Artificial intelligence is no longer a futuristic concept in auto retail; it’s a present-day reality that is reshaping dealership operations. A new study from Cox Automotive, the AI Readiness in Auto Retail Study, reveals that dealers are moving past the hype and are ready to harness AI for measurable results. The overwhelming sentiment is clear: AI is here to stay, and investing in what works now is critical for long-term success.
Dealers Embrace AI, But Demand Results
The study shows a strong consensus among automotive dealers about the staying power of artificial intelligence. A resounding 81 percent believe AI is a permanent fixture in the industry, and 74 percent are confident that its potential benefits outweigh the risks. Furthermore, 63 percent of dealers see investing in AI today as a critical step for future success, indicating a significant shift from cautious curiosity to strategic necessity. However, this enthusiasm is grounded in pragmatism.
“Dealers don’t care about AI for AI’s sake,” stated Lori Wittman, president of retail solutions, Cox Automotive. “They care about outcomes they can measure—more cars sold, lower inventory costs, higher gross profit. That’s why we’re focused on delivering results, not just pushing technology.””
This results-oriented mindset is driving dealers to look beyond flashy features and seek out solutions that solve specific pain points and deliver a clear return on investment.
Despite this widespread belief in AI’s potential, most dealers are still in the early stages of their journey. The study found that 85 percent have, at most, just begun to explore or test AI tools. About 25% of dealers have not even started to touch AI and are still waiting to see where the technology goes. Only about 14 percent have reached a more mature stage where AI is integrated into their workflows or used to automate decisions. This gap between belief and implementation highlights the challenges that many dealers face when it comes to AI adoption.
Marketing: The Gateway to AI Adoption
For most dealerships, the journey into AI begins in the marketing department. This area serves as a natural entry point because the benefits are clear, the solutions are readily available, and the technology often feels familiar from experiences in other industries. Dealers are using AI to automate communications, personalize customer engagement, and manage campaigns more effectively.
The top use cases identified in the study are all centered on marketing and the Business Development Center (BDC):
- 24/7 Customer Engagement: 52 percent of dealers are using AI-powered chatbots to engage with customers around the clock via text, chat, or email.
- Personalized Communications: 48 percent are leveraging AI to create and send personalized emails and text messages to prospects and customers.
- Predictive Targeting: 39 percent use AI to predict which consumers are ready to buy and then target them with personalized messages.
While marketing is the most common starting point, dealers who achieve the best results expand AI’s application to other areas of the business. The study found that top-performing use cases, those most associated with greater sales and profits, also include dynamic market-based pricing and automated VIN-specific image processing.
Overcoming the Barriers of Trust and Education
Despite the optimism, significant barriers to AI adoption remain. The biggest hurdle is a lack of trust, fueled by concerns about the technology’s accuracy and a limited understanding of how it works. The study revealed that 74 percent of dealers are concerned about AI making errors, and 69 percent lack trust in the underlying data sources and algorithms.
This trust deficit is compounded by a need for more education. Two-thirds of dealers (66%) feel they need more training to use AI effectively.
“If we understand the tool, we understand where it’s pulling data from, then the trust is much higher,” said one dealer in the study. “The AI can only communicate what it’s given — so if there’s trust in the input, there’ll be trust in the output.”
To build comfort and accelerate adoption, dealers are looking for:
- Effective Training: 41% want better training on how to set up and use AI tools.
- Data Transparency: 36% need to know and trust the data sources being used.
- Clear Education: 33% seek better education on the functionalities AI can deliver.
The Strategic Advantage of an AI Roadmap
The study uncovered a key differentiator for dealer success: having a strategic plan. Only 35 percent of dealers reported having a strategic roadmap for how to roll out AI across their business. The rest tended to adopt tools more reactively as vendors approach them.
This minority of strategic adopters, however, sees significantly better results. Dealers with a plan were more likely to rate their current business performance and efficiency as strong. They also reported greater improvements in efficiency and operating costs over the past year. These “Optimal AI Users,” who make up about 24 percent of dealers, leverage AI for more complex tasks like decision automation and see superior performance as a result.
The path to AI success is not about adopting every new tool that comes along. It’s about a purposeful, strategic approach. By identifying specific business needs, getting buy-in from leadership, and mapping out a gradual integration process, dealers can move beyond the hype. With ongoing training and a commitment to tracking performance, dealerships can unlock the true potential of AI to drive efficiency, profitability, and a better customer experience.
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