DealerTrack Partners with Manheim, Sundaram Discusses Market Trends
LAKE SUCCESS, N.Y. — DealerTrack recently announced its partnership with Manheim to work together on inventory management products.
The two companies came to an alliance under which DealerTrack will provide its InventoryPro management solution to Manheim's POINT customers. Manheim officials said they will rely on DealerTrack to provide inventory optimization product solutions to meet their customers' needs.
Moreover, Manheim said it will work with DealerTrack to enhance InventoryPro with POINT features, including access to Manheim Market Reports, Ad Manager and Manheim Power Search.
Executives said the newest version of InventoryPro will launch in the third quarter of this year.
As another part of the alliance, Manheim said it will team up with DealerTrack to market and sell InventoryPro and help transition Manheim POINT customers to the product.
"This agreement with Manheim represents our shared goal of providing innovative tools to address the needs of DealerTrack's 22,000 active dealers and Manheim's 65,000 dealer relationships," explained Mark O'Neil, chairman and chief executive officer of DealerTrack.
"As used cars become a more important contributor to dealer profitability, together we can help dealers better manage their inventory through powerful analytics and highly relevant live-market data," he added.
Manheim's senior vice president of development, Ralph Liniado, said, "We are pleased to have joined another industry leader to work on these dynamic initiatives that will enable us to better serve our mutual customers.
"We believe this relationship will benefit our customers by bringing greater efficiency to the process of managing inventory and positively affecting their profitability," he continued.
Sundaram Reviews Market Trends
In DealerTrack's spring issue of DealerTracking, Raj Sundaram, senior vice president of dealer solutions for the company, discussed what he sees for the future of the marketplace.
For the short term, he said new-car margins will persist in shrinking, while he expects interest rates to remain steady and government regulation to continue increasing.
"With an economic forecast like that, it's only natural to consider sitting tight and waiting out the storm," he explained in DealerTracking. "That could be a losing strategy. Many dealers have already told me that they plan to rely on increased revenue and profit generated by their F&I and fixed operations to get them through the rough times ahead. It is likely that the economic pressures bearing down on the auto industry in 2007 will affect every component of their business.
"In addition to the F&I and fixed operations, the used-vehicle business will provide a significant opportunity to increase profitability," he said. "In brief, here's what the stats reveal: The supply of used vehicles (one to five years old) will begin climbing in the second half of 2007. The supply of these used vehicles will be significantly higher in 2008 and 2009.
"At the same time, used-vehicle prices will continue to strengthen. That's a rare win-win opportunity that most dealers would like to jump on," he highlighted.
As technology evolves and becomes even more popular in the industry, Sundaram said it will be increasingly difficult for dealers and used-car managers to simply rely on gut instinct for making business decisions.
"For Tim Paasch, who oversees the used-car inventory for Victory, analytic technology has become an indispensable tool for making sure the right cars are in the right stores at the right time," Sundaram pointed out. Victory Automotive Group has 22 stores in eight states.
"The analytics tell him what's needed at which stores," he noted. "They tell him which cars he needs to buy and which cars he needs to sell. He can analyze by model and change the parameters from 45 days to 90 days. He can also find out how many cars were sold by Victory dealerships in the past 90 days and which models were the top sellers. Then he can dig down deeper and find out which colors and which options are hot at which store."
Concluding his article, Sundaram said, "My own prediction is that early adopters of analytics and technology will gain a competitive advantage in the retail automotive market. Since that market seems poised for an upward surge in used-vehicle business, inventory management will be a critical capability."
For Sundaram's complete article and more from DealerTracking, visit www.dealertrack.com/portal/extras/magazine.aspx.
DealerTrack Shares 1Q Financial Results
The company reported $51.7 million in GAAP revenue for the quarter, up 36 percent from $37.9 million in the same period of 2006.
As for net income reached $4.8 million, up 40 percent from $3.4 million in the same quarter of 2006.
"Our first-quarter results represent strong performance from both subscription and transaction businesses and our ability to drive revenue while controlling costs," explained O'Neil.
"Our growth momentum is fueled by ongoing traction in the expansion of our network, products and services, and the powerful value proposition of our on-demand solutions for the automotive retail industry," he continued.
As of March 31, executives said there were 22,642 active dealers in the company's network, up 4 percent from 21,794 the year prior.
Furthermore, the number of active finance sources hit 344, up 61 percent from the previous year. Meanwhile, the number of transactions processed in the network for the quarter was about 22.7 million, a 45-percent increase from about 15.7 million in 2006.
Moreover, the number of revenue-generating subscriptions in the network came in at 23,267, up 42 percent. Officials pointed out that about 50 percent of active dealers in the network have one or more of DealerTrack's subscription products.