Could AI make negotiating a car sale as outdated as paper contracts? How soon will dealership sales models become a thing of the past? Analysts frequently cite showrooms and direct-to-consumer online sales as ways that AI has positively infiltrated the industry. A recent survey found 79 percent of Gen Z shoppers want AI agents to help them find a car, and 68 percent of Gen Z and 71 percent of millennials want AI agents to find the best financing options.
Dealerships have a reputation for stagnant technology. Most auto dealerships operate as franchises, and because of this, they are bound by franchise agreements with major auto manufacturers. This limits dealers’ ability to be innovative with the customer and sales.
Legacy software adds to the paradoxical challenge as they tend to have restrictive provisions around dealers’ access to raw data. These two factors, franchise agreements and software, have stifled AI adoption among dealerships.
Finding Customers
A quick scan at the National Automobile Dealers Association Show in Las Vegas reveals an abundance of venders selling search engine optimization and lead marketing products. However, in and of themselves, these products are not necessarily innovative when you compare them to each other, nor are they AI-centric. Most of them are doing the same thing – generating leads.
AI, however, promises a liberalizing future for dealers, giving them the ability to find customers and generate revenue without relying on third-party venders. Instead of pushing out advertisements to customers via mass media and social media ads, dealerships will one day pull back the flood of promos blasting to a generic audience. Instead, dealers will generate leads with AI on their own with highly targeted messaging that appeals to purchase-ready customers.
Another exciting area where we expect change is in the dealership transactions themselves. For more than 50 years an auto purchase has meant wait times of two to five hours as the customer sits in the showroom while paper approvals are shuffled from one manager to another during the deal. These tedious waits, accentuated with stale coffee, boredom and a little haggling, could soon be a thing of the past.
Customers can already use “AI agents” to do the search work (for a fee, of course). These agents turn customers into “conversion ready buyers.” Buyers save hours of research and haggling over price as agents do the work for them, including searching for the best financing options, eliminating unnecessary add-on packages and hidden fees, and negotiating final prices.
Imagine that the same power of AI in the hands of dealers as AI agents increase the quality of customer leads by leveraging existing data sources for predictive lead generation. Agentic AI can analyze hundreds of thousands of data points in seconds, identifying key variables like past purchase patterns, browsing history, personal income, previous auto ownership, dormant customers and other factors that can more accurately predict a qualified lead than humans sifting through hundreds of files. Tedious tasks are automated, and leads are more focused on quality than quantity.
Coupled with customer-facing chat bots that work 24/7 on their websites, AI will fundamentally change how a vehicle is purchased. As a bonus, many Dealerships could see additional savings on physical space normally allocated in showrooms as transactions move online becoming seamless and friction-free.
AI & Dealerships: Back Office
AI is transforming back-office activity and mundane workflows like accounts payable and receivable processes. The technology can extract and post invoice data, reduce errors, and provide real-time, accurate analysis of a dealership’s financial operations. The result of this automation is increased efficiency.
AI technology is already being used by fintech in the loan approval process, turning hours or even days of credit checks, interest rate comparisons and other activities into just a few minutes or seconds. Beyond loan approvals, AI will be able to streamline other personnel processes, data entry, and other human intensive activities like resume screening, background checks and onboarding.
In addition, customer service maintenance support will vastly improve with the underpinnings of AI. Service departments can enable the technology to send automated, customized service notices to owners, with AI-generated appointments.
From a marketing perspective, some dealerships are already experimenting with Gen AI, especially when it comes to creative marketing language and advertising outreach saving hundreds of creative hours. Machine learning, for example, can use predictive analytics to guide inventory management, syncing predicted inventory with targeted advertising.
Who Are the Winners?
Both dealerships and customers will benefit from AI integration. For dealers, AI offers a competitive advantage in customizing targeted sales to people who are really interested in that new car, and back-office work will become more streamlined, freeing staff to work on more meaningful activities. From the customer perspective, AI will soon offer increased transparency in the auto purchasing process and save with fair-market comparisons, automated credit checks, and streamlined financing. In short, increased transparency on both sides of the sale means increased confidence and trust.
The human factor will still be essential. Even if it’s a high-tech environment, trust and relationships still play a role. Whether facilitating a test drive, completing a final physical inspection, or helping customers navigate their final purchase decision, humans are still needed. The future of car buying will be streamlined and faster with AI, but there are some things that technology cannot replace, including human connection and trust.
Related Stories:
Lewis