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2026.10.05 | TB | Software | Tekion Automotive Retail Software

原标题：Tekion – Driving the Next Generation of Automotive Retail

#software #auto

Third Bridge · 2026-10-05

Analyst-led • 21 Sep 2026

Companies: EFX US, ABG US

Clifford Hollen (CH) Director, Operations at SVG Motors LLC

Dylan Koehler (DK) — Third Bridge Sector Analyst

Agenda

Key Insights

Introduction

DK: Welcome to Third Bridge's Interview entitled Tekion – Driving the Next Generation of Automotive Retail. I am Dylan Koehler, and I will be facilitating today's Interview with Mr Clifford Hollen, former Director of Partner Success at Tekion.

Cliff, before we start today's Interview, please state I agree or I disagree to the following statement: You understand the definition of material non-public information and agree not to disclose any such information, or any other information which is confidential, during this Interview.

CH [00:00:26]: I agree.

DK [00:00:27]: Could you start with a brief introduction to yourself and your roles and responsibilities during your time with Tekion?

CH [00:00:37]: Yes, absolutely. I started at Tekion in the customer success team, having been at Reynolds for seven years before that. I was an individual contributor in the beginning. There were only four or so people on the team when I started, and we had roughly 60 rooftops. I came in, in my third week was responsible for our biggest client at the time that was 20% of Tekion's book of business. I was in that IC role for 12 months or so and then was promoted to senior manager. I was in that role officially for about 12-14 months, but in reality, I had taken on directorship responsibilities within eight or so months. I spent most of my time both on paper and informally as a Director at Tekion. In the meantime, I have moved into the dealership world and now a Tekion client.

Questions

00:01:34] What are your thoughts on the DMS [dealership management system] market today? How does that market look? What's changed the most over the last couple of years? Is there anything important to highlight before we get into Tekion, CDK, Reynolds and the remaining market?

CH [00:02:00]: Great. What has changed? I think that the biggest driver of Tekion's success, at least in the beginning, was that CDK and Reynolds and Reynolds' lack of development and the ill will that they built because of the way they treated customers opened a door for Tekion to get their foot in. The cloud-based platform and the all-in-one system was, of course, the gravy on top of that opportunity, that crack in the door. Where they sit today, during my tenure there, I saw them attract more customers from CDK and Dealertrack and then extensively CDK after their outage of, I guess, it was two years ago or three years ago now, then I did Reynolds and Reynolds, but they had definitely attracted business from Reynolds and Reynolds as well. What I see changing that is definitely dramatically different is until 18 months or two years ago, Tekion had no contracts. It was month-to-month. The customer service was absolutely phenomenal. The price was also more competitive. In the meantime, they're demanding out of both new and existing customers, longer-term contracts, usually three years. The price is a premium price now, and I'm not sure if it's necessarily fair to call them a premium product just yet, at least compared to Reynolds and Reynolds, and the service level is pretty atrocious.

00:03:51] You discussed the premium product and how it stacks up. You mentioned Reynolds and Reynolds. CDK and Reynolds and Reynolds have historically dominated the market, while Tekion has been gaining traction. How do you see the market dynamics playing out? What are the biggest differences between those platforms? How do you think market share looks across the major platforms today?

CH [00:04:32]: Reynolds and Reynolds, the service is phenomenal. Their support team is incredible. They have processes and the experience to know how to handle every situation. The benefit to their platform being so old is that it's tremendously stable, and they don't really ever encounter anything new. If there's a problem, "We've seen this before, we know exactly what to do with it." Then the relationships that they have with lenders and other vendors, if you will, across the automotive vertical is really advantageous for them. I don't think, at least not in the last 15 years, has anybody ever said anything positive about CDK service. I'm surprised in that list you left out Dealertrack, but Reynolds and Reynolds, when I left, I think had about 2,500 customers. I think if they haven't yet, Tekion is about to surpass that. I can't imagine Reynolds has grown much in that amount of time. I would guess, I would speculate that Reynolds and Reynolds and Tekion have about the same market share today.

00:05:52] How comparable are the major platforms' customer bases? You mentioned these platforms have a similar number of customers, but these customers may not be created equally. How do you see those customer bases in terms of dealership size and the number of rooftops? Is there market share parity, or is it just the number of customer relationships?

CH [00:06:32]: Reynolds and Reynolds and CDK really are still a better match for really large, centralised accounting enterprises. I know that Tekion has brought on Asbury, and I assume that they're making headway in this regard, but for dealership groups that are running 50-100 locations, CDK and Reynolds and Reynolds backbone is built better for that. It definitely wasn't even close as of two years ago. Tekion was still struggling with relatively what those companies would consider relatively light lifts like consolidated AP, consolidated AR, general centralised accounting functionality. Reynolds and Reynolds and CDK had those dialled in. Then, of course, there's the matter of early adopters. In the beginning, the first probably 1,500 customers were all that far left end of the adoption curve. Tekion really started to struggle when they moved into that, to the more meaty part of the adoption curve, wasn't just early adopters. In the beginning, customers had a lot of tolerance for the imperfections, the pains of growth, the instability, outages and breaks and everything of that nature. When they gained more market share, customers had a different expectation. The assumption was, even if we didn't say it, the assumption was that Tekion at that point had grown into a mature stable platform. I don't know how they managed to evangelise that message because it really just wasn't true.

00:08:30] You've discussed stability a couple of times so far, highlighting Reynolds having exceptional service, stability and dealer relationships, and how Tekion now struggles with that stability as it moved beyond early adopters. How widespread were the issues? How do you think they look today? Do you think they were primarily implementation-related growing pains, or are they true limitations in the platform architecture that could constrain Tekion's ability to expand further?

CH [00:09:21]: I don't think that there were built-in problems with the architecture necessarily that prevented those problems. DMS implementations are always challenging. They're just so big. It's so much software. There's so much to learn. There are so many users that it affects all of their workflows, like that's always going to be hard, but compared to my experience at Reynolds and Reynolds, moving to Tekion was extremely challenging. I know that they couldn't have been able to solve that in the last year since I left. Furthermore, I still talk to people on at least weekly basis that I worked there, my friends and personal relationships. I can say with much greater than 60% confidence that they still have implementation struggles. They still have a deluge of support tickets that don't get first call resolution. They still have a bucket of support tickets they call pending engineering, where either something is broken in the platform or nobody in the support team knows how to fix it. Average time to resolve those support tickets used to be over 30 days. I don't get the impression now it's any better than that. When Tekion is working, like once you've been through the growing pains, you put probably 150-180 days on the platform, and you've gotten used to the new workflows and you've adapted to it. The set-ups have been refined to your dealership the way that you need them, things get much smoother. In the beginning, it's really painful.

I used to always talk about dealership controllers in one of two ways. The former is somebody that came from CDK or Reynolds, Dealertrack or Frazer or whatever and knew what buttons to press to get the outcome that they need. They just never got it on Tekion. You probably had enough of these conversations. I assume to know that the controller is really like the heart of the dealership. If the controller doesn't get it, the whole thing falls apart. Then on the other end of the spectrum, there are like the two controllers that are the true controllers, the true accountants that understood debits and credits and weren't just pressing buttons. Those people could adapt to Tekion and do well on it. They did fine, but if you don't have a strong controller in place, adapting to a new DMS is inherently challenging on the cusp of impossible. That was a really long-winded answer, but it also speaks to your question about adoption. If you're not an early adopter, if you're not comfortable with that, Tekion is going to be challenging. If you have a staff of people that know one DMS well and aren't excited to change, it's really challenging, especially if you have an accounting team that really just knows the dealership, the DMS that they're on. It's also always been advantageous to be on one of those legacy platforms.

When you need to plug in a new service manager, new parts manager or new accounting team, it's really easy to hire for somebody that has experience on that platform, and it makes the ramp-up period much shorter. All of those things, I know that was kind of a rambling response, but all of those things are headwinds towards moving to Tekion.

00:13:12] You highlighted implementation difficulties, including the difficulties of switching a DMS, and pain points. You also highlighted Asbury, which is an important test for Tekion and its ability to support larger dealer groups. What do you need to see from that deployment to be convinced that Tekion can handle centralised accounting, reporting and the complexity of a 50-100-rooftop group as effectively as CDK or Reynolds?

CH [00:13:59]: This is what I think that they would need to demonstrate. What was frustrating for me and for everybody else that was on Tekion is, when Asbury came on, Tekion had been promising, we personally have been promising our clients a multitude of updates and features to come, stuff that was needed that was fairly mission-critical or at least necessary to reach parity with their prior system. All of that came to a grinding halt when they signed Asbury and all resources went into Asbury. They were all the time flying engineers in from India and had a staff of people full-time living in Asbury to get that up and running. I would imagine the ROI on Asbury alone, like I know it has broad business implications to prove that they can operate a group that size and for what that means for the business in terms of selling to other groups and just for the sentiment about the software. If I were a dealer looking at Tekion, I'd be thinking, well, if they can operate Asbury's business, they can operate anybody's business, but the reality is, speaking about the ROI, I'd be surprised if they can ever break even on Asbury, considering how much energy they've had to put into making it work there.

What I would want to see to really prove that they can handle another business that size is a routine implementation just like they would offer for a three-store group, it would be that easy scale, of course, but that easy to launch a group the size of Asbury. When they can do that, they've really figured out implementation and they've really got the software dialled in to a point that it's usable for everybody, but what they had to do for Asbury is not repeatable, at least not on a broad scale. The other thing that has surprised me is that they almost entirely outsourced implementations at this point. I guess it seems to be going no worse, but I have seen others try that. CDK is a great example, and it just didn't work. I think that they're using three different companies to outsource implementations to. I would imagine on some level, they're shopping it now, let's see who can do it the best, but it does feel a little funny to me that when you hire Tekion for your implementation and you spend a bunch of money out of pocket for the implementation, they end up sending in subcontractors that may or may not know the system well.

00:16:53] You mentioned that you'd be surprised if Tekion could ever break even on Asbury. How much more resource-intensive do you think this implementation was compared to a typical smaller dealer group? After 1-2 years, do you think Tekion could bring the cost down to make these larger, 100-rooftop deployments economically attractive, or is Tekion still several years away from that?

CH [00:17:46]: The timeline is little hard to judge. My assumption would be that in putting all of those resources into Asbury, they've done a couple of things. The first of all, built out the platform in such a way that users that operate similarly to Asbury may have what they need in the beginning as opposed to Tekion needing to do additional work to satisfy the needs of those customers. In terms of implementation, implementation was a problem there when I started in 2021, and it was no better when I left in 2025. They just have not demonstrated the ability to improve their implementations. I am optimistic, but sceptical that any large-scale, any meaningful improvement in implementations is likely still potentially years away. However, the caveat to that, the other side of the coin is that there was a time when the platform was changing so quickly that nobody's knowledge was ever holistically up to date. That at some point, it almost has to slow. I mean it did slow for sure. As the platform got bigger, it got harder for them to be as agile. I'm sure that's become increasingly true. There are a relatively finite number of things that a dealership will need to operate.

Innovation will continue, I'm sure, but at some point, most of those things will pretty much be built out and the pace of development won't need to be what it has been since Tekion's inception. Just bringing stability, bringing a little bit less, a little less velocity and change will also accidentally lead to easier implementations.

00:20:09] It makes sense that once the pace of product changes slows, implementation and stability improve. You discussed the difficulty in implementations. What are your thoughts on AI's potential impact on the implementation process? Do you think AI could reduce DMS implementation costs and timeline? Do you think it reduces switching friction?

CH [00:20:58]: I think it should be able to. If it were really dialled in, AI would be able to look at set-ups. If I looked at Tekion's existing book of business, and I filtered out all GM dealers, all groups of certain size and all groups that had these accounting set-ups, etc, like look for similar dealerships, then AI was able to start off this new dealership with the best practices, the set-ups, etc, of those dealerships, it would be a tremendous starting point. In most cases, at least as of a year ago, and I think that this is still true, too, every store, every launch was starting off with a blank slate. In the week or two or oftentimes during implementation, set-ups were still being not just finished, but started. Every implementation started with a blank slate, a blank platform in every set-up, that's like every schedule for accounting, every one of thousands of different specs for service and parts and sales, all started off blank and those had to be manually entered. Then over the course of implementation, they were tweaked. If all they did was start off with an average that AI could build based on examining similar dealerships, that would be a huge step in the right direction.

The more AI does to automate stuff like there sometime in the future, have an AI AP platform coming. I know it's not ready yet, but they're already talking about it. That sort of stuff, like anything that the dealership doesn't have to learn on day one would ease implementation, thinking where else good AI application is. I also think that AI could be really handy. I would imagine at this point, they're doing that, but just bug fixes and identifying problems. Even with OpenReplay and that sort of technology, the stuff that broke was still really hard for humans to figure out when we couldn't replicate it. We knew this was happening, but we couldn't find out why, when or how to replicate it. If they're using it, AI would be phenomenal about finding that problem and that would make a really big difference. That's like stuff that's sort of broken, so to speak, too, but just in the ability for it to analyse behaviours or like one of the problems with support is that the support team is so immature, so much of it is in India and has never even seen a US car dealership that they often don't ask the right question or the next question.

They hear from a customer, blank is not working, but don't think to ask the next-level question. Like the radio isn't working in my car. Did you start the car? They'll go through a list of troubleshooting questions like about why that radio isn't working, but don't think to ask if the car is on, just as a really dumbed-down example, the best one that came to mind in an instant. If AI could help assess or get to the root cause of problems, that would be big. They've been for years now using an AI support bot that is still poor. I've used it very recently, and it's still poor. They haven't managed to do much with the ability to enhance or speed the support experience with AI.

00:24:50] Support experience seems crucial. You've mentioned some difficulties with the support team, including a lack of first-hand experience in how a US dealership operates. Do you think the current support model is a scalable cost advantage for Tekion, or do you think this could constrain the company's growth going forwards? If it needs more US-based dealership specialists and dedicated account support to retain customers and win other large groups, what cost impact does that have? Does it massively increase cost if they have to bring support back to US markets?

CH [00:25:44]: The metric that Guru used regarding support is that they could employ five India-based agents for the price of one US agent. Yes, the cost is extraordinary. The benefit is potentially huge too. The tenure in the US-based support staff is solid. It's really good. They are able to get and retain people when you pay them well for a support position. In most cases, pay people more to make the move to Tekion. That's a factor that keeps them there. I'm not being hyperbolic. Every dealership that I spoke to and every individual within those dealerships complained about the quality of support and the fact that it was outsourced to offshore. Sometimes it was just blatantly racist, but most of the times, it was valid gripes, like they don't understand the problem that I'm trying to explain to them. Oftentimes, the communication challenges, the language barrier was just that. It was just a practical concern, like I had trouble hearing this person, and I feel bad that I ask them to repeat themselves six times.

That's a frustrating factor for the dealership base. I don't know. I'm not the CFO. I can't speak to whether or not it could be financially feasible. What I can say, though, with a great deal of confidence is even if the answer accuracy was equal, I'm assuming that nobody in the US was any better at doing the job than somebody who is offshore, the dealerships would be way more satisfied.

00:27:54] When a dealership encounters a serious issue, what does the escalation process look like? It would be great if the offshore team resolved it independently, but if they didn't, does that issue pass through several layers before reaching someone who understands the dealership operations and is better-suited to solve the problem? You discussed some timelines for fixing support for Tekion's customers. It was a 30-day-plus resolution time. Is that factored in as well?

CH [00:28:47]: I want to answer your question, but it's not going to necessarily be answered directly the way that you asked it. What happens in reality is every dealership has a customer success manager, they're calling them value architects now, I believe, is the terminology that they're using. What happens in the real world is the customer will call support once or twice, not get an immediate answer, not get the answer that they need, and they stop calling support and call the representative from the value team or success team, whichever we want to call it. All of that support work, the value team should be concentrating on performance reviews and process improvements and everything that you would expect a standard success team to be focused on, but what happens is they get so bogged down by support's inefficacy that they end up propping up the support team. The exact same thing is true of implementation. Implementation has a timeline, like 2-3 weeks on site, and they bounce and move on to the next project. The customer value team ends up cleaning up that implementation. If you're hoping to get optimisation out of your dealer value partner or whatever they're calling themselves, which is exactly what the sales reps will be telling you. We've got a team of support agents, some are in the US, some are offshore, which they can't lie about anymore because that's just everywhere, like anybody in the industry knows that much of the support team is offshore, but you've also got a US-based dealer value representative that's going to help you optimise the platform.

The reality of it is that it will be a struggle for that dealer value partner to ever actually spend time with you unless you make noise and you insist upon it, they're not going to likely show up or give you a call and say, "Hey, let's look at this new feature, let's do this or let's do that." They just don't have the bandwidth for that. That team has grown to the point that they're each owning well over 100 rooftops each. They have an impossible task, I feel for those individuals, but to more directly answer your question, what's supposed to happen is there's like a front line team. Ideally, that front line team takes the call and is able to solve the problem. If they're not, then it goes to a backline team. If the backline team doesn't know the answer, just because maybe it's something the front line team hasn't learned yet.

Then at that point, it goes to the engineering team. That pending engineering ticket, any ticket that gets past the front line and the backline that goes to engineering, those are the tickets that just stagnate forever. Nobody knows the answer. Nobody knows how to fix it or nobody has the bandwidth to look at it, and they just sit there for forever or sometimes they're in development, they're waiting for the next sprint to fix this problem. It's often a known problem. Tekion just hasn't been able to get around to fixing it yet.

00:32:05] Could you set a baseline for what you think Tekion can achieve over the next couple of years? We've discussed some limitations and headwinds, but the company has experienced a lot of momentum. What do you think its growth rate would look like over the next couple of years? An expert in a previous Third Bridge Interview [see Tekion – Dealer Digitisation & Platform Adoption in Automotive Retail – 6 March 2026] thought that it could sustain 20-30% growth over the next 12-24 months. What do you think is realistic from this point? Is there a range that you think is achievable?

CH [00:32:58]: Yes. There's kind of a lot to unpack on that one, too. At this point, I'd be surprised if there's enough TAM in the United States market to repay investors, which is, I'm sure why they're looking at expanding into Europe and Australia and anywhere else, they're dipping their toes in which I'm like seeing how much they struggled in Canada, I am wary of that. I don't think that that continued growth rate is optional, so to speak. It's necessary. Does the market have an appetite for it? I think probably so. It surprises me how far behind they are on AI. There are already tools that have been for CRM, for example, there are AI agents that have been on the market for years and Tekion still doesn't have one, and that blows my mind. I think it's scheduled for release imminently. It's in beta elsewhere, but I can't believe that they're just now getting around to that. They've got some serious catching up to do. Of course, AI is easier than it's ever been.

The runway for developing that sort of thing is much shorter than it was in the past, but if they can truly get agentic AI working in sales, for example, and really round out their CRM offering, I think that there is still a lot of TAM in the United States for them. I wouldn't be surprised if their US dealer base over the next, call it, three years expands from 2,500 to 3,500-4,000. I think that that's definitely attainable in the next few years. I think that there is an appetite for that. I'll add a little bit more context to that, too, that probably is necessary, but that's my sense from having worked at Tekion, and it's also my sense of what I see at industry shows. They are still the buzz at NADA and similar automotive verticals. Just the general buzz, but definitely it shows like they are the booth to be at, at NADA's big show each year. There's nobody else attracting attention like they are. I know that their implementations are not really slowing down. If I were an investor, I'd be scared of all the problems that I already mentioned, but I would still feel like they're going to grow and they're going to grow aggressively.

What I can imagine getting in the way of that is it seems like there are serious headwinds that are only going to get worse in the automotive market. Residuals or equity in vehicles is really bad right now, especially we overpaid for vehicles throughout the epidemic or pandemic, and interest rates have been high for several years, four years and so many people are upside down on their car that's preventing them from getting in a new automobile. Credit rates are not strong and seemingly only getting worse. I think the dealerships are going to continue to get squeezed and that might make people more reluctant to invest in a more expensive solution. Having sold Reynolds and Reynolds and Tekion bolt-on products and DriveCentric, even when the dealer truly believes that a system will make them more money, changing their DMS bill from USD 3,000 a month to USD 8,000 a month is not something they typically have an appetite for.

00:36:57] You mentioned there's a lot of buzz in industry shows, and Tekion is the booth to be at, which slightly depends on the company getting its AI strategy right. You could see it moving from roughly 2,500 to 3,500-4,000 dealers over the next three years. To do that, it'd have to achieve mid-teens growth in its dealer base. Is that the pace you expect it to grow? Do you expect revenue to grow in line with dealer base growth? You discussed premium pricing. Would you question that? Do you think that it grows at a rate beyond mid-teens? What do you think growth might look like in terms of revenue? Is it best to think of it in terms of dealerships and rooftops?

CH [00:38:09]: No, I think it should be looked at both ways. The legacy customers are paying a lot less than newly signed customers. Unless they have been able to aggressively increase the prices of those legacy dealerships, the dealerships that went through a lot of pain in Tekion's development, unless they're able to seriously increase the pricing of those dealerships, new dealerships are going to continue to pay more. A 12-15% increase in rooftops might be more along the lines of 20-25% increase in ARR. I don't think that that's necessarily unreasonable. I also think that while that might not be necessarily aggressive, I mentioned earlier in our conversation how our Tekion is working to re-sign dealerships that have been on the platform for some time. They have a team of individuals doing that. Some of them I'm well acquainted with. They're putting a lot of energy into that and trying to get more money and term out of customers that have been on the platform for some time. Alongside adding new rooftops, there's more revenue to be gained just through the existing dealer base.

I also see at the time that I was there, the number of dealerships that were signed up for the CRM, it was 70-80% like alongside signing up for the DMS, they signed up for the CRM, which is expensive, it could easily be one-third or more of the total bill of Tekion. Only a relatively small portion of those dealerships had gone live on the CRM. Even if the bill for their DMS doesn't go up, just adding the CRM will make a pretty significant increase in Tekion's revenue.

00:40:13] At Tekion One, Tekion discussed launching many new AI products. There's T1 Pro, a unified AI interface and agent orchestration layer, Salesperson AI, Deal Guard AI and Accounts Payable AI. What do you make of these products? What adoption do you think the company will see for these products?

CH [00:41:03]: The Salesperson AI, they are so far behind the eight ball on that one. I think that's really, in a sense, my wheelhouse, and it blows my mind that they don't have anything on the market there yet, but the adoption of that will, in large part, come down to the price point that they're selling it at. I mentioned that because they have a service tool, an AI service tool that is slick as snot. It's a really, really cool thing, but the price point, I think, it's close to USD 3,000 for a medium-to-large dealership. It's really expensive. It's cost prohibitive. If they're going to try to get that kind of money out of the Salesperson AI, I don't think adoption will be strong. I see what else the market supports like from DriveCentric. DriveCentric gets for a really large dealership, maybe USD 1,000 for their Salesperson AI or you can bolt on Impel, Podium or one of those third-party features that Tekion is already integrated with for less than USD 1,000 a month. If they're going to try to get USD 2,000-2,500 out of the AI tool, then it's just not going to work, but if they set the price point at something reasonable, it will probably work out really well. I don't think that they will ever get that much market penetration from the AI AP tool. Unless it's just an absolute steal, there are several headwinds there.

There are already tools that are on the market also that already implement or also integrate with Tekion that are strong and they're not well utilised. Dealerships already employ people that do AI. There has to be some sort of offset there. I almost look at it like it's going to have to be cheap for them to get very many adopters of the AP AI. Back to the Salesperson AI, my sense of having been intimately involved in that market until very recently is that a lot of that is kind of already losing its lustre. Some people are really attracted to trying it, and then they see AI do some goofy stuff. For all that it does well, the juice isn't always worth the squeeze and 1,000 text messages that are flawless can really quickly ruin the sentiment of a dealer or it can be ruined when the dealer experiences one or two awful ones. How is your grandma? She's dead now or even more stuff, more unwise stuff, comments about somebody's credit, quoting wrong numbers. There's a litany of things I've seen AI not do well in auto dealership communication that quickly disheartens dealerships on it.

00:44:37] Regarding the AI tool offerings, you highlighted some third-party tools, such as Impel and Podium, that dealers can buy for considerably less, and you view them as good enough products, especially compared to Tekion's offerings. When you think about AI and what Tekion could do with what it has access to, do you think there's an advantage with its DMS data and workflows? Are these third-party integrations able to deliver the same results? With AI, does Tekion have any data advantages?

CH [00:45:36]: 100% like the AI agent is only going to be as strong as the coaching that you've given it and as the data that it has access to, to have a conversation. Then the third advantage potentially, I'll round out to, but those first two things, the coaching might be challenging in the beginning because it will be an immature product, but the access to data it will be really strong. Now, there are other tools in the market that have access to Equifax data and Q research data. Yes, they'll have a lot of data about that customer that is already in the Tekion system, but for them to be competitive in AI today, that's not enough. They need to be getting data from third-party sources like Equifax or like state registrations so that they know vehicles in garage. On its own, the data that Tekion has is strong, but without partnering with other companies that have even more consumer information, it won't be enough today. If you asked me that question like three years ago, I would have answered it differently, but today, you need access to Polk. You need access to Equifax. You need access to Recall Masters. You need much more than just what has historically lived in a DMS.

The third advantage is and this is an important one from Tekion's perspective. What Tekion can do that others are trying to do now is it can be the communication hub of the entire dealership. Whether it's me as somebody working in service, if it's somebody working in sales, if it's a service agent, AI agent, if it's a sales AI agent, to be able to be the communication hub for the entire dealership to have all communication with the customer consolidated in one place is very powerful. Compared to a bolt-on, the fundamental challenge in the dealership is if I can get a salesperson to look at the CRM before a customer walks in at all, I've done something amazing. To expect them to look at the CRM and get a perspective on the communication I have with the customer and expect them to look at a bolt-on to get the rest of the information on this customer and then maybe also an equity mining tool to get the holistic picture of this customer, it just isn't going to happen.

Before I make every outbound phone call to a customer before a customer walks in the door, etc, to be able to house all of that information in one place, and I can see that the customer has bought three cars from us before. I can see that the AI agent sent them a message yesterday. I can see that they have an upcoming appointment in service next week, to be able to see all of that in one place is very powerful.

DK [00:48:44]: Is that an advantage for Tekion?

CH [00:48:49]: It absolutely is.

00:48:51] How difficult would it be for Reynolds and Reynolds or a CDK to replicate Tekion's communication prowess? You discussed the stability of the Reynolds platform, but does Reynolds' legacy architectures create a structural disadvantage in the AI race in DMS?

CH [00:49:15]: Yes, I believe so. Tekion's DMS is, in most cases, locally hosted or you're working off what is essentially your own server that's remotely hosted. It used to be only like 10% of customers were using a server outside of one that was in their dealerships. They're locally hosted. Then the CRM actually was cloud-based. It's always been. For them to totally weave all of that together almost certainly offers and this is a little bit above my pay grade, like why that's challenging, but it has always offered a challenge in truly embedding the two of them together. Absolutely, I believe that that's an inherent challenge. You haven't asked about it. There's probably a reason and I probably don't need to muddy the waters, but what's very interesting that's happening in the marketplace is Cox having bought Fullpath. CDP is, customer data platforms, the buzz right now, too, because you want all that other data, not just the data that you as the dealership already have that you own.

You also want to organise the dealership data that you have alongside third-party data. Those CDP platforms such as Fullpath are really powerful. If Cox is able to embed that and make a functional CRM when combining with VinSolutions and also weave in what they have with Dealertrack, that's going to be huge. That is something that could really get in the way of Tekion's growth.

DK [00:51:03]: You discussed Tekion already being behind some of the established AI providers, and the company may struggle to charge a premium. Do you think Cox's June 2026 acquisition of Fullpath makes the problem harder by giving dealers access to broader integrated customer data and marketing offering? Is that what you were getting at?

CH [00:51:40]: 100% does. Tekion has not even really been able to consolidate the name file for a dealership. Never mind utilise a CDP and push the CDP records back into the DMS. If VinSolutions is able to weave together Cox, Dealertrack, VinSolutions and Fullpath, that's an unstoppable force.

00:52:11] Regarding Tekion's growth going forwards, where do you think that mainly comes from? Will it be driven by new dealership logos, greater wallet share or deeper penetration with existing customers? Which of those factors do you think will matter more and drive the platform's incremental growth?

CH [00:52:58]: I think that more penetration into existing dealer partners is incremental growth. I think that large scale growth depends upon bringing on new logos.

DK [00:53:19]: If it's going to come down to bringing on new logos, how would you characterise Tekion's competitive win rates against some of the major competitors? How would you compare that to the industry average? Is the company winning more deals on average than its competitors? Could you walk me through the sales cycle?

CH [00:53:52]: I wouldn't really be able to speak intelligently about that. What we know is that the number of franchise dealerships has been rather static in the US. There hasn't been dramatic change in that and Tekion is growing rapidly. The inference would be that they're winning more deals than their competitors. I would imagine that new business penetration is almost all to Tekion with one caveat. I think that CDK and Reynolds are doing a fairly strong job earning renewals and I think that CDK and Tekion, almost all of their new logos or a vast majority of their new logos are through acquisition. Cliff's Auto Group buys a store that's on another platform, and they move them on to my platform. By and large, the losses at both Tekion and at DriveCentric because of acquisitions. Tekion is a sticky, sticky product, just for no other reason than the implementations are painful. Switching a DMS is really painful under the best of circumstances. People are reluctant to make that change, but when there's been an acquisition, that change is going to happen.

00:55:29] What do you think is the biggest thing Tekion needs to get right to continue growing at the strong rate that it has been over the next 12-24 months? We've highlighted implementation and support, closing product gaps from an AI perspective and continuing to win new rooftops.

CH [00:56:07]: I would say implementations, but my lived experience is that poor implementations have not done a whole lot to get in the way. Historically, they continue to grow at the rate that they have despite being awful and not improving their implementations. For me to sit here and say that that's a barrier is probably naive, even though it seems like it certainly should be. I think that they got all these neat ideas about AI, and they were preaching Tekion one, two in February in NADA. If February at NADA in Orlando rolls around and they don't have those features alive and humming, that's going to be really hard for them. If they don't actually bring more AI features to market and do so at a competitive price, that would definitely get in the way of growth. Then I think parts has historically been a challenge. I'm still subscribed to some online forums, dealership life-type forums. They get the worst feedback among parts departments. I saw in real life parts departments, especially large wholesale parts departments, derailing deals.

DK [00:57:29]: With all of that being said, I think we've reached the top of the hour. It's a good place to end things for today. I want to thank you for your great input over the last hour. I appreciate all of the time and help today.

CH [00:57:56]: If there's anything I can clarify or anything else, I want to make sure I'm bringing value to you guys, just give me a ring.

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