9:49 am, April 13, 2023
Car dealers could end up facing vastly inflated bills from a host of suppliers after a row over ‘unfair charges’ broke out into the open.
A swathe of car dealer suppliers are at loggerheads with one of the industry’s biggest dealer management software (DMS) providers after the latter said it would be hiking fees.
DMS provider Keyloop has told its partners that their current agreements will be terminated on May 7 and they must sign new terms.
Keyloop has said these suppliers must now hand over ‘between 20 and 30 per cent of the revenue they invoice dealers’ or face being cut off completely from the data they need to provide their services.
The suppliers rely on data fed to them via a digital pipe – known as an ‘ODBC’, or via API feeds – to provide services such as websites, data analysis, video services, efficiency checks, customer management and a whole range of other solutions.
The data fed to suppliers via these digital pipes include customer information, touch points customers have with the dealers, even workshop hours worked and staff details.
The partners then analyse this information and pass it back to dealers via a variety of services.
The data is effectively the dealers’ property. Keyloop charges for piping it out to other businesses via their system, which a huge proportion of the UK dealer network uses.
Keyloop is alleged to have told suppliers they must now share the invoices they send to dealers so it knows how much to bill them.
Car Dealer has seen copies of the new agreements and an ‘FAQ’ sheet sent to the suppliers explaining how it will work.
In the questions and answers, Keyloop says: ‘What supporting documentation do we need to provide for active dealer sites? Answer: To calculate the correct new pricing for each site, each partner needs to provide Keyloop with either the latest order form or latest invoice confirming the charges each current dealer customer is paying them for the Keyloop integrated version of their application.
‘We will treat this information as confidential; it will be used solely for calculating the charges payable to Keyloop for the use of our integration products.’
It has also been alleged that Keyloop has told partners there will be a minimum fee they can charge dealers.
A number of suppliers – all of whom fear being cut off completely by Keyloop if their identities were revealed – have contacted Car Dealer. A list of those currently approved can be found on the Keyloop website.
They say they have been told by Keyloop to pass on these increases in costs for access to its systems to their car dealer customers, or absorb the costs themselves – something many can’t afford to do.
‘This is going to end up costing car dealers more because the majority of the suppliers who rely on this data being funnelled to them by Keyloop simply won’t be able to absorb the costs,’ said one of the supplier bosses.
Car Dealer has agreed to keep the names of the firms anonymous as the bosses fear they will lose access completely if Keyloop knows they are speaking out.
Car Dealer has spoken to four key industry supplier sources and different companies who have all corroborated this information.
‘Many of us have signed NDAs with Keyloop saying we cannot speak about the details,’ said one of the bosses.
‘They don’t want dealers knowing this.
‘This is simply anti-competitive and we are sure the CMA [Competition and Markets Authority] would be interested.’
Another added: ‘Without access to the data that comes from Keyloop we cannot provide our services to dealers and they know that. They’re using this to ramp up fees far higher than is reasonable and we’ve been told to suck it up or pass it on.
‘Dealers need to know why these bills are going up and we can’t tell them.’
Keyloop is a sprawling global business that has offices in 40 countries.
It started out 40 years ago as Kerridge in the UK and has previously been known as ADP Dealer Services and CDK Global.
It became Keyloop in 2021 after it was acquired by tech investment firm Francisco Partners.
Peter Smyth, director of Swansway Group, uses Keyloop in his dealerships and spoke of his concerns at what was happening.
He told Car Dealer: ‘If a supplier came to me and said they had to put up their costs by 30 per cent without good reason, we’d seriously look elsewhere.
‘This is the first we have heard of the potential of these additional charges being handed down to us and it’s concerning.
‘Suppliers will need to absorb some of the costs themselves and then have serious conversations with us about why they are increasing our bills.
‘We would soon be looking at alternative products and solutions if bills went up by that much.’
Another partner affected by the changes said: ‘Keyloop will argue this is not a price increase but a way of realigning prices.
‘Access to the ODBC has been allowed for years for suppliers but the agreement for that is between Keyloop and the dealers, and they are not allowed to be used by third parties. Keyloop has turned a blind eye to that but this will change all that.
‘The price increase just feels underhand. Some dealers have started to get wind of it and are not happy.
‘All the suppliers have created their businesses based on commercial terms that Keyloop set. We made decisions for our businesses based on those terms and set prices for the dealers in line with the fees we had to pay.
‘This is a wholesale change in those terms. This partner programme has been running since 2019 and now four-and-a-half years later they have ripped up the pricing. That’s the hard part for all of us to swallow.’
Several suppliers that rely on the Keyloop data are said to be now considering legal action.
Another added: ‘We would have to charge our dealers a lot more for exactly the same service, while Keyloop will simply have to pay for the additional administration of collecting the money. This will mostly go straight to their bottom line.
‘If we’re handing over 30 per cent of the revenue to Keyloop, we’ll actually have to put our bills up for dealers by between 40 and 50 per cent just to stand still.’
In a statement issued to Car Dealer, Keyloop said: ‘The Keyloop Partner Programme exists to enable third-party software application providers to enrich their solutions by integrating with Keyloop systems for the benefit of the automotive market.
‘Over the past several months, we have been working with our partners to modernise our partner programme to bring it into line with normal software industry standards.
‘In doing so, we have ensured that all our partners are treated the same. We have opened up our entire modern, secure API product library to all our partners and are moving away from older, less resilient approaches, such as ODBC.
‘Keyloop and its partners have normal reciprocal confidentiality obligations regarding the partner programme’s commercial terms.’
