A dealership management system (DMS) or auto dealership management system is a bundled management information system created specifically for automotive industry car dealerships or large equipment manufacturers...

Car Dealership Management System know how

Car Dealers management system

A dealership management system (DMS) or auto dealership management system is a bundled management information system created specifically for automotive industry car dealerships or large equipment manufacturers, such as Caterpillar Inc dealerships, and also adapted for cars, boats, bikes, RV, and power sports dealers. These systems often contain software that cater to the needs of the finance, sales, parts, inventory and administration components of running the dealership.

DMS software typically includes support for all aspects of running a dealership such as:

  • Tracking sales
  • Parts inventory
  • Follow-up

A typical DMS installation includes a central server which stores all data, allowing multi-user access for as many as 50 or more client computers. Some installations may include thin clients.
Other DMS providers use a centrally-hosted, or software as a service/application service provider model.

A DMS usually offers interfaces with other systems, especially manufacturer’s systems to enable automatic processing of purchases, warranty claims, price lists and many other data.

In Europe many automotive manufacturers prescribe specific DMS to their dealers though this is no longer officially allowed under the Block Exemption Regulation.

Dealerships use specific software to meet the complex requirements of their business. Typically small scale dealers will manage their business with a generic accounting package and extend functionality with plugin’s or other bolt-on software. The advantage for dealers running a specialized system are numerous, however the primary outcome is a more efficient dealership. Dealer Management software typically encompasses all the tools mentioned above however difficulty arises when dealership staff are evaluating vendors and deciding what software to implement. Integration of these tools is key but dealer principals and other key staff still need to pay attention to other factors such as cost.

What Exactly Is DMS?

DMS is a widely used acronym these days and it cries out for a clear definition. DMS stands for Dealer Management System, which on the surface seems to specify something of clarity, but clarity is very elusive when you look at the many varied uses of the term DMS. So let’s define clearly what a DMS should be.
A Dealer Management System should be a system that clearly measures, reports and controls the functions within a dealership yielding quantifiable, reliable and timely information of significant importance to the dealer and dealership management. Now, with that out of the way, what exactly do we mean? – DMS most commonly refers to a software solution for your dealership that will meet the qualifications as we just defined them.

There are some basic, but very important, factors that must be present in your DMS software.

  • Integration
  • Reliability
  • Audit trail

Integration is simply the exchange of information between operational areas of your software with the purpose of streamlining effort, eliminating duplication and reducing the opportunity for human error. This means that information should be able to flow from one department to another and back; for example, from accounting to sales and from sales to accounting, thereby eliminating the need for duplicate entry.

Reliability of information is dramatically increased when this exchange of information occurs. This information exchange cannot take place in a multiple vendor software solution. More specifically, third party general accounting software, like Quickbooks and Peachtree, do not have the ability to update your inventory when a new vehicle is purchased or reconditioning is applied, therefore separate entries must be made to your sales software and your accounting software.

For dealers with a service department, internal repair orders (when completed) should add to the reconditioning cost of a vehicle and be sent to accounting automatically. Otherwise, the same internal repair order would have to be handled at least three times by different dealership personnel. Each handling of that repair order is an opportunity for error, a waste of manpower and an unnecessary expense. A single vendor solution, to your dealership software needs, provides a much stronger reliability factor and a much improved audit trail.

The importance of a proper audit trail cannot be overstated in your DMS. An audit trail means that no transaction can be processed in your dealership that does not flow through to your financial statement. This requirement provides the necessary information to make personnel accountable for performing their job correctly, handling money appropriately and for tracing the flow of financial transactions from origination to completion.

The final resting place of any financial transaction is in your financial statements. Have all the sales recorded, all the cash deposited, all receivables logged. At no time should any completed transaction be removed without showing that it was there and then was reversed. For example, at the end of the year, most dealers will write down their inventory for tax purposes. There should be a traceable record of write downs that supports the original purchase cost of each vehicle and the resulting adjusted cost. Such an audit trail provides proof of your vehicle inventory balance, stock number by stock number. Every aspect of your dealership should be subject to audit trail verification in order to prove that your financial information is correct.

The term Dealership Management System implies a comprehensive set of controls, measurements and reports that provide an accurate picture of your entire dealership. Be sure when reviewing your software or shopping for new software, that you look for a system that will help you and your staff operate and manage your entire dealership; not just sales, not just service, not just accounting. Your success depends on all departments in your dealership working cooperatively and efficiently towards a single goal. Be sure your DMS helps rather than hinders this objective.

No other investment can impact your dealership as completely as a good DMS.

It provides structure, eliminates work, increases reliability; all of which make profitable growth a reality rather than a dream.

Such software systems now provide dealerships with lending valuation criteria. Integrating valuation with dealership data reveals how much customers in each rating class can borrow from lending institutions while a vehicle is being appraised. The software thereby assists dealership personnel with the appraisal process by ensuring that a particular vehicle can be financed – and at what loan amount – for a particular consumer.

Additionally, dealerships can quickly determine which vehicles are best to obtain, as well as which to avoid adding to their inventory of pre-owned vehicles. This significantly increases the efficiency of the dealer’s special finance operation and ensures that all elements come together to help gain new customers.
These new software programs integrate with NADA, Black Book, KBB and other valuation databases to enable dealers to identify which cars and trucks on their lot are priced below the value that lenders will finance. This way, when dealers approach credit-challenged customers, they can identify only those vehicles that the customer can afford and still allow the dealership to make a profit.
Without this information, dealers and customers waste time looking at vehicles the customer can’t finance, creating frustration for everyone involved.

New software packages also allow dealers to obtain a water report with the click of a mouse. Knowing that the price a dealer has for a vehicle aligns with book list values, significantly bolsters a customer’s confidence in the dealership’s credibility.

Advantages to customers

Dealers who do not have tools like this can be put through an agonizing process of having their sales representatives walking a lot, selecting vehicles for which customers cannot qualify. This process costs dealers time, effort and money and leads to low morale and lots of frustration. Plus, the situation can be exacerbated if the dealer is not set up to handle sub-prime customers.

As part of the inventory book difference report, which the software instantly generates, dealers can quickly inform customers which vehicles they can acquire, based on their current financial and trade-in situation. From the dealer’s perspective, the software is a big advantage in that it factors in the need for the dealership to make a profit, while still making the transaction a good business decision for the customer. In cases where the customer is in a negative-equity position, it allows the dealer to help the customer find the best vehicle to absorb that negative equity.

This process saves time and effort by enabling dealership personnel to show the customer only those vehicles he or she can finance, while ensuring that the purchase is the most efficient in terms of financial commitment.

How Car Dealers Can Increase Leads

Over the years, we have focused on building the right software and the best process to help dealers communicate with their website visitors. It comes down to ease of use and impeccable customer service. These are all important, but at the end of the day, dealers want more leads. The number of form fills on most dealer websites have been on a steady decline despite sales going up. Much of this can be attributed to the continued rise of mobile website traffic; people are simply less likely to fill out a form on a smartphone than they would if viewing the page from a desktop.

Still, the need to gather contact information and to take charge of the sales process has kept the art of lead generation from becoming obsolete. If anything, it’s more important today than it ever has been.

While some would like to make it complicated, there really is an easy way to break down the improvement of lead generation on a dealer’s website. One way to do it is to increase traffic to the website. The more interested shoppers that you can get to your website, the more leads you’ll get. Increasing traffic can happen through a wide variety of advertising strategies from search marketing and social media to banner advertising and email marketing.

This is important, but it can also be expensive. Traffic isn’t cheap and the more you get, the costlier it usually is.

The other way to increase leads is to improve the way that the website engages with your visitors. This is where tools such as ours comes into play. When a dealer’s website maximizes its ability to interact with visitors in order to compel them to leave their information, the percentage of visitors that turn into leads goes up. This doesn’t require more traffic. It’s about improving the experience of the traffic you’re already getting.

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