Dealer finance teams worry over spread of A.I. in lending

Author

Colin Velez
August 09, 2024

Most dealers are uncomfortable with the shift to artificial intelligence in the automotive financing space, despite the range of benefits promised by vendors.

Big picture: A.I. has been quickly adopted by lenders and financing teams, who hope the technology will increase accuracy, cut costs, and speed up the process. However, J.D. Power’s survey of more than 4,400 dealership finance professionals discovered that the transition hasn’t been welcomed by all.

  • 55% of auto financing teams are uncomfortable with the prevalence of A.I. in their sector, compared to 50% last year.

  • Survey respondents were chiefly concerned about the loss of human interaction in the lending process, job losses, and whether A.I. would limit creative problem-solving.

Key quote: “There is a growing sense of concern among dealer finance teams that the increased prevalence of A.I. in the lending process will limit their ability to find creative solutions, forge key relationships with lenders and effectively close deals.”

Patrick Roosenberg, Senior Director of Automotive Finance Intelligence at J.D. Power.

Zooming out: Roosenberg still urges dealers and lenders to weigh the potential benefits of using A.I. while leveraging lessons learned from previous technological revolutions.

Zooming in: J.D. Power’s study also focused on another factor: lender satisfaction. The following brands ranked highest for satisfaction in their respective segments:

  • Jaguar Land Rover Financial Group (Captive Premium—Prime)

  • Southeast Toyota Finance (Captive Mass Market—Prime)

  • TD Auto Finance (Non-Captive National—Prime)

  • Huntington National Bank (Non-Captive Regional—Prime)

  • Ally Financial (Non-Captive Sub-Prime)

Bottom line: A.I. has the power to transform the car market as we know it. The best dealers seem to be navigating this transition using a blended approach, one where technology is coupled with human oversight to drive results.

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