The challenge for Tekion, a five-year-old startup based in San Carlos, Calif., is that dealers have … [+]
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Tekion is a company intent on simplifying the process of buying a car.
CEO and founder Jay Vijayan left Tesla in 2016 where he was the chief information officer to start this company. Before that he worked at both Oracle
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But Tekion is not trying to replace dealerships. Rather, Vijayan is equally focused on auto dealers and consumers.
He believes the solution is found in making cloud computing more accessible.
The challenge for Tekion, a five-year-old startup based in San Carlos, Calif., is that dealers have long-term relationships with the well established competitors. These are companies such as CDK Global, Reynold & Reynolds or Cox Automotive’s Dealertrack that provide dealer management systems.
In simple terms, they sell dealers the IT infrastucture through which they manage inventory, track when customers’ leases expire, sell add-on protections such as extended warranties and perform most accounting functions.
But as the availability and analysis of consumer data explodes there are many additional capabilities dealers need and consumers want.
For example, any car shopper wants to know how much vehicle she can get for an affordable monthly payment. Dealers are able to show them options, based on the length of a loan or lease.
The issue, as Vijayan explains it, is that traditional DMS providers have to build some of these additional services in a piecemeal fashion, adding hardware and softwares costs they then pass onto their dealer customers.
“The consumer experience then suffers from the lack of integration,” Vijayan said. “With our platform everything comes together from one source. Being on the cloud we can connect all the pieces of data that could influence what you may need or want in your next visit to the dealership.”
Merriam-Webster defines cloud computing as “the practice of storing regularly used computer data on multiple servers that can be accessed through the Internet.”
Think of it as having online access to the Library of Congress instead of multiple library cards for a group of local libraries or even online access to Amazon
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Convincing dealers to change DMS providers is difficult. There usually are long-term contracts and enduring relationships.
While Vijayan will not disclose revenue or how many dealers have signed up with Tekion, he told Forbes.com that his system his used dealers in more than half the states representing 17 brands.
General Motors, BMW, Nissan-Renault-Mitsubishi and Exor, the holding company of Fiat Chrysler (now Stellantis), and Ferrari have all invested in Tekion. Last October the company raised $150 million of new funding that boosted its valuation to more than $1 billion.
It has more than doubled to 950 employees in the last year despite the pandemic, Vijayan said.
“A year ago we took a serious look at everything,” Vijayan said. “We didn’t want to fire people.”
So Vijayan and his management team took salary cuts of between 10% and 30%.
“Throughout all of the pandemic we rolled out agreements with new dealers,” he said.
Then in March, General Motors selected Tekion as the DMS provider for the sale of its electric vehicles, beginning with the launch of the 2022 Chevrolet Bolt and Bolt EV this summer. GM
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“GM’s relationship with us didn’t happen overnight,” Vijayan said. “They made their first investment in us about 18 months ago and we’ve been showing the progress of our system for about three years.”
Mike Bowsher, chairman of the Chevrolet dealer council, told Automotive News that Tekion’s system was “more intuitive than the best third-parties on the market.”
The next step is to go international. Vijayan said the company will launch with its first dealerships in Canada in July 2021, while discussions continue with potential customers in Europe and India.
