Automobile

CDK Global to acquire insurance tech provider Salty Dot Inc.

Dealership management system giant CDK Global Inc. plans to acquire Salty Dot Inc., a company that allows consumers to digitally purchase auto insurance at the same time they’re buying a vehicle, the companies said Thursday.

Terms of the deal were not disclosed. CDK Global COO Joe Tautges told Automotive News that Salty is considered a “rapid-growth, early-stage company” and that the purchase price falls below public disclosure thresholds. The deal is expected to close in October and will not affect the company’s 2022 fiscal-year financial guidance, he said.

CDK, of Hoffman Estates, Ill., said the addition of Salty, founded in 2019 by CEO James Hall, to its product lineup would give it software tools that go beyond helping dealerships digitally operate their stores. The company said auto insurance could become a new revenue stream for auto retailers and give them more opportunities to connect with their customers after they have purchased a vehicle.

“Dealers are the natural point of relevancy as consumers look to buy insurance,” Tautges said. “Wherever you’re at, you need to think about, how am I going to insure this vehicle? And Salty has, from our perspective, the leading-edge, mobile-first, best platform.”

Tautges said CDK in recent years has analyzed what consumers want from a vehicle transaction and the values of simplicity, convenience and a frictionless experience that emerged were among the reasons the company purchased digital retailing provider Roadster in June and the Elead customer relationship management system in 2018.

Improving the purchase process

The acquisition of Salty, based in Salt Lake City, seeks to improve customers’ purchase experience in similar ways, he said.

“Customers historically have had to leave the journey to buy the car, go and enter into an insurance sales process and come back into [the vehicle purchase] and verify that they’ve secured coverage,” Hall said.

Salty’s Embedded Insurance tool works with dealerships to allow consumers to receive an auto insurance quote from participating carriers before they finalize their vehicle purchase, Hall said. After a customer has agreed to the purchase price, payment and trade-in value and the deal moves to the finance and insurance office they can receive a text message from Salty’s digital platform that delivers their quote, he said.

“How do we solve for the fact that most people don’t like buying insurance because it’s stressful, it’s complicated, it’s confusing to most people, and yet, everyone needs it?” Hall said.

“We were trying to create a solution for that utilizing technology, and that solution for us is Embedded Insurance — insurance where technology drives the best insurance that the consumer can find in a marketplace for their risk class, all at the fingertips of their mobile device, without having to spend a great deal of time [or] speak to an agent.”

Salty works with slightly more than 500 franchised dealerships, Hall said. In July, the company said it is partnering with Asbury Automotive Group Inc. to include Salty’s insurance technology within Asbury’s Clicklane digital retailing platform.

Hall said Salty is a licensed insurance provider in all 50 states and works with about 12 to 18 insurance carriers, including national and regional providers. The platform can work with dealers regardless of their dealership management system, digital retailing or other software providers. Tautges said Salty’s software will retain that approach once the acquisition is complete.

Roots of a deal

The acquisition developed about six months ago, when Hall contacted CDK about integrating Salty within CDK’s Fortellis open network development platform, Tautges said. That led to deeper discussions about how the companies instead could work together through an acquisition, he said.

When the acquisition is complete, Hall will join CDK as the company’s head of Embedded Insurance, Tautges said.

CDK in March completed the sale of its international business to private equity firm Francisco Partners, in a transaction valued at $1.45 billion. CDK at the time said it intends to use the proceeds of the sale to invest in its North American operations, which include DMS and other dealership software tools in the U.S. and Canada.

“We enjoy a very strong balance sheet, from our perspective, to be able to do acquisitions,” Tautges said, adding that CDK will continue to evaluate deals that aim, among other things, to improve the consumer experience a dealership can provide.

CDK in August issued revenue guidance of $1.78 billion to $1.82 billion for its 2022 fiscal year.


Most Related Links :
Business News Governmental News Finance News

Source link

Back to top button