It’s not really black cats and witches on the streets this Halloween that you should fear: What about possible monopoly power in the hands of a few companies that could seriously hurt your dealership’s business this Halloween? And every day?

Now THAT trick is scary.

History can show us a clear parallel to how cartel, or monopoly, power may be hurting dealers, good vendors, and consumers in automotive. In the late 90’s, the Department of Justice (DOJ) filed a massive lawsuit against a huge American success story: Microsoft.  Why?

The DOJ lawsuit accused Microsoft of using their immense size to fix market pricing, bully suppliers and computer OEMs and vendors into one-sided agreements, and essentially pushing every competitor out of the marketplace every way they could. The DOJ promoted that Microsoft worked to prevent a choice of anyone else.

The DOJ was correct. 100%. And Microsoft folded their hand, changed, and competition has dominated—and the marketplace, companies, and consumers have benefited. This is the same worry that will likely kill the AT&T/Time Warner merger this year: Too much marketplace power ($85.4 billion is the deal’s price alone) in one place can be bad, both for business and consumers. Both presidential candidates have, in fact, expressed concern against this merger, because anti-trust laws are in place to prevent the anti-competitive nature of monopoly power—capitalism needs competition to get the best products. The best answers. Even the European Union (EU) has laws against such cartels.

How does this apply to automotive retail? The same monopoly power abuse may also be happening, and if so then it is likely costing you sales and CSI—and may be costing the consumer money, too. There are several situations to worry about, but I’m going to talk about two examples that draw my concern: Shift Digital and General Motors.

Shift Digital seems to control much of the digital space for almost every major vehicle manufacturer. If I have it right, it appears that, for these manufacturers, you just about can’t do business, get an interface, pass a certification, etc. without going through Shift in some manner. Or some spot Shift has a say in. For example, one of the “approved CRM” lists for a major OEM includes companies that don’t even HAVE a CRM product? How did that happen? Even if it’s in simple error, it still makes me wonder: How many expensive mistakes like this hurt dealers? Why do they happen?

In fact, superior products for dealers sometimes may not get an OEMs’ direct attention. GM, for example, doesn't seem to easily open their systems or certifications, and from what I 've seen they haven’t certified new CRM vendors in years and haven’t announced when they will start certifying again—making dealers perhaps use often-more-expensive “horse and buggy” solutions (“brooms”, here at Halloween) when money-making rockets are available.

Make no mistake, any poor vendor products that you are FORCED to choose to use will cost you MONEY.

Contrast that with the great work that OEM Daimler (Mercedes, yep) has done, culminating with Motive Retail, to open their systems since 2014. Daimler dealers in this system aren’t hurt by ad hoc tool limits, great vendors can provide great solutions, and ultimately the dealerships and the consumers both benefit. Dealer profits and CSI can naturally get better by the DEALER’s choice—but this shouldn’t be limited to Daimler’s Mercedes. All dealers should have this fair situation.

However, apparent anti-competitive practices (on purpose or not) in our business may currently keep the best sales products—and, ultimately best profits and highest CSI—from your stores. And they may LOSE YOU SALES. That’s my opinion, and maybe I’m wrong, but you can look at the facts on your own.

And that is where my worries about this most parallel Microsoft’s DOJ problem: Microsoft made money, stiffed the consumer, and laughed all the way to the bank. For years. Carrying their “partners” and the consumer’s money.

Until the DOJ stopped them. I'm not saying monopoly power IS being abused. However, the question from my chair—really, the rally cry from automotive retail—is “DOJ, Where Are You?”. They need to show up and at least look at this. Because maybe this isn’t going to change to cost you less money until they do. That’s just my opinion, and (again) maybe I’m wrong, but form your own. I've recently returned to consulting, and this topic bothers me as a dealer advocate.

Because black cats don’t scare monopoly power that could be costing dealers money. But the government does. Your awareness does.

Boo! And Happy Halloween.

by Keith Shetterly 
keithshetterly@gmail.com