Dealer Management System: What Is It and Which Dealers Need It?

By Deal Pack - July 20, 2012

What is a Dealer Management System (DMS)?


The term DMS has several different acronyms in many industries, such as department of management services or a document management system. Even in the automotive industry, the term DMS can mean “dealership management system” or “dealer management software” or “dealer management solution.” Regardless of the exact words “DMS” is referencing, they essentially mean the exact same thing. A Dealer Management System is the lifeblood software of a dealership or finance company. Without a DMS, the dealership will not grow or survive in today’s industry.


A DMS is software designed specifically for the automotive industry that manages each facet of a dealership. Dealer Management Systems are responsible for performing all the day to day transactions a dealership encounters. A dealership has sales operations, financing operations, service operations and they all need to work together. Integration is a key component of a DMS because what one operation does directly affects all others. Dealers don’t have time to make costly mistakes by using subpar software. The auto industry is heavily regulated, so the DMS is also responsible for ensuring compliance to all government regulations and codes. Not following these rules could mean hefty fines, penalties, and even revocation of one’s license.


Dealer Management Systems should also help employees work more efficiently in their jobs. Here’s an example: A service and parts employee that is responsible for repairing customer’s vehicles needs to keep track of costs for accounting purposes. The employee can input the cost of a part after a repair into the DMS, and that information is automatically transferred to the General Ledger (G/L). He or she does not have to worry about complex calculations or double entry. Also, if the dealership is running low on a certain part, the DMS can notify employees that it’s time to order a new part.


Typically, DMS providers have focused on servicing a niche market such as the new car (franchise) market or the Buy Here Pay Here market. Each market is very competitive with several DMS providers to choose from, which is great news for auto dealers or finance companies. However, all dealership management software companies are not created equal so you need to do your research. Cost is definitely important when making a business decision, but you will end up paying more in the long run if you try to skimp on services and compliance. For example, if you are a buy here pay here dealer with a related finance company, you need to ensure your DMS provides specific BHPH solutions. Approach cost as which DMS is the best long term investment in your growth.


Which dealers need a Dealer Management System (DMS)?


If you fall into one of these groups, you need a DMS: franchise dealers, independent dealers, Buy Here Pay Here (BHPH) dealers, Lease Here Pay Here (LHPH) dealers, leasing companies, and finance companies. The truth is this: To grow your dealership efficiently, you will need to invest in a Dealer Management System. Let me explain why.


Let’s say you started a dealership 20 years ago; everything has gone well and now you have grown to several rooftops and locations in your city. Here’s the problem: Each dealership has its own business strategy, Dealer Management System, and unique customers. With recent legislation being passed, each business strategy needs to adapt to new government regulations. Oh, and now you have to worry about consolidating financials which means accounting for leases because one of your dealerships operates a Lease Here Pay Here. Take my word for it; you don’t want to mess with the tax man… He will win. So, what are your options?


Management can gather a team of programmers and attempt to build a completely customized solution. Unfortunately, even with millions of dollars and thousands of man-hours spent by your team, it will not work. Even if they could build something, the training and upkeep would be unbearable. Many have tried and failed – learn from their mistakes.


The other option is to select a robust, fully integrated Dealer Management System that handles this for you. I understand many people learn by experience, but it’s not always necessary and can be very costly. I wrote this article because I wanted to share with you honest, helpful information so you don’t have to waste time or money.


What is the difference between Deal Pack and other Dealer Management Systems?


The key difference between Deal Pack and every other Dealer Management System comes down to the foundation of the software. Think about building a house, where do you start? You wouldn’t start building a house with a roof- you begin with a cornerstone. Deal Pack was built by accountants specializing in the automotive industry. This accounting foundation separates it from every other DMS out there. When any deal involving a vehicle transaction is completed, Deal Pack automatically accounts for these changes seamlessly, updating your G/L and controlled subsidiary reports in real-time. There are no exports to QuickBooks or other third party software applications, and no double-entry. It was designed by dealers who knew exactly what they needed to run their business efficiently. Inexperienced software vendors can design and beautify applications, but they won’t stand the test of time because the foundation is not there.


Several applications have tried to add accounting components or leasing capabilities but they fail. Why? The intricacies of accounting for the automotive industry are not there. Accounting is very complex in the auto industry and can have serious consequences if not performed correctly. Deal Pack has been in this industry for 30 years – this is all we do. Publicly traded, billion dollar corporations will not trust amateur software for their DMS – they have trusted Deal Pack.


Deal Pack can handle each and every component of your dealership including Sales, Leasing, Finance, and Parts & Service. It does it all with real-time accounting which means no double entry by your employees and no tedious exports. When your dealership grows, Deal Pack flourishes with you and adapts to your needs. If you currently focus on Buy Here Pay Here operations but later decide to add leasing – you don’t have to switch systems. Please take the time to speak with current Deal Pack customers if you have any questions in regards to your current DMS provider. In fact, we will even provide references so you don’t have to take our word for it.


All In All


Survival in today’s economy require stellar software and adaptability. The market changes rapidly and you have to be ready at a moment’s notice to remain profitable. Just like investing in your children’s education for the the future, dealers need to invest in an integrated DMS. Remember, the right Dealer Management System can be the difference between success and failure.

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