Reynolds and Reynolds Co. aims to step up its acquisition activity as the retail technology giant charts its future product portfolio.
In addition, the privately held dealership management system provider will take a more public stance with the industry, company President Chris Walsh told Automotive News. That will happen through both Walsh’s role as the public face of Reynolds and with the hiring of an industry relations director, whose job will be to engage with groups such as state and national dealer trade associations and dealership consultants.
Walsh, 57, who was promoted to company president in January from his role as executive vice president of sales and marketing, also will help steer the Dayton, Ohio, company’s ongoing work to simplify its DMS contracts and improve its relationships with dealer customers who have perceived Reynolds to be inflexible.
Walsh will work alongside Willie Daughters, 54, who last month was promoted from executive vice president of operations to COO. Both men succeed Tommy Barras in their respective roles.
Barras, who was promoted to president and COO in June 2020, retained both titles after he was named CEO that November following the departure of longtime CEO Bob Brockman. Brockman stepped down after he was indicted on federal tax evasion charges. Barras remains CEO.
“Willie and I will be relied upon pretty heavily when we think about things like product discussions — so what is the functionality that we really need to build into our products, or what acquisitions are out there that we need to be looking at in order to strengthen our product portfolio?” Walsh said in an interview this week. “We’re going to probably be more active on the acquisition side than we have been in the past.”
Reynolds’ product focus — in particular, its Retail Anywhere strategy, which aims to help dealerships reach consumers online, in-store or in some combination of the two — is happening as the coronavirus pandemic has prompted auto retailers generally to embrace e-commerce. Reynolds last year bought digital retailing provider Gubagoo and is working to integrate the platform into its DMS, including desking, finance and insurance and e-contracting processes, Walsh said.
Walsh declined to disclose specific details about acquisition opportunities but said there may be ways to diversify Reynolds’ product lineup within automotive beyond areas in which it has specialized.
“We play in the DMS space, but there’s lots of other things that go on in automotive,” he said, citing F&I as an example. “Where do we think we can be good? Where do we think we have some experience? And where do we think some of those things can connect with other things that we’re doing?”
Reynolds is in the midst of reviewing its entire business in a bid to improve its standing in the market and attract and retain dealership customers.
One of its initiatives is to simplify its DMS contracts, and the streamlined versions likely will roll out within weeks, leaders said. The new contracts will be around 40 percent of their previous size, Walsh said.
Reynolds has not disclosed details about how or whether it will phase out the fees it charges to integrate third-party software vendors, which dealerships long have complained about, other than to say the topic is on the table and a longer-term initiative. Walsh said the company is “heavy in discussions with a lot of third parties in how we can change this program.”
The company last fall said its DMS customer renewals had increased roughly 15 percent during a six-month period in 2021 compared with an earlier six-month window that covered time in both 2020 and 2021. Reynolds leaders this week said the rate of such renewals had inched up toward 18 percent when comparing a nine-month period from March through November 2021 with that same earlier 2020-21 six-month period. Walsh added that Reynolds had seen more new and returning dealership customers on its platform since it began to pursue a more flexible approach to contract negotiations.
Reynolds does not disclose the number of dealership customers on its DMS platform. It has faced pressure in the market, and its longtime position as No. 2 behind rival CDK Global Inc. has become less certain in recent years amid new competition from smaller and startup DMS providers.
“There’s going to be people who are going to choose different DMS providers for lots of different reasons, and we feel like we’ll be in every conversation. Are we going to win every customer? No, we’re not going to win every customer,” Walsh said. “We’re going to fight like hell to win every customer and keep every customer. But I’m not worried about competition. I think competition is healthy for the industry, and, frankly, I think it’s healthy for us. It causes any company to look at themselves.”