CDK Global Inc. is in conversations with multiple automakers about how CDK could enable a “Tesla-like” buying experience that incorporates franchised dealerships, an executive said this month.
Joe Tautges, COO of the Hoffman Estates, Ill., dealership management system giant, declined to share specific details about the talks in an interview with Automotive News but said CDK is “in several discussions with various OEMs around how we enable that improved digital experience.”
CDK has spent more than $1 billion over the past few years to bolster its own digital capabilities and build a portfolio of products aimed at delivering an end-to-end digital sales experience that extends from lead generation through vehicle ownership.
Tesla sells its electric vehicles directly to consumers in the U.S. without franchised dealerships. But with the ongoing industry shifts toward electrification and digitization, Tautges said, dealerships will be a key part of transforming customers’ experience around buying and owning a car, including servicing of EVs. And as traditional automakers plan to introduce more electric models in coming years, they are taking an active role in how their brands are perceived and what their customers’ experiences are like, he said.
CDK’s talks with automakers are related to EVs but also apply across their broader product lineups, Tautges said.
“I don’t have the answer for you on how it’s going to work out, obviously, yet between OEM and dealership,” he said. “What I can tell you is I spend a lot of time with OEMs, saying: ‘I understand this is the journey you want to enable.’ I understand the dealership — here’s the guest experience they want to enable. And how do we leverage our technology in the middle of that to create a win-win?”
“We are finding ourselves as the connector in between what large dealer groups are trying to achieve [and] what the OEM’s trying to achieve,” he added.
CDK is investing heavily to develop its end-to-end vision to stay ahead in an industry that is rapidly electrifying and digitizing. Its $1 billion-plus spend includes investments in internal technology upgrades and process improvements, data intelligence and acquisitions.
That figure includes the $513 million acquisition of customer relationship management system provider Elead in 2018 and the June purchase of digital retailing platform Roadster for $360 million.
CDK in recent years also has bolstered its data intelligence capabilities through the launch of its open-network development platform, Fortellis, and through Neuron, a platform CDK introduced this year to offer predictive data insights to help dealerships make operational decisions. Also this year, CDK bought data insights company Square Root for a price of up to $25 million, according to the company’s annual report for its 2021 fiscal year, which ended in June.
In February 2020, CEO Brian Krzanich outlined a $300 million spending target on internal technology and process improvements as he promised dealership customers that their experience doing business with CDK would improve. The company said it achieved its 10th straight quarter of year-over-year growth in automotive customer sites when it delivered its fiscal fourth-quarter earnings results in August.
The investments, including buying up software companies that add to its product portfolio, “make a bet on where the puck is headed to be the leader in connecting, end-to-end, the consumer buying experience and helping enable dealers for a future business model,” Tautges said.