Welcome to another edition of the Car Dealership Guy Podcast Recap—a rundown of key lessons from top operators, founders, and execs shaping the future of auto retail.
Today’s guest is Chris Walsh, President and Acting CEO at The Reynolds and Reynolds Company.
Chris breaks down how to transition from a fragmented "bolt-on" tech stack to a unified AI ecosystem that automates routine administrative tasks.
The average dealership has more employees today than it did ten years ago, and that is becoming a problem.
The growth in headcount is not a staffing strategy. It is a symptom of a tech stack that expanded horizontally rather than vertically, with systems that do not share data and require people to fill the gaps between them
"The tech stack has expanded kind of horizontally versus vertically. Systems don't always work together. Data is not always shared. It makes you require more people to do that."
Dealers are now asking how to reverse that trend and run leaner operations without sacrificing the customer experience.
Operational efficiency is the number one thing dealers are asking about right now.
With new car margins compressed and the market projected to shrink from roughly 16 million to 15.5 million units this year, the conversation has shifted away from volume and toward how to get more out of what already exists.
"How do I get more operationally efficient? How can I run my business with less people than I have right now? And how can I leverage technology to do a lot of the things that people are doing right now?"
AI has become attractive precisely because it offers a credible answer to that question.
Good AI requires a unified data layer underneath it.
Before Reynolds built AI features, it spent two years building something called Spark, a unified data layer that pulls together transactional, demographic, and first-party data that previously lived in separate silos.
"The quality of that data layer will determine the quality of the AI tools that are being used out there. We knew that was the foundational work that needed to be done."
In other words, the AI features that dealers interact with are only as useful as what sits beneath them.
Reynolds is moving into agentic AI, which means the system actually does things rather than just recommending them.
Chris describes three phases of AI development: generative tools, AI assistants that gather and recommend, and agentic AI that acts autonomously within the policies a dealer sets. Reynolds introduced its agentic AI assistant, Ray, at its annual customer event last August in Dallas.
"We are for sure all in on agentic AI and what it can do to drive operational excellence. To us it's not really about human being replacement. It's about human being augmentation."
The dealers who are ready to move in that direction are already seeing it change how work gets done.
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There is still real hesitancy in the industry around letting AI act autonomously, and Chris does not think that hesitancy is wrong.
Some dealers are all in on agentic AI. Others are cautious about handing autonomous actions to a system that is interacting with their customers. Chris sees both positions as reasonable.
"You're talking about interacting with the lifeblood of your organization, which is a consumer. You want to make sure that what responsibility you give to technology, it's going to perform the way you'd want a person to perform."
The tools Reynolds has built are designed to be deployed at whatever level of autonomy a dealer is comfortable with.
The accounting office is due for a fundamental rethink.
Chris identifies the accounting department as one of the biggest near-term opportunities in the dealership. Right now, it is a posting-intensive operation. The goal is to shift it toward cash flow and expense management.
"How can we change that department to be less of a posting intensive organization and more of a cash flow and expense management organization?"
Automating accounts receivable and accounts payable is already allowing some dealers to repurpose staff into higher-value roles elsewhere in the store.
The service lane is where enhanced workflows matter most for the customer experience.
A dealer Chris spoke with recently sees the same customer three to four times a year in the service department. That recurring touchpoint can build or erode loyalty, depending on how the experience is managed.
"How do we make it seamless and easy for the consumer, but do all the things that you need to do internally to maximize that visit with the customer?"
Untethering advisors and technicians from fixed workstations and moving more of their work to a phone that is fully integrated with the DMS is a big part of how Reynolds is approaching that problem.
The most successful dealers are the ones who stay curious about what everyone else is doing.
When asked about common traits among the highest-performing dealers he interacts with, Chris pointed less to specific technologies or processes and more to an orientation toward learning.
"How can we look at everything we're doing internally and try to find ways to make it 5% better or 10% better?"
In a flat market, incremental gains across every department matter more than they did when volume was growing.
In five years, employees will be focused on the things only people can actually do well.
Chris is direct about where the technology is headed. Routine, high-volume, low-risk tasks will be handled by automation and AI. People will spend more time with customers and less time entering information.
"I think people will be more focused on the things that only people could really do effectively. Responding to internet leads—are salespeople great at it? Probably not. Do they even want to do it? Probably not. What they want to do is get the customer in the showroom and interact with them one-on-one. That's what they're good at."
The dealership of five years from now is not necessarily smaller in headcount, but it is different in how those people spend their time.
The thing that keeps Chris up at night is complacency.
After decades in the industry, his biggest concern is the pull toward being satisfied with where things are instead of continuing to push on what needs to change.
"I worry a lot that we can get complacent. I want us to be a company that's continually looking to raise the bar in every way imaginable. The reason we exist is to help our customers be successful."
That mindset, he says, is what the industry needs from technology partners and dealers alike right now.
