The AI Automotive Retailing Revolution Is on the Horizon

Recent advances in artificial intelligence have the potential to revolutionize the way automotive retailers conduct sales and marketing. This will benefit both dealers and consumers by creating more personalized, proactive and meaningful interactions.

As technology continues to change rapidly, it’s critical that dealers recognize the unique value of AI–including foundational machine learning capabilities and the newer generative AI capabilities. By investing in a broad spectrum of technologies, dealers will be able to provide a better car-buying experience for consumers.

A lot of progress has been made in terms of adopting AI in automotive retailing, but we’ve just scratched the surface of its potential.

Where the Industry Is Today

There seems to be a new product announcement every day about software backed by AI, but it's important to understand what we are really talking about when AI is discussed.

In automotive retail, various forms of automated systems and chatbots have been responding to customer questions with predefined answers for some time, but these are not built on conversational AI technology. On the other hand, a generative AI chatbot creates human-like responses in real time. Far more powerful and precise versions of generative AI are still in their infancy and will evolve very quickly in the coming years.

Before digging further into this topic, let’s define key components of AI and how they relate to the state of automotive retailing today:

Currently, many dealers have chatbots on their websites that can interact with consumers as soon as they hit the dealer’s landing page. These chatbots are rule-based algorithms that use keywords and other language identifiers to trigger pre-written responses to respond to consumer questions with the limited answers programmed into the chatbot.

While a chatbot utilizing rule-based or decision tree models can certainly provide value as a customer's initial point of contact, dealership sales and profitability should not be left to basic yes or no questions.

Generative AI is artificial intelligence capable of generating text, images, videos and other data using generative models, often in response to prompts. Generative AI models rely on machine learning and deep learning models to unravelthe patterns and structure of input training data and then generate content/new data with similar characteristics.

Machine learning is a subset of AI and is broadly defined as the capability of a machine to imitate intelligent human behavior. Machine learning models are crucial for tasks such as pattern recognition, predictive analytics and classification.

The Opportunity for AI in Automotive Retail

In my experience and opinion, the true opportunity with AI in automotive retailing comes in the form of dealerships adopting and implementing technology that uses machine learning models to provide predictive insights on who is in market, why, when, for what vehicle and what payment/financing options best fit their needs.

Dealers who embrace this use of AI will benefit because their sales staff will have accurate data and insights allowing them to spend more time working with customers who are close to making purchases and less time trying to sell the wrong cars to the wrong customers.

Specifically, generative AI has the potential to revolutionize the customer experience by creating proactive and personalized interactions by meeting the customers where they are in their journeys. The technology’s natural-language capabilities enable more intuitive, human-like interactions between customers and their vehicles, dealers, OEMs and third-party providers to create a more seamless, engaging user experience. There is also an opportunity to learn how customers interact with their current vehicles to determine preferences for their next vehicle.

AI Aspirations

I’m inspired every day by the progress we’re collectively making as an industry to use AI to help our dealership partners improve their profitability and customer satisfaction. The global technology team I lead at automotiveMastermind is committed to continuously improving and advancing our machine learning models and helping dealers understand how to effectively adopt this technology.

My hope is that automotive retail leaders will understand the importance of embracing AI – specifically machine learning and the newer generative AI – in their dealerships…starting now.

When used strategically, the result will be efficiency gains in operations, alignment across departments, better relationships with customers and accelerated vehicle sales.