High interest rates and stubborn inflation are not stopping U.S. consumers from doing one of the things they love the most: buying cars. Automotive dealers should be cheering the uptick in sales because more sales should mean a healthier bottom line.

But in recent years, profit margins have been eroded by rising manufacturing costs, supply chain snarls, and the country’s persistent labor shortage. This means that even when consumers are flush with cash, dealers are not seeing the financial gains they should.

Every dealer knows that sales are just one part of the equation and that fixed operations—or servicing cars throughout their lifecycle and turning one-time buyers into repeat buyers—represent a sort of Holy Grail for the industry. Serve the customer for years beyond the original purchase, and profit margins will expand exponentially.

Using AI at Your Dealership

But knowing this and making it happen are two different things.

Even if consumers would prefer the convenient option of having their cars serviced and repaired at the dealership where they bought them, roughly 70% of customers are more likely to go to an independent mechanic or lube shop to find a more affordable and personalized customer experience. Many dealers, in fact, do not see customers return for their first service, let alone repeatedly over their years of ownership.

Expanding fixed operations to capture more revenue and keep customers for years is a tantalizing opportunity, but the effort that must go into maintaining ongoing customer engagement is Herculean. That is why auto dealers are increasingly turning to automation and artificial intelligence (AI) to streamline the job. And while some dealers are finding success, others are struggling.

There are simple ways to tell whether any given dealer is using AI to the advantage of their business, or whether it is simply adding complexity and cost to a situation where there is already plenty of both.

Stories from the Dealership

There are some funny stories making the rounds at auto dealerships. But they offer more than just a laugh–some offer a lesson about the future of the industry.

Dealers who use well-designed, AI-powered webchat or lead management applications sometimes hear from customers in the showroom who ask to say hello to the helpful representative that answered their questions so responsively. Other dealers have seen online reviews of their business where a customer raved about a helpful representative, even referring to that rep by name, without realizing that it was actually a virtual AI assistant.

These stories are good for a laugh, but they illustrate something more important: the dealers who have these kinds of tales to tell are the ones who are doing it right. They are the dealers embracing the future without losing the human touch upon which the business will always depend.

Signs of Successful AI Deployment

These dealers don’t rely on a patchwork of AI point solutions, or impulsively graft ChatGPT onto their operations without understanding how to take advantage of this powerful new technology. These dealers—who are in a prime position to capture coveted revenue from fixed operations—opted for a more thoughtful approach. After researching and comparing the growing list of self-proclaimed AI solutions and providers, they chose a fully-integrated AI platform capable of supporting every touchpoint in the customer lifecycle.

With more than a decade of experience working with auto retailers around the globe, I’ve noticed three common traits among the dealers who are successfully using AI to fundamentally transform their business operation:

• AI works alongside staff to increase productivity and allow them to focus on higher-value activities like customer relationship building.

• AI has become a core part of the dealership’s operating system, where it is seamlessly integrated into their existing technology stack, allowing them to gain new insights into customer needs and behaviors, while providing new capabilities to reach and engage them.

• AI is being leveraged across every department of the dealership, helping staff and customers in Sales, Service, Financing, Parts & Accessories — even inventory acquisition.

Embrace AI Now

Within the next few years, AI will become ingrained in the fabric of every auto retailer and manufacturer. The line separating AI from humans will become even more blurred as consumers interact with an indistinguishable blend of people and technology across the entire vehicle ownership lifecycle.

Dealers who embrace AI-powered automation and the benefits it provides will thrive, as customers return to the dealership again and again for service and the purchase of their next cars.

Those who don’t risk going the way of the Saturn, the DeLorean, the Oldsmobile and the Edsel.

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