Artificial intelligence (AI) has become an increasingly prevalent topic in the automotive dealership industry and seems to be one of the current “disruptors” in the industry. While dealers may be skeptical about adopting the latest buzz word or signing up with a new vendor, particularly as expense control becomes more important, the potential benefits of AI can’t be ignored. That being said, a measured and thoughtful approach to implementation is likely going to yield the best results and help to avoid painful mistakes. Below are some of the preliminary steps dealers can take as they consider whether and how AI might be right for their operation.
Identify How AI Can Help
The first step to implementing AI in an auto dealership is understanding the specific areas where AI can add value. Some of the most prevalent use cases being touted for AI in dealerships are chatbots or scheduling assistants, inventory management, personalized marketing, and service customer engagement; however, there are other less pervasive opportunities as well, such as automating the inventory stocking process, posting deals, or performing account reconciliations. Different dealers will have different needs and priorities, and the first step in adopting AI should be to identify the solutions that are right for your operation and provide the greatest ROI.
For example, it may not make sense to roll out chatbots in certain rural markets, regardless of their capabilities, but some of the back-office opportunities of AI could help overcome some of the labor pool limitations that are often experienced in these areas. Further, as you allow AI to take over some of the administrative tasks, you can elevate your employees to take on higher-level tasks that create more job satisfaction and opportunities for their growth, while also adding value for the dealer.
Get Your IT Team Involved
Once the dealership has identified the ways AI can add value, the next step is to engage the information technology (IT) department. Collaboration with IT, whether internal or an outsourced provider, will be crucial, as they will be responsible for integrating AI solutions into existing infrastructure, ensuring data security, and maintaining any new AI tools. As with all software solutions, there will be a number of options and a lot of very convincing presentations about how a product can transform your business, make you more profitable, etc., but getting IT involved early-on will help you limit the options you’re considering to those that are most feasible to implement and aligned with your goals.
IT can help you to understand the implications of the various selections available, such as whether you have the existing infrastructure to support the software (think about what happened with EV chargers) and what the implementation costs and pain points might be. Additionally, they should have the opportunity to assess the types of data being used, how the data is obtained, whether it’s used outside of the dealership, and any other potential security risks being created. Many of the AI solutions require integration with the DMS, and understanding how the software is interacting with the DMS and data maintained within are critical for understanding the potential risks.
Assess Current IT Environment and Applications
Understanding the dealership’s current IT landscape is essential for determining how AI will fit in and where it can be most effective. This involves reviewing all of the dealership’s software and applications, from sales tools to service management systems. Many dealers have their central DMS, then dozens of different, standalone applications that are used to meet the needs of the various departments. Each of these applications likely comes with a monthly price tag, and, as mentioned above, expense control is becoming more important to maintaining profitability. Using your AI assessment as an opportunity to identify which applications can be replaced by AI, or which are redundant or no longer needed, can create savings opportunities that may not otherwise be explored.
Before making any decisions, however, dealers should talk to their teams, and, again, include IT in the conversations, to understand how the different applications are used, whether they’re effective, and what the pain points are. Is there a process creating frustration or taking up excessive personnel time that could easily be handled by AI? The goal isn’t to add another layer of software or eliminate employees, but rather to consolidate and streamline processes and create capacity for employees to take on more engaging tasks.
The Road Ahead
The use of AI across the auto dealer industry will continue to grow, and may eventually become unavoidable, but at this point dealers have some control in how it’s used in their dealerships. Understanding how AI can be used, where it can improve efficiency, and what the practical implications are will allow for dealers to make more informed decisions. By taking a measured and thoughtful approach to its adoption, and through intentional and targeted implementation, dealers will be able to capitalize on the potential of this technology without taking on unnecessary risks or overhead.
Matthew Marcoullier is a director at ARB. He focuses primarily on financial accounting and consulting services for auto dealerships, commercial businesses, and closely-held businesses. Matt previously served as a Senior Auditor for the State of Maine Department of Audit.
