Auto dealers are going by their gut rather then using artificial intelligence (AI) tools to make key decisions for their business.
At least that is the finding Lotlinx‘s online survey of more than 2,500 automotive dealer professionals during March. The poll found just 12.6% of dealers said they are leveraging sophisticated analytical data to monitor days on the lot, combined with segment type, used or new, and other local inventory levels of similar vehicles.
Instead, 31% of respondents are relying on gut instinct to manage their dealership’s vehicle inventory even as a plurality (36.9%) responded they continue to struggle with managing inventory for both new and used vehicles.
Inventory Management
Lotlinx, a VIN-specific data company for dealership inventory management, recently released results from its Automotive Retail Industry Pulse Survey to spotlight the challenges dealerships are having with managing vehicle inventory and to take the pulse on the use of AI and machine learning (ML) to help mitigate inventory risk.
“These results tell us that auto dealers can no longer rely on manual methods, industry experience, and overall ‘gut instinct’ to manage inventory and determine pricing,” said Jason Knight, CEO of Lotlinx is a press statement.
The survey comes as Lotlinx recently launched the Sentinel VIN Risk Mitigation Platform (VMP), which the company promoted as helping dealers not only forecasting inventory risks and implement corrective actions at the VIN level to reduce the time vehicles spend on lots, but helped them earn higher profit margins and enhance competitive market performance.
Questioning AI
Officials at the Detroit-based company found that 38.7% of respondents are currently leveraging the capabilities of AI/ML or predictive modelling data to manage inventory and adjust pricing levels. But another 36% are not.
Additionally, the largest number of respondents (44.1%) said they don’t feel confident in the current results they are receiving from current investments when understanding their largest inventory marketing pain point.
“By leveraging the power of AI through predictive analytics, auto dealers can anticipate demand fluctuations, enabling them to adjust inventory levels proactively, and we are committed to ensuring that dealerships are well-positioned to capitalize on industry shifts and emerging trends,” said Knight.
