Chrysler, GM Closures Don't Faze Car Dealer-Focused VAR

Reynolds & Reynolds has been expecting the cuts for some time and had adjusted its business model accordingly, the spokesman said. He did not say how many of the affected dealerships were Reynolds & Reynolds customers.

"I can tell you what's been surprising is the pace of cuts. Most of the domestic [auto] producers have been signaling for the last several years that they want to winnow their dealership base," according to the spokesman. "If you look at the domestics, they probably account for 75 percent of the dealerships, but only 50 percent of the market share. Clearly there was some adjustment that needed to take place there."

Reynolds & Reynolds expects the automakers to target underperforming dealerships for closure, which could mean dealerships that did not have the right business processes or appetites for technology anyway, the spokesman said.

"It's hard to say a number and that equals 'X' for us," he said. "The other thing to probably think about is a lot of dealerships have multiple franchises. So you might have Mazda, Jeep and Ford under your umbrella. If Jeep goes away, but you keep Mazda and Ford, we might lose very little in that regard."

After the dust settles, the VAR believes that the automakers, as well as dealers, will be smaller, but stronger and more profitable, which could result in better business for VARs that focus on the automotive market.

"Our point of view is larger dealerships will have much more of an appetite and a need for technology and services. They can't just keep adding people to run the business. They have to rely on technology and tools. The larger you are, the more likely you are to need those solutions. One year from now, we may serve fewer dealerships but have a larger amount of business from them," the spokesman said.