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Thursday, August 30, 2018

Integrated Vehicle Solutions Group Sues Rick Case Automotive

A major provider of dealership management software programs and services is suing Rick Case Automotive Group, of Sunrise, Fla., for allegedly breaching its licensing agreement and misappropriating trade secrets.

Integrated Vehicle Solutions Group, which provides software and support services to dealerships, also accuses the dealership group, a number of its dealerships in Florida, Ohio and Georgia, and co-owner Rita Case of unjust enrichment and wrongfully refusing to return about 150 proprietary software programs after failing to pay monthly licensing fees for the past year and a half.

"These important and very profitable programs, clearly licensed under a written license agreement, have been appropriated," said the software provider's lawyer, Ian Kukoff, of Miami. "The Rick Case dealerships have refused to pay licensing fees and locked my clients out of their own programs."

"We believe those damages are in the millions of dollars," Kukoff said.

However, defense lawyer Aaron Horowitz, of Fort Lauderdale, Fla., said, "My clients deny the allegations of IVSG's complaint, and we will be defending the case vigorously." The Rick Case defendants have not yet filed their answer to the complaint.

Unpaid balance

Rick Case Automotive Group has 17 dealerships and ranks No. 39 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 21,913 new vehicles in 2017.

Integrated Vehicle Solutions Group partners with CDK Global, one of the two primary providers of dealership management systems in the U.S. Reynolds and Reynolds Co. is its major competitor.

According to the suit, filed June 11 in Broward County, Fla., Circuit Court, the Rick Case dealerships were licensed to use Integrated Vehicle Solutions Group programs for sales, service, accounting, parts and payroll management. From late 2010 until 2016, the dealership group and its stores accessed more than 1,395 individual modules "without incident, complaint or challenge" to Integrated Vehicle Solutions Group's ownership of the programs, the suit said.

In 2016, Integrated Vehicle Solutions Group upgraded the platform at the dealership group's request at a charge of $37,400, with a $16,000 discount conditioned on a new two-year minimum license agreement.

The dealership group paid the discounted amount, $21,400, but has refused to sign the new agreement or pay the $16,000 balance, the suit contends. The dealership group stopped making monthly license payments in February 2017 and has not complied with Integrated Vehicle Solutions Group's demand to remove the programs from its CDK dealership management system platform, it claims.

'Removed and purged'

According to the suit, Rita Case claimed that the group had paid a software engineer to "redevelop identical programs with the same functionality of the IVSG programs."

But Integrated Vehicle Solutions Group spokesman Greg Euston said, "There is no evidence to support that claim and, regardless, that sort of duplication would also be a breach of the licensing agreement."

The suit seeks compensatory and punitive damages, as well a court order requiring Integrated Vehicle Solutions Group's programs to be "removed and purged."

Kukoff said, "One of the things so puzzling to us is the actions taken by the Rick Case dealerships are indefensible — there doesn't seem to a rational basis for them."

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Hendrick Automotive group uses docuPAD to improve FandI sales manager training

Most dealers know that investing in training leads to success, but pinpointing training gaps can be a daunting task.

At Hendrick Automotive Group, executives know exactly how long an F&I manager spends discussing each product with customers. After migrating its 96 dealerships to Reynolds and Reynolds Co.'s docuPAD interactive tabletop F&I system, F&I work ethic is no longer measured by product penetration alone.

"More than anything, we know so much more about our business today than we did 10 months ago," Robert Taylor, vice president of information technology for Hendrick, told Automotive News in June. "I hope we're all still friends."

Information gleaned from the technology is already altering the dealership group's internal operations, especially in the F&I department, he said.

Over 10 months, Hendrick switched all of its dealerships to docuPAD from a previous Reynolds digital menu. Refining F&I operations across 130 franchises encompassing 28 brands wasn't easy for the Charlotte, N.C., group.

"People ask, 'Was this a technology project, an operations project?'?" Taylor said. But "this was a Hendrick project. It involved virtually every aspect of our organization being on the same sheet of paper."

The shift has already been an eye-opener. Starting with Hendrick Lexus in Charlotte in September, 350 docuPAD system workstations have been installed in all 14 states in which Hendrick does business. The final store, Rick Hendrick Toyota in Sandy Springs, Ga., made the switch in July.

Pressure to update operations came first from the consumer, Taylor said. Car buyers are looking for an interactive F&I process that matches the experiences they have when buying nonautomotive products.

"As our consumer is changing in the marketplace, it's going to force evolution and change in the dealership experience," Taylor said. "When you look at the rest of the retail industry, you're starting to see a tremendous amount of technology."

The rewards have been significant, according to Taylor. Not only has F&I profit per vehicle improved, but the efficiencies gained in the F&I office because of the tool, such as standardization and compliance, extend into accounting, where paperwork arrives more accurately. Simplifying these processes is allowing Hendrick dealers to funnel regained capital into other parts of stores' operations, such as vehicle inventory.

Tom Schwartz, spokesman for Reynolds and Reynolds in Dayton, Ohio, said in general docuPAD cuts 10 to 15 minutes off time with the consumer, according to participating dealers. Dealers also report that F&I profit per vehicle increases $200 to $225 after adding the tool. Hendrick would not disclose how much docuPAD has increased its F&I profit per unit.

When it comes to regaining capital, however, the value of the digital tool extends beyond cleaning up the paper processes to maximize product penetration. DocuPAD provides real-time data on where managers lag in the F&I process.

The information sent from docuPAD to the company's corporate office tells the full story of what's happening during the F&I sales process. Pairing the product penetration with an understanding of the behavior of the F&I manager during the selling process has been critical in revamping the company's F&I training process.

"The biggest thing that we've learned from leveraging the analytics and the tools is that no two F&I managers are the same. They work differently, and they have different skills and subtleties in the way the master their craft," Taylor said.

Tracking movement on docuPAD enables the company to target a specific F&I producer who, for example, might excel at service contracts, but may be struggling with prepaid maintenance. Because Hendrick executives can see how long an F&I manager stays on a certain page, they pinpoint actions an F&I manager made to bring the manager up to speed on areas that may need improvement, Taylor said.

Hendrick is not alone in deepening its ties to Reynolds and Reynolds. Penske Automotive Group, the second-largest dealership group based in the U.S., said in July that it will also install docuPAD in its 130 U.S. stores.

Hendrick ranks No. 6 on the Automotive News list of top 150 dealership groups based in the U.S. with retail sales of 113,267 new vehicles in 2017.

Hendrick would not disclose the cost of switching to docuPAD. Roger Penske said in November 2016 that infrastructure to install the system at his U.S. stores would cost between $4 million to $5 million, plus a monthly fee.

Melissa Burden contributed to this report.

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