Prioritizing AI investment decisions in auto dealerships

To operationalize AI, dealerships must thoughtfully evaluate where it might deliver the biggest bang for the buck. “It’s tempting to want to bolt AI capabilities onto your existing infrastructure as quickly as possible,” says Todd Workman, GM & VP of Global Services. “But AI for AI’s sake doesn’t make sense. Without a clear roadmap, you risk spending on software that will be underutilized or unable to scale along with your business.” 

AI investment decisions in dealerships often come down to questions of efficiency vs. innovation. To determine what applications will deliver the greatest ROI in the short term, here are a few prompts to consider:

• Are there sore spots or roadblocks that can be quickly improved with AI?
• Do core processes and systems provide a mature foundation to build on?
• Will your employees embrace modernization or struggle with it?
• How can AI set you apart in creating a streamlined and delightful customer experience? 

Departmental performance metrics can provide insights into areas that merit AI support, as can Voice of the Customer (VOC) research [link to previous blog]. Pinpointing inefficiencies and, whenever possible, assigning a hard dollar cost to them allows you to focus efforts where they’ll be most effective.

Top 5 AI use cases in car dealership software

Next, let’s take a look at five specific areas where dealers are applying AI to deliver a seamless customer experience.

1. Demand forecasting with AI

Inventory management within auto dealerships is notoriously susceptible to shifting market dynamics, at both the manufacturing and dealership level. When the U.S. Administration announced tariffs in the spring, for example, new vehicle sales surged in response to perceived urgency and opportunity costs.

AI proves adept at analyzing demand patterns across multiple dimensions, from seasonal and historical performance to potential supply chain disruptions. Vehicle and parts inventory follow their own unique cycles and typically should be considered separately for AI modernization.

2. Personalizing marketing automation

AI in dealership marketing enhances the sales cycle by first identifying customers with a higher propensity to buy and then by targeting them with individualized campaigns. As PwC notes in its Sector Perspectives research the “increasing use of online channels for purchasing journey touchpoints provides wealth of buyer data relevant to dealers.” 

Considering the growing percentage of consumers looking to move some or all of the purchasing process online, creating an omnichannel ecosystem supported by AI gives dealers a powerful competitive edge, particularly those who add drip campaigns and promotion pricing to their marketing mix.

3. Building a digital retail ecosystem

Many dealers express interest in consolidating varied aspects of the consumer experience into one so-called automotive cloud. Imagine a single platform which delivers real-time sales and service data to staff, from lease status and warranty claims to upcoming service milestones and dealer visits. 

In this scenario, AI may be used to send timed alerts and recommendations to both customers and staff. “In an ideal state, AI should not comprise a separate track for dealer staff to monitor, but rather be embedded directly into standardized workflows,” says Ken Hamkins, VP of Solution Engineering. “That level of integration requires more effort but has a better chance of unifying the dealer experience.”

4. Streamlining auto financing with AI

AI within the desking department offers transformative advantages for auto dealers and consumers alike. Three use cases stand out:

1. Streamline and automate loan approvals, credit checks, and previously manual due diligence
2. Analyze customer data and market trends to customize financing options, including from marketplace partners
3. Manage risk and detect fraud to promote secure and accurate transactions

Dealers are highly motivated to steer customers to captive financing—a highly profitable revenue stream. Upgrading cumbersome processes to a tech-enabled user experience makes customers happier while reducing burdens on the F&I team.

5. Adding predictive service capabilities

The efficiency and productivity of a service department can make or break a dealer’s reputation, so every advantage counts. A recent survey of parts, service, and executive leaders shines a light on the most valuable perceived uses of AI within fixed operations:  predictive service, parts inventory prediction, and service retention monitoring. 

Add in the full potential of connected cars to communicate hundreds of different data points back to the automakers and dealers, and you have an immersive experience waiting to be built.

Embedding AI into your product roadmap

For software development firms targeting the car software market, the question of AI integration is not if but when. Embedding AI across core functions will be increasingly critical to capture eyes and accounts. Recruiting AI talent—as well as upskilling existing teams—to build these integrated capabilities takes time and effort.

Need AI talent asap? Our nearshoring model delivers flexible access to experienced talent while minimizing geographic and time barriers.  Contact CodeRoad today to continue the conversation and realize the benefits.