A December 2021 report from CDK Global, regarding what automotive retailers in the United States think about Artificial Intelligence (AI), found that many dealerships (68%) are already using AI or plan to do so within the next three years.
“Artificial Intelligence is really starting to catch on,” said Peter Kahn, Senior Director of Market Research at CDK Global, in an interview with Canadian auto dealer. “It’s not like where it was maybe 10 years ago, where it was an interesting idea amongst early adopters—it’s now starting to gain favour.”
Seventy-five per cent of dealer respondents are already familiar with AI. The report predicts there will be a high adoption of this technology and its range of sub-divisions, such as Machine Learning (ML) and Natural Language Processing (NLP), within the auto retail industry.
Peter Kahn, Senior Director of Market Research at CDK Global
Many of the dealers surveyed are not from large dealer groups; instead, they are primarily owners of one or two rooftops, or in some cases maybe three to five rooftops. Yet, already 56% of dealers who plan to use AI anticipate positive outcomes, while 68% of dealers using it are already benefiting from a positive experience and impact.
“We wanted to get a sense of, what does it mean for auto retail? Do dealers have a good understanding of what AI is? Do they have a good understanding of how it could help them?” said Kahn.
Seventy per cent of dealers using AI are using it in the sales department, while 47% are using it in the service department and 43% are using it for marketing and advertising. Specifically, 56% of dealer respondents are using it to assist them in finding qualified sales leads, and 43% are seeing the benefits of this—with AI helping to convert leads and attract new customers.
The dealers that are not using AI, but plan to, anticipate using it to attract new customers (50%), identify and target qualified leads (48%), for lead conversion (45%), to retain existing customers (40%), and to deal with cyber security issues (30%).
Another 26% intend to use it to maintain enough skilled staff, 19% will use it for financial management and forecasting financial trends, and 16% plan to use it towards reducing employee stress and burnout.
That is good news, since dealer pain-points hover around many of these areas, as the study suggests. For example, dealers were asked what they have the most difficulty managing; 56% per cent of respondents said employee and skill shortages, followed by attracting new customers (34%), employee burnout (22%), converting sales leads (19%), and retaining existing customers (19%).
The study also shows that, while many dealers do understand the benefits of AI and how to use the technology, 25% of respondents do not know how AI can be used at the dealership. Kahn said this is more about education and awareness.
“We see that, in some other studies, there are AI-based tools that can help improve knowledge and awareness of, I would say, the more junior folks in the service area and make them more productive,” said Kahn. “So when I think about that 25%, I think that’s education, that’s awareness, and that’s putting solutions in front of folks and having them say, ‘Oh, that makes sense. Let’s give that a try to solve my productivity issues.’”
He said AI has a bright future in the area of service.
The report also points to a very low percentage of dealers that do not plan to use AI, while a large percentage are using it now and/or plan to use it in the coming years.
“So the question going into this AI study is, are dealers going to be more reluctant? Is it going to take longer for dealers to understand that AI is a promising technology that can help them in their business?” asked Kahn. “And I was honestly surprised by the level of knowledge, the awareness, the adoption, and the likelihood that (many dealers are) saying they do plan to bring AI into their dealership.”
