Asbury’s DMS platform shift is paying off for dealers and shoppers
Asbury Automotive Group reached what CEO Dan Clara called a “defining” milestone in the third quarter: completing the chain’s nationwide connection to a new AI-enabled and cloud-based dealer management system from supplier Tekion.
“Every active Asbury store is now operating on Tekion, our single, modern technology platform. After several years of planning and execution, we now run the entire company on one system, giving us a common foundation to operate more efficiently,” Clara said in a Q3 earnings call on Oct. 27.
Completing the Tekion installation comes just in time for Asbury to address a big surge in lease returns in 2027, Clara said. In Q3, the CEO said Asbury linked the last 47 of its 158 stores to the Tekion Automotive Retail Cloud system.
Taps more efficiently into lease returns
Lease returns are a main source of highly sought-after certified pre-owned vehicles, which command higher prices than non-certified used models. Dealers recondition CPO vehicles to a factory checklist and each comes with an extended, OEM-backed warranty.
Where Tekion comes in, is greater efficiency, greater productivity, faster transactions, lower costs per transaction, including automating some functions, and better user experience for both dealership employees and customers, Clara said.
He said some key performance indicators are up at Asbury dealerships that have been using Tekion long enough to get past a typical break-in period of around six months.
For those dealerships, Clara specifically cited higher-than-average fixed operations gross profit and better-than-average reductions in selling, general and administrative expenses as a percentage of its gross profit.
Based in part on those Tekion efficiency benefits, Asbury plans to capture greater used-car sales volume from the surge in off-lease cars — with less pressure to cut margins and lose profits.
Allows an acceleration of used-car volume
Until recently, Asbury’s approach has been to protect its used-car margins, even if higher prices relative to the competition meant sacrificing sales volume. That made sense when the most attractive used cars — 3-year-old lease returns — were in short supply.
“For years, we had been protecting gross profit and not chasing the volume. As a reminder, we shifted that strategy in May because we knew that these returns were coming, it was a good time to start going after a little bit of the volume while protecting the profitability of the used car department,” he said in the call.
For the whole industry, lease maturities are expected to hit an estimated 2.4 million in 2026, an increase of 6.2% compared to 2025, according to Cox Automotive. Lease maturities are projected to reach 3.1 million units in 2027, which would represent an increase of 29.3% vs. 2026.
The surge echoes a gradual comeback in lease originations, which began in 2023. That’s when new-car inventory started recovering from the pandemic and a shortage of computer chips. With greater inventory, OEMs turned to lease deals to help move the metal.
An echo boom of EVs — on the used side
In addition, leasing surged because many electric vehicles were eligible for a $7,500 tax credit only if they were leased. The credit was phased out after Sept. 30, 2025, but earlier EV leases are still in the pipeline.
About 300,000 EV leases will reach maturity in 2026, according to Cox Automotive, representing 12.4% of all lease expirations. In 2027, they are expected to almost double to around 589,000 units, or 18.7% of all lease maturities.
The off-lease boom after Asbury’s switch to Tekion marks the end of a tough transition. The switch to a cloud-based DMS began as a limited pilot project in January 2024, when Asbury was using CDK Global as its DMS provider. But in the summer of 2024, CDK suffered a major service outage due to a cybersecurity incident, and the pilot evolved into a full-on phase-out of the company’s services.
Clara warned that it takes dealerships about six months to learn the new Tekion system and get the necessary “muscle memory.” Therefore, he said, the benefits probably won’t begin to arrive fully until the second quarter of 2027.
Asbury said that in Q3 of this year, implementation expenses for Tekion were $6 million in addition to paying for “duplicative systems.” Keeping some stores on CDK while the rest were on Tekion cost another $1 million in the quarter.
Clara said that changing DMS platforms, “has been a heavy lift.”