There has been a lot written about how the auto retail world will be impacted and disrupted by artificial intelligence, or machine learning.
With so many overly-hyped predictions, amid some self-serving promises of tech vendors hoping to make a quick buck, I can understand why car dealers might be skeptical.
But here’s the thing: harnessing AI can give you and your teams an incredible edge in one key area: information.
Getting accurate information and knowing what to do with it has always been the name of the game for business success. British philosopher and statesman Francis Bacon knew this when in 1597 he said: “The better information one has, the more one will be able to control events.”
There are an explosion of AI tools already available that can help virtually every member of your dealership team stay on top of the issues and knowledge in their specific job area. That could be knowledge about the models you sell, your competitors, used vehicle marketplace changes, vehicle financing and F&I trends, and fixed ops and service — to name a few.
Vast amounts of information are available on all these topics and by properly harnessing AI tools to synthesize and summarize it, there’s no reason your teams can’t be at the top of their game. You should insist upon it. They don’t have to “know everything” they just have to know how to “find anything.”
For example, I was recently experimenting with a new closed-loop AI tool that only assesses the input sources you add into it. In effect, you build your own little machine learning engine. I added in a couple of dozen of the best reports I could find about the future of automotive retail. Then I asked it a question that I often wonder about: What should be keeping car dealers up at night? Here’s the response:
Consumer dissatisfaction with
the dealership experience: The current car-buying process is viewed by many consumers as stressful, time-consuming, and lacking transparency;
The shift to electric vehicles (EVs): Dealers need to invest in new infrastructure, train staff on EV technology and sales, and adapt to potentially lower aftersales revenue due to EVs’ reduced maintenance needs;
The rise of digital disruptors: Dealers need to find ways to compete with these digital players, potentially by offering their own seamless online experiences and exploring partnerships;
Margin compression: The combination of increasing competition, price transparency driven by online platforms, and the potential shift to agency models (where dealers act as agents facilitating sales at prices set by OEMs) are putting pressure on dealer profit margins;
The complexity of the evolving market: The automotive industry is undergoing rapid transformation, driven by technological advancements, new mobility models, and shifting consumer preferences. Keeping pace with these changes, anticipating future trends, and making the right strategic decisions in such a dynamic environment is a significant source of anxiety for dealers;
The need to attract and retain qualified staff: As the automotive industry evolves, dealerships require skilled employees who can sell and service EVs, navigate digital platforms, and provide exceptional customer service in a rapidly changing market;
Uncertainty surrounding OEM strategies and distribution models: Dealers are wary of OEMs potentially shifting towards direct sales models or implementing agency models, which could impact their roles and profitability;
Data security and privacy concerns: As dealerships become more reliant on data and digital platforms, ensuring the security and privacy of customer information is paramount. Data breaches and privacy violations could damage reputation and erode customer trust.
While none of this was particularly earth shattering, or offered new insights (it was just creating an analysis of existing research on these topics) it did provide a decent summary of the key trends, converting hundreds of pages of boring research reports into a few digestible sentences on each topic.
So, whether you use tools like these or other emerging technologies, my point is that you should be fully encouraging your team members to incorporate these tools into their roles.
They will be “augmenting” their knowledge and adding value to your business. You can’t afford to be an AI skeptic, because otherwise in time your competitors will become more knowledgeable and on top of their game and your customers will see it.
