That is great analysis and possibly accurate. This is exactly the UCS model (the same owner of ReyRey)… they have a small market share, but still have many dealers using them. Most are very successful dealers that have been around for 50+ years in large US metro markets. These dealers pay UCS a crazy amount of money every month (even compared to ReyRey and ADP) and are very aware of their short comings (no integrations, little product enhancements, etc.) But they keep using UCS for a few reasons in my observation – 1) they are either locked in for another 10 years on their contract (YES, dealers will sign 10 yr contracts with UCS) – 2) or the dealer is too scared of change, - 3) or the dealer has had a lock down on market share and repeat business for so long, they can afford to stay with the status-quo (my opinion -they are old school and apathetic to changing times). So what’s the UCS end result… just like you said… Low overhead/employees + high paying customers = High profits.
I don’t think that model will fit with ReyRey and remain profitable (although it seems Bobo is pushing for this). Partly because MOST dealers, not the type described above, are willing to take the “perceived” risks that come with changing DMS systems. (I'm an optimist) So if ReyRey continues down this road, they will start to lose customers and market share. Also, technology has moved forward and dealers adaption will also continue to move forward. Think of how fast things have changed in the last 4 years… that old-school mentality will either change or die.
In the short term, it could hurt a lot of good people, dealerships, and innovative vendors. (I hope I am wrong)!
I'm not beating up ReyRey here, I think they have valuable and helpful products, but at the end of the day, they need to be more concerned with who keeps them in business. I doubt Bobo is listening, but I hope whomever ends up buying them is.
