Auto Dealers and Dealer Management Systems: What Causes Conflict?

Auto Tech Outlook | Wednesday, August 03, 2022

State governments have approved the law to prevent the DMS companies from hindering authorized integrator companies from accessing critical data.

FREMONT, CA: The 'Dealer Management Systems' enterprises and the auto dealers face each other. DMS companies gather car dealers' sensitive manufacturer and consumer data and enter legal agreements with those dealers.

New legislation offered by several states and actively promoted by dealers would enable a third party or 'authorized integrator companies' to access DMS systems without the consent of DMS companies. Like DMS providers, integrator companies integrate different databases and computer systems for the dealers but do not invest in data gathering and curation. As per the proposed state laws, these firms have permission to hack into proprietary systems.

A DMS system integrates accounting, inventory, marketing, customer data, and price trends, which are essential for car dealerships to function. The necessity for state-of-the-art DMS systems will grow substantially with the growth of the Internet of Things, connected cars, and automated vehicles.

Most car dealers are frustrated with the expense and the complications related to running what can also be called growing data centers. Instead of revenue generators, these centers are known as 'cost centers,' which is one of the reasons DMS and car dealers are in a state of conflict. One of the means for car dealers to decrease costs is to delegate more work to the authorized data integrators.

Arizona, Oregon House, North Carolina General Assembly House, and Montana House ban Dealer Management Systems companies from stopping the integrators from accessing the databases maintained by the DMS dealers.

These bills have different legal and public policies, such as how an authorized integrator protects personal data, what data an authorized integrator shares or sells, and how high cybersecurity can be maintained. There is also a ban on data usage, some of which is personal consumer information.

Each state has its computer security laws, so several challenging issues exist. From a public policy viewpoint, the cybersecurity implications of these state laws cannot be stressed enough. Thus, the states must tread cautiously in changing times and views on competition, privacy, and emphasis on high cybersecurity standards.

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