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What is Causing Conflict between Dealer Management Systems and Auto Dealers?

Auto Tech Outlook | Thursday, October 28, 2021

State governments have passed the law from preventing the DMS companies to prevent authorized integrator companies from accessing crucial data.

FREMONT, CA: The ‘Dealer Management Systems’ companies and the auto dealers are against each other.  DMS companies gather sensitive manufacturer and consumer data for car dealers and enter legal agreements with those dealers. According to new legislation proposed by several states and actively encouraged by dealers would allow a third party or ‘authorized integrator companies’ to access DMS systems without the consent of DMS companies. Similar to DMS providers, integrator companies integrate different databases and computer systems for the dealers, but they do not invest in data gathering and curation. According to the proposed state laws, these firms have permission to hack into proprietary systems.

A DMS system integrates data such as accounting, inventory, marketing, customer data, price trends, which are essential for car dealerships to function. The need for state-of-the-art DMS systems will grow substantially with the growth of the Internet of Things, connected cars, and automated vehicles.  The majority of car dealers are frustrated with the expense and the complications related to running what can also be called as growing data centers. Instead of being 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 ways for car dealers to reduce cost 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. There is also a ban on the usage of the data, as some of which is personal consumer information. These bills have many legal and public policies associated with them, such as how is the personal data protected by an authorized integrator, what data an authorized integrator share or sell, and how high cybersecurity can be maintained.

As each state has its computer security laws, there are several challenging issues. Thus, the states must tread carefully in changing times and views on competition, privacy, and emphasis on high cybersecurity standards. From a public policy perspective, the cybersecurity implications of these state laws cannot be stressed enough.

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