Reynolds technology fuels auto dealer profits

New vehicle sales have returned to pre-recession highs even as the number of automobile dealerships have declined across the country.

Helping with this renaissance has been Reynolds and Reynolds, a Kettering-based company that has positioned itself to help auto dealers build revenues beyond selling new vehicles.

Reynolds and Reynolds President Ron Lamb recently sat down with this newspaper and discussed changes the company has made since the Great Recession and its future.

The company, which has a rich history in the Dayton area, provides auto dealer information systems and services, and derives 97 percent of its annual revenues from car dealerships and manufacturers, Lamb said. The privately held firm has more than 4,300 workers worldwide, including about 1,300 at its Kettering headquarters and 400 at its documents production division in Celina.

Over the past five years, Reynolds has rebuilt its Dealership Management System, the software that helps auto dealers manage their businesses, into a more expansive Retail Management System. The retail system provides tools and technology for dealerships to increase efficiency and engage customers more effectively, boosting their bottom line, company officials said.

Those products include “docuPad,” an oversized, interactive touchscreen device for the dealership’s finance and insurance manager to display necessary contract and disclosure documents, and electronically capture signatures.

“Because it speeds up and makes the process so much easier, the dealers are getting a better opportunity to share with consumers other products and services they can offer,” such as an extended warranty or tire protection, Lamb said.

Reynolds recently sold its 1,000th docuPad, which promises dealers an average of an additional $200 per deal in finance and insurance profit, according to company research.

“AddOnAuto” is an in-dealership touchscreen device that allows consumers to select accessories such as floor mats or roof racks for their specific vehicle model.

According to the Specialty Equipment Market Association, aftermarket accessory sales total nearly $40 billion annually, but new-car dealerships account for less than 5 percent of that market.

Lamb said new-car dealerships are under pressure to find new profit centers and better ways to serve customers because of increased competition, higher sales volumes, digitally connected consumers and regulatory compliance issues.

“The average gross profit for a new vehicle sale went down 6.8 percent from 2012 to 2013,” he said.

Lamb said the number of franchised new-car dealerships in North America has dropped by nearly 4,000 since the late-2008 start of the recession, with longtime brands such as Pontiac being discontinued.

In the U.S. alone, the number of new-car dealerships dropped nearly 17 percent from 21,200 in 2007 to 17,635 last year, according to the National Automobile Dealers Association.

Meanwhile, U.S. auto sales have surged from a 27-year low in 2009 to 16.98 million vehicles in June, the highest sales rate since the July 2006.

That gap means “we are now selling and servicing more vehicles per dealer than in the history of retail automotive,” Lamb said. New-car dealers must be more efficient and productive to keep up with this increased volume, he said.

Economists expect new car sales to remain healthy but flat in the coming years, due to the shrinking pool of pent-up demand and supplier limitations, among other factors.

“You’re not going to get more customers over the next five years, so you’ve got to do a better job with the volume you have today,” Lamb said.

Reynolds was founded in 1866 as a business forms printing company in Dayton. The company started serving automotive retailers in 1927 by providing standardized accounting forms for all franchised Chevrolet dealers. In the 1960s, Reynolds became the first forms company to offer computer services to U.S. auto dealers.

Reynolds operated as a private company until 1960, when it became publicly traded and was listed on the New York Stock Exchange. The firm returned to the private ranks again in 2006 after closing a $2.8 billion merger with Houston-based Universal Computer System Inc., a privately held firm.

The combined company kept its headquarters in Kettering and continues to market its products under the Reynolds name. Company officials declined to disclose the firm’s annual revenues or customer data.

During the recession, Reynolds invested funds and resources into integrating a number of technology products that the firm had acquired into its dealer management system, said Jon Strawsburg, the company’s vice president of product planning. That allowed the various functions to operate as one system and provided an entry point into dealerships for newly connected consumers, he said.

In addition, Reynolds built a $20 million data center at its Kettering campus that now handles up to 50 percent of all retail automotive transactions in North America, Strawsburg said.

“Now, every opportunity the dealership has to communicate with you, they are able to take better advantage of,” he said.

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