Automotive News - March 9, 2009 - (Page 4) 4 • FEBRUARY 9, 2009 ADP-Reynolds venture takes on DealerTrack, RouteOne Ralph Kisiel rkisiel@crain.com Prepare for a slugfest in the business of transmitting credit applications electronically. ADP Dealer Services and Reynolds and Reynolds Co., the two largest suppliers of dealership management systems in the United States, have created a joint venture called Open Dealer Exchange. It allows dealers to electronically transmit credit applications and other documents to financing sources directly from their ADP or Reynolds systems. The venture is a direct challenge to DealerTrack Inc. and RouteOne LLC, two Web-based systems that already connect dealers to lenders. The two sides already are sniping at each other. RouteOne CEO Mike Jurecki says he has “not heard any market outcry for additional players.” Steven Anenen, president of ADP Anenen: Using O’Neil: The more rival services may finance sources, be clumsy. the better. Dealer Services, says dealers can continue using DealerTrack and RouteOne. “But it may be a little bit more clumsy to go in that direction,” he says. ADP and Reynolds say Open Dealer Exchange will make it even easier for dealers to transmit documents because they do not have to take the customer information in their systems and manually transfer it to another system. ADP and Reynolds are spirited rivals, but they already have a joint venture that allows dealers to connect directly to the department of motor vehicles in 25 states. That venture, Computerized Vehicle Registration, has been in place since 1992. “Coopetition is not new,” says Anenen. “Many industries do it. If we can have two powerhouses come together and are able to share utilities, then everyone wins.” Open Dealer Exchange already has an undisclosed number of participating lenders, but it will take about 18 months to bring it up to “critical mass,” says Kevin Henahan, ADP’s senior vice president of marketing. DealerTrack CEO Mark O’Neil says his company has the numbers on its side. DealerTrack connects dealers with 730 lenders and expects to have 1,000 by the end of 2010. Says O’Neil: “The number-one ADP, Reynolds vs. DealerTrack, RouteOne ADP joined rival Reynolds and Reynolds to create a venture that will send credit applications and other documents to lenders. They’re taking on DealerTrack and RouteOne. Here’s what the venture means for dealers. Pros Ease of use. Dealers can send credit applications and other transaction documents from their dealership management systems directly to lenders. Speed. Dealers get funding faster from the lender. Cons More limited. The venture has far fewer financial institutions lined up than competing systems from DealerTrack and RouteOne. Fewer options. A dealer who chooses the new venture cedes even more control of dealership operations to ADP or Reynolds. Source: ADP, Reynolds, DealerTrack and RouteOne thing dealers care about in this environment is access to financing sources — the more, the better. They have to reach out to a broader array of lenders to get the widest possible choice of financing alternatives.” c As he sues Nissan, dealer is puzzled over lost store Lindsay Chappell lchappell@crain.com Last year, Nissan dealer Ray Dixon lost his dealership in Orange County, Calif. A dealer losing a store is becoming all too common in the United States. What’s surprising to Dixon is how quickly it all went bad after Nissan encouraged him to buy the point. Within two years of taking over, with Nissan’s encouragement, Family Nissan was losing $200,000 a month. As sales faltered and the situation worsened, Dixon tried to find fresh capital. When that failed, Nissan terminated his franchise and the store closed last May. Dixon then lined up a willing buyer for the store, but says Nissan did not pursue the effort. Dixon and his partner, Marc Spizzirri, are suing Nissan North America Inc. in California Superior Court for Orange County. Dixon and Spizzirri are the third dealers who failed to thrive at the location in Rancho Santa Margarita, Calif. Today the point is simply an abandoned building — an odd case of a modern Nissan store failing in a corner of one of its strongest regions, 60 miles south of Los Angeles. Beyond a brief statement, Nissan declines to comment on the dealership or the suit. And Dixon, a minority dealer whose Family Automotive Group partnership also owns Family Honda next door, is not ready to put his finger on the precise reason for the store’s failure. “Why did this happen?” Dixon ponTIM RUE see NISSAN, Page 25 Ray Dixon is troubled over losing Family Nissan in Southern California. “Why did this happen? I really don’t know.” At D.C. show, industry unites in pleas for federal help Harry Stoffer hstoffer@crain.com WASHINGTON — At the Washington Auto Show, cars shared the spotlight with some ominous warnings. Auto dealers predicted the U.S. economy won’t recover until consumers start buying vehicles again. Suppliers warned that despite U.S. aid to automakers, the failure of some parts makers over the next few months could disrupt industry supply chain operations. Automakers said state and federal regulators will make a bad situation much worse if they don’t agree on a single cost-efficient way to regulate fuel economy and greenhouse gases from vehicles. Industry leaders showed unity not only in their distress but in their pleas for government action. “There could not be a more important time to get the policy right,” said Phil Brady, president of the National Automobile Dealers Association. The Washington show, designed to U.S. Rep. John Dingell, D-Mich., left, receives the inaugural Keith Crain/ Automotive News Award at the Washington show. Crain is at right. aid government-industry dialogue, appeared to serve that purpose. Green discussions Top Obama administration officials and California’s chief regulator of vehicle emissions toured show dis- plays. They heard auto executives explain what they are doing to make vehicles greener. Dave McCurdy, president of the Alliance of Automobile Manufacturers, guided Transportation Secretary Ray LaHood, EPA Administrator Lisa Jackson, White House energy and climate chief Carol Browner and Mary Nichols, chairwoman of the California Air Resources Board. Rep. Sander Levin, D-Mich., said Obama is “stimulating people to get their heads together.” Levin said officials appear willing to find ways to avoid costly duplicate regulations. The EPA soon could give California and at least 13 other states permission to enforce greenhouse gas emissions rules for cars and trucks. At the same time, the federal agency is researching and could issue national greenhouse gas regulations. Meanwhile, the Transportation Department is under a legal mandate to raise fuel economy standards at least 40 percent during the 2011-2020 Stimulating ideas Lawmakers are listening to industry pleas for government action to get would-be vehicle buyers off the sidelines. Here’s a status report. Make auto loan interest tax-deductible: Approved by Senate, not yet enacted Pay consumers to trade in “clunkers”: Considered by Senate late last week Give every new-vehicle buyer $5,000 tax credit: Introduced, not yet considered model years. And Congress is moving to enact a federal climate change law. Economy troubles At the moment, though, the threat of economic collapse is a greater industry concern. “The industry could come to a dead halt in March,” Bob McKenna, presi- dent of the Motor & Equipment Manufacturers Association, told Automotive News. The association represents about 700 suppliers, half of which make original-equipment parts. The association has warned the Treasury Department and Congress that supply chain failures could shut down Detroit 3 and import-brand factories. Last week suppliers petitioned the government for emergency loans. NADA Chairman John McEleney came to Washington to ask the federal government to guarantee dealer floorplan loans and to provide consumer incentives. The Senate version of the economic stimulus bill would allow consumers to deduct loan interest and sales taxes on new vehicles from federal income taxes. The tax breaks represent a savings of about $1,500 on a $25,000 vehicle purchase. Said McEleney, a multifranchise dealer in Clinton, Iowa: “The recovery is going to start in dealer showrooms.” c
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