What Is a Dealership Management System (DMS) or First Steps Into the Future of Auto Dealerships

Before we jump into boring definitions of Dealer Management System (DMS), let me put something from a different angle. Think of your business from the perspective of the next five years. What is going to change, based on what has already changed and is actively implemented in your industry? How customer experience expectations have changed?

Take car sharing for example. As countries implement NET-ZERO policies and try to reduce the number of cars in the cities car-sharing companies see a burst in interest from consumers. How this will affect your business? Isn’t that cheaper to simply buy cars from large equipment manufacturers in bulk for car-sharing companies?

Now think about this from a customer experience perspective. To own a car, consumers have to pay taxes, parking fees, maintenance costs, leasing payments, insurance, you name it. All these costs occur no matter if you drive your car or not. Car-sharing companies offer car-on-demand and you’re paying only when you’re driving.

What opportunity this brings for a car dealership? And what is the biggest obstacle for IT-oriented car-sharing companies in this business? What does your dealership have to offer to these companies? Hint: It’s a fleet management and inventory management.

The Vision

Now picture a car sending you an appointment inquiry to bring a car to the service point through Dealer Management System (DMS) the moment it requires changing an oil (or battery). Let’s push it even further. There’s even no need to pick up a car from a random remote location, this could be done by consumers. Offer someone a free ride for swapping the car at the service point and voila – you’ve resolved complex logistics tasks. Auto dealers get a steady revenue stream, and the car-sharing company has to time to focus its efforts on negotiating more parking space across the town, while consumers enjoy accessible and safe cars next to their homes. Is your dealership prepared for that?

But that’s a big picture. There are many steps an automotive dealer should go through before getting there. A Dealer Management Systems (DMS) can solve one very complex, yet unavoidable step for a dealership – learning how to operate in this new digital era. Let’s make a step back and understand what is Dealer Management System (DMS).

What is a DMS (Dealership Management System)

DMS stands for Dealership Management System, Dealer Management System or Dealer Management Solution (pick the one you like most). It is a Customer Relationship Management (CRM) system, which was tailored to provide all the tools for automotive dealership management. There is no strict definition of what a Dealer Management System (DMS) means and what are its components, however, usually it comprises lead management, vehicle lifecycle management, and quoting solutions.

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What DMS does?

In essence, Dealer Management Systems (DMS) are designed to stand at the core of the automotive dealership business. It is the system that covers the entire cycle of automobile sales. From the moment a vehicle is planned to be delivered to the dealership to its commissioning (or trade-in). Dealer Management System (DMS) is an end-to-end programmatic solution for auto (or moto) dealerships to manage their entire business. It helps track the vehicle lifecycle, manage leads, payments, and service appointments, and on top of that brings reporting to a whole new level, since all the data is in one system.

With the help of Dealer Management Systems (DMS), dealers are able to manage their entire business using a single platform, cloud-based dealership software. This system is designed for better monitoring and analysis of all areas of operations in order to obtain a much clearer picture overall. The integrations provided by this software allow for smooth information exchange between different departments within the same platform – making it simpler to use than ever before.

Example of DMS

The most simple example of a Dealer Management System (DMS) would be a screen, where a sales rep would see a customer’s name landed from dealer websites, configure a vehicle, send a quote to a prospect, and would put a task to follow up with the potential client. Later this system would remind the sales rep to follow up with a lead, and if all goes well will help to make a leasing inquiry, choose the vehicle from inventory, or order from the factory depending on the configuration.

Features of a DMS

As I’ve mentioned before, there is no clear definition of what Dealer Management Systems (DMS) should consist of. But here is a list of what functionality an average Dealer Management System (DMS) would usually have:

• Lead Management
• Account & Contact Management
• Opportunity Management
• Vehicle Lifecycle Management
• Service Appointment Management
• Vehicle Configuration & Quotes
• Test Drive Management
• Leasing Inquiry Management

This list is not full. Some more sophisticated systems allow for Invoice & Payment tracking, and inventory management and basically act as an operating system for car dealership operations.

Benefits of using a DMS or why you should get one for your business

When it comes to the benefits of having dealer management software (DMS) versus not having it in the company, the list is long, but here are a few examples.

• Spend less time chasing down leads. 
• Close more deals and grow your business faster.
• Keep your customer’s information organized and accessible from any device.
• Get real-time updates on the statuses of your vehicles and parts.
• Keep track of your entire vehicle inventory from a single software system.
• Reduce the amount of time it takes to manage your dealership’s vehicles.
• Keep your service department organized and efficient.
• Manage customer appointments quickly and easily.

The list of benefits that a good auto dealership management system (DMS) can bring to your car business is nearly endless. It will help manage and organize the company, allowing for more time and energy to be devoted to its growth.

Role of DMS in the digital transformation of a dealership

Now that we’ve learned the basics of what is Dealership Management System, let’s roll back a bit and talk about a more deep, transformational role a Dealer Management Systems (DMS) can play in your auto dealers business.

In spite of the recent burst of e-commerce, self-service portals, and the shared economy, companies across all industries are facing a challenge. The challenge is: there is no expertise within the company to operate digitally. I mean most companies simply do not understand how to use digital tools. This is the reason why digital consultancies are making profit margins comparable to drug dealers (apologies for this comparison, but that’s not as far from true as you may think).

A dealer management software (DMS) implementation could play a very important, educational role for a dealership. It may help businesses survive and not fall into the very dangerous trap which tuns investment in IT into a waste of an unlimited amount of money.

The Digital Asset Trap

What does an average businessman think? I will invest a dollar and get a few dollars back in return. This logic was working for decades, if not centuries, yet it is not the case anymore. The digital era has created a very dangerous trap for companies and industries that have been here for a while. I call this a “Digital Asset Trap”.

How conventional assets work

To understand how the trap works, I need to provide you with a simple investment example. Let’s take real estate. When considering real estate as an investment, there are plenty of advantages to factor in. Most obviously, tangible assets can be used in a variety of ways; you can rent out the property, sell it for a profit, or modify it and make use of it yourself. Doing your research beforehand is easy – all the knowledge you need regarding market values, rental rates, and potential rates of return is freely available. On top of this, if worst comes to worst and you don’t like the outcome of your investment strategy with a particular property, you can always sell it for at least part of what you invested.

How digital assets work

Digital assets are very different from traditional forms of property. Instead of buying tangible items, you are buying tools that will eventually create valuable assets. These may not be recognizable as “assets” right off the bat, since these tools require quite a bit of skill and effort in order to assemble and utilize them effectively. For instance, your digital assets could consist of complex customer data, custom integrations with partners, or streamlined workflows within your organization – none of which was likely taught by your father or high school teachers. Despite this complexity, it is ultimately up to the company to leverage these digital tools and turn them into something with market value. Acquiring artistic skills and savvy business acumen should ideally provide the necessary skills to make this transition successful.

And this is one of the worst business traps humanity has invented for itself in the last fifty years. Especially for auto dealerships. Digital business can generate huge added value and bring hundreds of dollars of return on a single dollar of investment, which is a very tempting venture. And worst, if an auto dealers company is not investing in digital, its business’s long-term survival is the sword of Damocles. There is no doubt that is just a matter of time before yet another disrupting piece of technology appears on the market which will ruin the whole industry and companies who were in the business for decades will simply disappear like dinosaurs after the hit of Chicxulub meteorite.

Dealer Management System as a vaccine against extinction

Thankfully there is a vaccine against extinction. It’s called learning by doing. Learning by gradually implementing Dealer Management System. Traditional businesses that manage to learn how to benefit from technology can still survive in this era. And not only survive, but transform its centuries-long experience into new products which would benefit its customers and help surpass another century.

You can’t buy a ticket to a successful digital business, but you can start small. By implementing dealer management software (DMS) in your dealership you will gradually learn what digital tools are and how to use them. And when another disruptive start-up appears on the landscape you will be prepared. And with all the technology and new knowledge in your arsenal, you will be capable of partnering with them leaving your competitors behind, and handing over your auto dealerships business to generations to come.