In evolving DMS market, more changes ahead at CDK

We got more insight last week into CDK Global’s future under new ownership — and leadership.

The dealership technology giant, which specializes in dealership management systems and other auto retail software, this month completed its sale to investment firm Brookfield Business Partners, a unit of global alternative asset management firm Brookfield Asset Management’s private equity group.

Brookfield brought back Brian MacDonald, who previously led CDK as its chief executive between 2016 and 2018, as acting CEO. MacDonald was at the helm when CDK bought the ELEAD1ONE customer relationship management system provider, now known as Elead, and he told me it’s a platform in which CDK intends to continue investing. Same with Roadster, the digital retailing provider CDK acquired last year, MacDonald said.

He said CDK is “fully supportive” of Salty Dot Inc., an insurance technology company CDK also acquired last year that allows consumers to purchase auto insurance at the same time that they buy a vehicle, adding that Salty is “still in the early days.”

Brookfield’s not a stranger to the auto industry. Brookfield Asset Management acquired battery manufacturer Clarios, formerly Johnson Controls’ battery unit, in 2019 for $13.2 billion. And it held Capital Automotive, a provider of real estate financing for auto dealerships, until it sold the company for $3.8 billion in February.

MacDonald told me he plans to focus product development on the tools that most matter to dealerships’ ability to sell and service more vehicles.

Dealers are interested to see how the changes at CDK play out, said Matthew Gillrie, owner of the Gillrie Institute, which advises dealerships on DMS contract negotiations.

CDK’s transition brings additional uncertainty to a DMS market that is evolving with new entrants and technology, Gillrie told me, another reason more dealers are saying they want shorter contracts with more flexibility.

“The thing we’re really paying attention to is pricing and contracts. How are those going to change?” he said. “We really don’t know yet.”