Auto industry companies embrace generative A.I. boom

One of the most buzzed-about technologies in the automotive sector is generative artificial intelligence, from product R&D to the marketing campaigns used to engage car buyers. 

According to a study by Pymnts, 93% of automotive stakeholders agree that generative A.I. will significantly impact the industry, and 75% plan to integrate the tech into their operations within a year. 

Growing stronger: Generative A.I. is expected to grow exponentially in the automotive sector in the years to come. 

• The global generative A.I. automotive market is estimated to grow from $335 million in 2023 to $2.6 billion by 2033, reflecting a compound annual growth rate (CAGR) of 23%.

• The North American market accounts for more than 42% of the global revenue share of generative A.I. in the automotive market in 2023, according to Precedence Research.    

In auto retail, generative A.I. is becoming the go-to technology for a variety of use cases, from enhancing the vehicle ordering processes to better servicing customers after the sale.  

Big investments: The growing interest in the expanding capabilities ofA.I. to enhance various aspects of retail dealer operations and addressing key pain points is driving a surge in new investments. 

• Numa, a generative A.I.-based tech company that is focused on helping dealerships run more efficiently, closed a $32 million Series B round in September to accelerate its product development.

• Tekion, one of the leading retail tech companies in the auto sector that leverages generative A.I., secured an investment of $200 million in growth equity capital in July.

Driving partnerships: The growing opportunities with generative A.I. in the auto retail space are also fostering some innovative partnerships among companies in and outside the core business sector.

•  AutoComplete, a company focused on leveraging A.I. to help dealerships monetize the insurance process, announced in August that it had completed a finance round (for an undisclosed amount), which included a new strategic investment group comprised of seven dealership groups, as reported by Fintech Global.

• In February, Stella Automotive announced that it will be collaborating with Microsoft to enhance its generative conversational technology used by OEMs and dealers to interact with customers, as detailed in a PR Newswire report.  

Facing the cons: The capability of A.I.to enhance various aspects of auto retail processes, from marketing to F&I, is undeniable and poised to only get better in the years to come. However, some warn that the growing use of A.I. could also present some new challenges for dealerships.

• In 2023, an online car buyer/techie went viral after tricking a Chevrolet dealer’s chatbot into selling him a 2024 Chevy Tahoe for $1.

• Some IT leaders warn that the growing use of generative A.I. and artificial intelligence overall could lead to more severe problems for dealerships, including data breaches.

• A study looking at the use of generative A.I. in retail overall (not specifically automotive) found that half of the 1,400 retailers surveyed for the study said they lacked the ability to fully comply with data security standards and data privacy regulations.

That said: As the potential applications for generative A.I. continue to grow and become more advanced, the use cases for the tech are bound to drive its wider adoption in auto retail. In fact, generative A.I. could prove to be pivotal for any dealership seeking to remain competitive, as the market continues to evolve.    

Last word: The key to a dealership’s success when choosing to adopt more generative A.I.-based tech will be predicated on the ability of its sales and service associates comfort level using the digital tools and quickly identify critical issues as they arise. Checking those boxes will be just as imperative as the tech itself. 

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