ARKONA Aims to Expand DMS Business to Independent Dealerships

By Richard Greene, AR NewsMagazine Editor - October 31, 2006

SALT LAKE CITY — Already a leading supplier of fully integrated on-demand business management solutions to franchised dealerships, ARKONA is now setting its sights on marketing its dealer management system and other suites to independent dealers.

"Historically, our client base has been skewed predominantly toward new-car dealerships, with some 650 franchised stores currently using our various tool sets," explained Richard Holland, president and chief technology officer at ARKONA. "We are probably the fastest growing DMS provider, and throughout 2006 we welcomed into the ARKONA family about 12 to 20 dealerships every month." 

As an example, Holland cited the agreement ARKONA struck with the Chapman Automotive Group earlier this year. This agreement enables Chapman Automotive Group's 20 dealerships throughout Arizona and Nevada to use ARKONA's Web-based, fully automated dealer management solutions to conduct accounting, finance and insurance, sales, parts, service and back-office functions, including payroll and sales management, with complete integration to the dealer's multiple OEMs. 

"The relationship with the Chapman Auto Group is significant to ARKONA due to Chapman's size and reputation in the dealer community," Holland said. "Working with Chapman has given ARKONA the opportunity to deploy its dealer solutions into a sizeable and demanding multi-dealership environment. Large dealerships and dealer groups have seen what has been accomplished with Chapman, and we are confident that many more will now seriously consider implementing ARKONA." 

And now the independent stores are on ARKONA's radar. "They're just over our horizon, and we're looking forward to cultivating them," Holland said. "To date, we have roughly 100 used-car dealers on board, and we want to expand that number throughout 2007." 

According to Holland, this system can be adapted to whatever the size of dealership at an attractive rate. "They can pay for use of the system on a per-vehicle-sold basis or on a simple monthly flat fee," he said. 

David Jenkins, ARKONA's vice president of marketing, added, "We don't want to take away from what we've done in the new-car franchised dealer market; that's been our bread and butter. But we believe used-car dealers are an untapped market, and we will be spending more time in that area in the coming year." 

Regardless of the type of dealership, Holland said that dealers need to gain any technological advantage they can to compete in today's highly aggressive marketplace and a quality DMS suite can help them stay ahead of the curve. 

"One of our real strengths to the market is our method of deployment," Holland noted. "We offer our tools via the Internet, so the store does not have to make a substantial investment of hardware or licensing of technology." 

Holland said he's fully aware of the increased pressures dealers are facing today. He said he talks with dealers every day, listening to their stories and their needs. "Most are doing quite well, but I'm detecting more and more are now struggling from month to month," he said. 

"In an incredibly competitive environment like we're seeing today, and with many dealers operating on narrower margins, any way they can obtain efficiencies in the way they manage their inventory or flex the value of their inventory will prove to their advantage," Holland went on to say. 

"At the same time, with the complexities of taxation, and with the other legislation that has laid additional burden on a dealership, a DMS that has those additional functionalities certainly can assist the store with remaining compliant in all of those areas as well," he added. 

Holland said ARKONA, through its various systems, is trying to empower dealerships as they move forward and as their businesses continue to evolve under topsy-turvy market conditions. "Every dealership is looking for other opportunities to add to gross profit, whether it's to introduce a fixed operations functionality or whether to move into the buy-here, pay-here operation. So, we're providing them tools that enable them to grow their business and become a more full-service operator," he explained. 

"Our full DMS suite, with all its inventory management tools, F&I products, all integrated with accounting solutions, wrapped with a CRM alternative, provides a complete turnkey solution to meet the information system needs of any auto retailer, whether franchise or non-franchise dealer," Holland explained. 

In addition to "four quarters of record sales," Holland said that ARKONA's expansion took place on several other fronts. The company has opened 11 new sales offices in the last 22 months, and Holland said he anticipates ARKONA will open additional offices to meet the rising demand, particularly in the Sun Belt states, including Texas, Florida and California. 

In June, ARKONA announced that it had signed an agreement with MediaTrac. According to Holland, this partnership brought together the "full benefits of ARKONA's dealer management solution and MediaTrac's customer loyalty program to deliver a more effective and integrated approach to customer marketing, retention and management." 

Jenkins said the decision to partner with MediaTrac was an easy one to make. "Their customer loyalty program is well laid out, smartly designed and delivers a real return on investment for its customers," he said. "Rather than develop a product to compete against one that leads in its category, we chose to partner." 

ARKONA also announced in September that it became "an integration partner" of RouteOne, a joint venture between the captive finance arms of General Motors, Ford, DaimlerChrysler and Toyota. Holland noted that "this integration between ARKONA and RouteOne creates a high level of efficiency for participating dealerships by eliminating the need to enter application data in multiple systems and also powers a robust reporting suite." 

According to John Schomburg, chief information officer of Woodhouse Auto Family, "Having RouteOne integrated with the ARKONA DMS addresses a critical need and helps streamline our F&I department, where we process an average of 1,500 vehicles each month." 

Schomburg further said, "ARKONA continues to push the edge by quickly and cleanly integrating their DMS with third-party products we have deemed necessary to our operations. The ARKONA interface with RouteOne is used daily at our Ford dealership, and we greatly anticipate having the same capability at our Chrysler dealership." 

Anticipating an ever-changing market, Holland said ARKONA is "thinking ahead" regarding the globalization of its various solutions. "We foresee a trend that car deals will have to be performed in the native language of the buyer," he noted. "At this point, this functionality has not yet been deployed, but it will need to be shortly to enable a store to maintain a competitive edge over its neighboring competition. 

"We're focused on Spanish and French, but we also expect to add Italian, German and the Asian languages to foster the nationalization and the localization for those buyers who speak only those languages," Holland continued. "So when the sales associate works the car deal, as he does his 4-Square and offer sheet, everything that shows up on the screen will be presented in the native language of the buyer. This will become a major trend, and just like we're excited about equipping dealerships in so many other areas, we're going to help them get ready with this as well." 

Fresh off an engaging annual dealer symposium, at which ARKONA officials heard from and interacted with dealer clients, Holland concluded, "We anticipate in 2007 continuing to expand our particular market, opening additional regional sales offices to have ARKONA personnel closer geographically to the front doors of our clients and extending the offerings of the ARKONA solution to further empower dealerships so they can succeed. After a tremendous 2006, we can't wait for the new year."