • Digital Retail & Online Sales • Desking • BHPH/LHPH • Digital & econtracting • Bureaus & Compliance • F&I Menu • Embedded Car Insurance Sale & Marketplace • Customer Relationship Management & Sales Enablement • Engagement & opportunity Mining • Conversational Apps • Automotive Call Management • Dealer Management System (DMS) • Dealership Intelligence • Dealership Payment • Dealership Data Management & Collaboration • Human Capital Mgmt. • Document Management & Scanning • Managed Dealership IT • Parts Ecommerce & Wholesale • Parts Tracking • Electronic Parts Management • New Mobility • Connected Car & Telematics • Rental/Loaner & Fleet • Vehicle Key Systems & Asset Management • Service Portals & Check-in • Service Write-Up • Vehicle Inspection • Service Engagement & Retention • Shop Management • Tire Management • Mobile Car Care (1) Segment (8) Value Clusters (40+) Categories Automotive Dealership Software & Technology 1) Based on $30,000 monthly avg. spend for software per dealer site (franchised dealers) $ 7B+ Annual US DealerTech Spend1) 4
- 5. © Confidential by DealerTech Nerd | 2022 DMS Market Report • ASI => ACV (4/20) • BacklotCars => KAR (8/20) • CarOffer => CarGurus (12/20) • ACV => IPO (3/21) • Max Digital => ACV (7/21) • Carketa => Seed (11/21) • Eblock => IPO (11/21) • Drivably => ACV (2/22) • Accu-Trade/GALVES => Cars.com (2/22) • Fair's dealer marketplace => SHIFT (3/22) • Motoinsight => TRADER (1/20) • Prodigy => Upstart (3/21) • Roadster => CDK Global (6/21) • Gubagoo => R&R (6/21) • Darwin => J.D. Power (7/21) • truPayments => PureCars (7/21) • Rodo => Series B (7/21) • CarNow => Investment (8/21) • FUSE Autotech => Series A (8/21) • CreditIQ => CARS (11/21) • AutoFI => Series X (3/22) • AutoAPR => TradePending (3/22) • Modal => Shutdown (5/22) • Digital Motors => TrueCar (6/22) • DentWizard => DealerTire (1/20) • RoboTire => Pre-Seed (1/20) • CarDash => RepairSmith (2/20) • Fyusion => Cox Auto (1/21) • RAVIN => Series A (3/21) • UVEye => Series C (7/21) • Spiffy => Series B (10/21) • NuBrakes => Series A (12/21) • Monk SAS => ACV (2/22) • YourMechanic => Wrench (6/22) • myKaarma => Investment (4/22) [Service engagement & retention] • DealerPolicy (Polly) => Series C (8/21) • Salty => CDK Global (9/21) • Gabi => Experian (11/21) • Metromile => Lemonade (11/21) • The Floow => Otonomo (2/22) Trade & Auction/ Wholesale Digital Retail & Online Sales Mobile Car Care and Digital Inspection Insurance Tech / Marketplace $ 1.2B+ Investment Summer 2021 Big Funding in Vehicle Lifecycle/Transaction & Service Apps => Acquired By IPO = Initial Public Offering VL VT SX VT Vehicle Lifecycle Vehicle Transaction Service Experience Vehicle Transaction 5
- 6. © Confidential by DealerTech Nerd | 2022 DMS Market Report High DealerTech SaaS Spend for Franchised Car Dealers in the US Auto Franchised Dealers (US) Adjacent DMS (US) … International DMS … … DMS adoption: DMS TAM: Tech stack: Total SaaS: • High (90%) • >50k Adjacent Dealers1) • DMS + <5 bolt-ons • <$5k per month/site • Extreme (100%) • >75k Franchised Car Dealers • DMS + <10 bolt-ons • <$10k per month/site 1) E.g. Used Car, Commercial Truck, Heavy Equipment & Trailer, Powersport, RV, Marine/Boat, Classic Car, Mobility, etc. • Extreme (100%) • <20k Franchised Dealers • DMS + 10-15 bolt-ons • ~$30k pm/site 6
- 7. © Confidential by DealerTech Nerd | 2022 DMS Market Report 7 Market Challengers with Strong DMS Segment Focus Company Business Type Private Private Private Startup Public (CVE) DMS Key Events • 1988 - Founded • 1982 – Founded • 2008 – Officially formed/GTM • 2019 - Acquired by ParkerGale • 1992 - Founded Automotive Computer Services (ACS) • 2011 – Acquired by Dominion • 2021 – Intro VUE DMS • 2016 - Founded • 2019 - ARC DMS introduction • 2020 - $1B+ valuation • 1996 – Founded • 2000 - IPO as QIS on CVE 2021 Est. Revenue (DMS & Other BUs) $50-100M $20-50M $100-500M $20-50M $20-50M Est. Global Workforce (DMS & Other BUs) 2) > 300 employees > 100 > 300 > 1,700 > 450 DealerTech & DMS Claims (short) 2) • The largest Canadian dealership vendor & the top three in North America. • A fresh approach to DMS. • Empowering each dealer's unique vision for their dealership. • DealerBuilt delivers an enterprise- class DMS platform that is precisely tailored to each dealer client's unique requirements. • Redefines how automotive dealers reach, retain, market and sell to customers with solutions enabling higher sales and ROI. • The dealer's cloud-native DMS. • A DMS that is easy to use. • The first & fastest cloud-native automotive retail platform. • One platform that seamlessly connects your entire business. • Software technology solutions for vehicle dealerships and OEMs across North America. • The revolutionary dealership performance system driving revenue into your dealership. Fun Facts PBS President David Bradley founded Profit Building Solutions in 1988 in his basement. DealerBuilt was founded by Toyota/Honda dealer John Hosmer - hence the name. Similar to Cox Auto, Dominion Dealer Solutions is also part of a media enterprise (Landmark). CEO Jay Vijayan was Tesla's first Chief Information Officer. CEO Maury Marks worked in his family's GM dealership before he founded Quorum. LinkedIn Followers 2) ~7k followers ~2k ~6k ~55k ~1k Flagship DMS 1) v10 LightYear (ceDMS) VUE DMS Automotive Retail Cloud (ARC) XSellerator DMS Headquarters Calgary, Canada Grapevine, TX Norfolk, VA Pleasanton, CA Calgary, Canada Est. Share of DMS BU 1) vs. Total Revenue > 90% > 90% < 10% > 80% < 75% Biggest DMS Market 1) Canada USA USA USA Canada Main DMS Segment 1) Small-Medium dealers Small-Medium Small-Medium Small-Medium Small-Medium 1) 2021 DMS for Franchised Car (not adjacent markets) BU = Business Units 2) Per 5/22
- 8. © Confidential by DealerTech Nerd | 2022 DMS Market Report 8 Est. share of DMS business vs. vendor total revenue (‘21) Range of est. no. of US franchised dealers under DMS contract (‘21) - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Drive Dealertrack DMS ERA Ignite Auto/Mate GO (replacing FLEX) v10 LightYear VUE ARC XSellerator Other DMS 2021 Top 10 DMS Vendors (US Franchised Car Dealers) 50% 75% 80% 10% 90% 90% 90% 5% 25% 5% 50% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Other DMS XSellerator ARC VUE LightYear v10 GO (replacing FLEX) Auto/Mate ERA Ignite Dealertrack DMS Drive Other DMS ~80% of US DMS Market Share Captured by (3) Providers1) 1) 2021 DMS for US Franchised Car (not adjacent, not Canada); Total: 18,211 per Auto News
- 9. © Confidential by DealerTech Nerd | 2022 DMS Market Report 9 Experienced SaaS and DealerTech Leaders Brian MacDonald1) President/CEO CDK Global Bob Brockman Figurehead Reynolds & Reynolds Steve Rowley President Cox Automotive David Bradley President/CEO PBS Systems Jay Vijayan Founder/CEO Tekion Darko Dejanovic CEO Solera Mike Trasatti CEO DealerBuilt Maury Marks President/CEO Quorum Information Technologies Bryce Veon President/CEO Autosoft Marianne Johnson Chief Product Officer Cox Automotive Rebecca McGraw Vice President of Product Tommy Barras CEO Reynolds & Reynolds Sharon Kitzman President Dominion DMS Dan Sykes President Dominion Dealer Solutions 1) Replacing Brian Krzanich (7/22)
- 10. © Confidential by DealerTech Nerd | 2022 DMS Market Report Examples for Recent DMS Recode Initiatives • Cloud-native delivery for higher flexibility & agility • Boost to DMS UX for higher utilization & learnability • Workflows & automations to improve efficiencies • One database to capitalize on data assets • Modern API to facilitate advanced integrations (e.g. JSON) • Support new use cases (e.g. pred. analytics, telematics) • On-site server or web-based DMS deployment • Multiple DMS log-ons & short code trees • Many drill-downs & keystrokes • Multiple databases due to M&A and roll-ups • Dated data integration (e.g. via file sharing, ADF XML) • Traditional retail management dealership use cases FLEX DMS Drive ACCESS Aristo ⇢ GO ⇢ Drive Flex ⇢ VUE (DMX) ⇢ v10 ARC Incumbent DMS Next Gen DMS 10
- 11. © Confidential by DealerTech Nerd | 2022 DMS Market Report 11 DMS Clients: Concentrated & Consolidating Dealer Segment1) 1) Per 4/2022 research – NADA Data: https://www.nada.org/nadadata/; Automotive News store count 2022: 18,211 • DMS rate of adoption among franchised car dealers in the US is at maximum level (100%) • US dealer site count per NADA has been stable over last 10 years (0% CAGR) • DMS client base is highly concentrated - 93% own less than 6 sites (open to DMS switching) • Consolidation of dealer sites is expected to accelerate – especially in segment of dealership groups with 26-50 sites that has been growing at 12% CAGR (potentially favoring legacy DMS) 30+ OEMs 16,634 16,359 16,524 16,545 16,708 16,500 16,753 16,682 16,623 16,676 91.5% 92.0% 92.5% 93.0% 93.5% 94.0% 94.5% 95.0% 95.5% 96.0% 96.5% 16,100 16,200 16,300 16,400 16,500 16,600 16,700 16,800 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 US Franchised Car Dealers No. of Franchised Dealers Share of Dealers w/< 6 Sites
- 12. © Confidential by DealerTech Nerd | 2022 DMS Market Report 12 Dealers Are Mostly Users, But Get more Involved with SaaS DEV DealerTech Investors ”Focused” Investor SaaS Co-Creator DealerTech Co-Inventors ”Focused” Investor “Cluster” Investor SaaS Creator • Via investor in one DSP • Outsource investment decisioning • ROI/IRR focus • E.g. Serra in Tekion via FM Capital • Via investor w/balanced portfolio • Diversify risk and ROI/IRR • E.g. WarrCloud via Automotive Ventures Fund • Direct single investment • Return: IRR + X (like OE) • E.g. Galpin in DealerBuilt (sold to ParkerGale), Maroone & Salty • Co-create SaaS w/DSP • E.g. Van Tuyl & CarWars, Asbury & Gubagoo • Build SaaS w/o DSP • E.g. Schomp & A2Z Sync, Rimrock & WebBuy, Shaker & Truvideo, Lithia & Driveway, Walser & FUSE Dealer Data Patrons Data “Donor” Data Seller • Dealer data for SaaS access • E.g. Service history to Carfax? • Monetize dealer data • Future use case (e.g. Service history) ”Cluster” Investor • Family office model with wider invest- ments • E.g. Holman in Rodo via Holman Growth Ventures (Presidio) ”Indirect” Investor ”Direct” Investor DealerTech Users DSP Advocate Advisory Board DSP Client • SaaS user • Software in exchange for monthly subscription • Testimonial (maybe for discount) • Best-practice account • Formal dealer feedback loop • Typically, no compensation Dealers as DealerTech Users1): >90% Dealers as DealerTech Owners1): <10% 1) Estimated
- 13. © Confidential by DealerTech Nerd | 2022 DMS Market Report 13 DMS Vendors Should Adjust Data Sharing Strategy to Co-Innovate 1) 10/2020 DealerTech Nerd Online Survey, n > 50 DealerTech Vendor Employees 94% 6% 0% Strongly/Somewhat Increase Stay the Same Strongly/Somewhat Decrease Over the next 5 yrs, the relevance of data sharing among dealers, Dealer Software/Service Providers, and OEMs will: 17% 21% 62% Completely/Somewhat Disagree Neither Agree nor Disagree Completely/Somewhat Agree The DMS is the primary source of “transactional” data from Variable and Fixed Ops. 12% 42% 46% Completely/Somewhat Disagree Neither Agree nor Disagree Completely/Somewhat Agree The DMS lacks “activity” data points (e.g. shopper velocity from CRM or website). 54% 15% 31% Completely/Somewhat Disagree Neither Agree nor Disagree Completely/Somewhat Agree The DMS will become less important as a dealer data source in the future. 4% 19% 77% Completely/Somewhat Disagree Neither Agree nor Disagree Completely/Somewhat Agree Dealers will complement DMS data with data from other sources (e.g. CRM, Google). 31% 25% 44% Completely/Somewhat Disagree Neither Agree nor Disagree Completely/Somewhat Agree Dealers will create a central data warehouse outside of the DMS.
- 14. © Confidential by DealerTech Nerd | 2022 DMS Market Report 14 Research Limitations & Other Considerations This disclaimer governs the use of this report. By buying this report, you accept this disclaimer in full. DealerTech Nerd is an industry analyst and consulting firm for dealership software. DealerTech Nerd is not an investment adviser and thus cannot and does not provide investment advice. The information presented in this report is for general information purposes only. It is intended to provide insights on available Dealer Management Systems (DMS) technology for Franchised Car Dealers in the US. Nothing in this report is intended to serve as investment advice, a recommendation of any particular transaction or investment, any type of transaction or investment, the merits of purchasing or selling securities, or an invitation or inducement to engage in investment activity. You should not rely on this material for making any business, transactional, investment, or legal decisions and should make your own independent assessment. All primary and secondary data have been analyzed and presented in the best of faith. DealerTech Nerd, its affiliates, and officers make no representation of the accuracy or completeness of the information contained and bear no responsibility for any omission inaccuracies or for any losses, damages, or injuries arising from its display or use. Without prejudice to the generality of the foregoing paragraph, we do not represent, warrant, undertake or guarantee that the use of guidance in the report will lead to any particular outcome or result. We will not be liable to you for any business losses, including without limitation loss of or damage to profits, income, revenue, use, production, anticipated savings, business, contracts, commercial opportunities, or goodwill. This report is the sole property of DealerTech Nerd, and upon purchase, strictly limited for use by the recipient with associated license rights to share within your organization (corporate user license). This report CAN NOT be shared with any external parties outside your organization. Sharing without permission will result in legal action. We invite you to contact us to license the report insights for your marketing purposes.
- 15. Connect With Us on Any Questions. Stefan Drechsel Dealership Software Expert DealerTech Nerd stefan@dealertechnerd.com | 813-843-6410 DealerTech Nerd is an industry analyst and consulting firm for dealership software including Dealer Management Systems (DMS), Customer Relationship Management solutions (CRM), Service Management Suites, Digital Retail, and many more (DealerTech). My research services include supporting dealers to evaluate & procure DealerTech, software providers to better Go-To- Market & roadmap, and Investment firms to investigate & acquire DealerTech SaaS businesses. With more than 800+ vendors in 40 dealership technology categories, DealerTech Nerd offers taxonomy and crucial market insights about industry forces and key trends. I love to share my passion for dealership software as a speaker at NADA, ADAs, 20 Groups and industry events.