A.I. is changing the face of dealerships

Hey, everyone — I sat down with car dealer mogul and U.S. Senate candidate Bernie Moreno to discuss everything from EV mandates, digital car titles, the future of America and more. Find out his plans for the American auto industry here and let me know what you think.

—CDG

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The A.I. craze is huge, but we're just beginning to see its real potential.

So, how does it work at dealerships? I spoke with dealers and industry vendors about how dealers are using A.I. daily—cutting through the hype to see if it really drives results.

1. The power of personalization 

Traditional dealership advertising focuses on popular vehicle models but neglects a lot of inventory. Lotlinx, an AI-driven automotive inventory management company, says 80% of dealership ad budgets target just 26% of inventory, leaving 56% unseen.

One application for A.I? Turning dealership data into actionable insights and automatically optimizing that online ad spend. Creating and tweaking ad campaigns without lifting a finger… that will happen soon (and not just with dealerships, but all businesses).

But… A.I. isn’t effective on its own. Algorithms need to be trained on good data to deliver insights, which, for many dealers, means relying on Customer Data Platforms (CDPs) to collect first-party info.

2. Driving fixed-ops efficiency

Think A.I. is just on a phone screen? Think again.

Visual A.I. allows machines to understand images and visual data just like humans do. Dealerships are using this new tech by leveraging large scanners, cameras, and image recognition to spot wear and tear quickly, speeding up service and letting technicians focus on other tasks. Basically, there are giant robots in the service center (yes, these already exist at scale).

• Automatic vehicle inspection companies like UVeye (who also happens to be today's newsletter sponsor) showed me how their visual A.I. technology has significantly increased sales at dealerships, with tire sales doubling and vehicle alignment sales rising by 50%.

• Dealerships using A.I. for used vehicle inspections cut policy-related costs by 50-70%, saving on potential damages (otherwise, the service department takes it on the chin).

Yet…showing the “visual A.I.” a vehicle or component it’s never seen before will likely cause a not-so-accurate reading. This is why human oversight is key when using A.I. Regardless of the tool or platform, gaps in knowledge exist.

How Toyota of Hollywood Doubled Tire Sales

UVeye partners with dealerships across the country to help improve customer satisfaction and unlock new revenue opportunities. Read more about how they helped Toyota of Hollywood increase tire sales by 100% in only one month.

Highlights from the case study:

• Tire sales doubled, rising from 1,000 to 2,000 tires sold, showcasing the benefits of UVeye technology.
  

• Alignment sales experienced a 50% boost, showcasing UVeye’s positive impact on service sales.
  

• Service lane collision work generated an additional $30K in revenue, making UVeye a key driver of higher collision repair income.
  

• The Customer Satisfaction Index (CSI) improvements reflect enhanced service quality and customer experience thanks to UVeye’s implementation.

3. Boost customer engagement

Of course, the obvious (and growing application) is the A.I. chatbot. According to Impel, an end-to-end automotive AI platform, dealerships using chatbots see a 25-40% boost in appointment rates and a 30-50% increase in lead touches, outbound sales, and live calls.

Why? Chatbots are instant. They schedule appointments, answer questions about availability and pricing, and work 24/7 without making customers wait.

A prominent Midwest dealer explained to me, “If a customer says, ‘Hey, does this vehicle have a tow package? It wasn't in the description,’ the A.I. knows to grab that specific photo or feature from the photo sequence or from the physical description and reply back directly and immediately with that specific feature.”

It’s not rocket science—chatbots handling routine tasks allow sales and BDC staff to focus on following up with leads and engaging with shoppers in their stores.

One of my followers on LinkedIn agrees…

On the flip side…bad A.I. implementation can drive customers crazy, like being stuck in an endless chatbot loop.

4. Manage inventory

Manufacturers supply the cars, but dealers handle inventory risks and pricing. A wrong move means losing money on depreciation, carrying costs, and stressful guesswork.

Dealers are starting to analyze factors like vehicle age and market demand accurately using A.I., predicting sales time and pricing to reduce inventory and costs.

San Francisco Toyota, for example, cut their average days on the lot from 45 to 15 and boosted inventory sales by 27% year-over-year using A.I. tools, according to Lotlinx. By identifying fast-selling inventory with historical data and local market analysis, they could price more competitively.

However…A.I. might lack the human intuition and creativity that are important for inventory forecasting. In my opinion, A.I. works best when humans work alongside it.

Bottom line

The real game-changer is how seamlessly A.I. integrates with existing tools and if it can provide a comprehensive view of operations.

A.I. offers plenty of excitement for dealers (and consumers!), but there’s no one-size-fits-all solution for selling cars. The best dealerships will inevitably adapt and test every available strategy at their disposal. Ch-ch-ch-changes are coming…

Seeing any other applications of A.I.? Hit Reply and let me know — I’ll write up a summary of anything I missed and mention in next week’s newsletter.

This week, I caught up with Jessica Caldwell, Head of Insights at Edmunds for the Car Dealership Guy Market Update, where we dove into the hard data and macroeconomic perspectives on the market. Find out what the numbers have to say about second-quarter sales, OEM inventory strategies, margin compression, and where the auto industry goes from here.

FYI — Dealers: Don't miss out on this opportunity to elevate your dealership's visibility and sales performance using Edmunds Premier, the sponsor of Market Update. You can check out Edmunds Premier here: edmu.in/4cPPFje.

Earlier, I sat down with Chris Nihan, President of EVready Energy, a company that helps clients with all things related to energy and electrification. We took a close look at the latest trends in EV infrastructure development and heard the inconvenient truth about charging that very few people are talking about.

Listen to the episodes here, and subscribe to the CDG Podcast on Apple, Spotify, or wherever else you get your podcasts. And thank you to Edmunds, Cars Commerce, and EVready Energy for making these episodes possible.

• Ron Marhofer Auto Family is looking for a General Sales Manager to join its team in Ohio.

• Edmunds is hiring an Account Executive in Illinois.

• Braman Miami is looking for an experienced auto technician to work on Hyundai models alongside coveted luxury vehicles, including Bentley, BMW, Bugatti, Cadillac, Genesis, MINI, and Rolls-Royce.

Looking to hire? Add your roles today—it’s 100% free.

• Waymo to get new $5 billion investment from Alphabet as robotaxi competition heats up.

• Rivian heading to court over allegations it stole trade secrets from Tesla.

• BMW recalling 290,000 vehicles in U.S. over defective cargo rails.

• General Motors postpones re-launch of Michigan plant on slow EV sales

• Volkswagen betting big on EVs through Scout Motors launches and Rivian collab

Thanks for reading. See you on the next edition…

—Car Dealership Guy

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