Market pressures in today’s auto retail world have become structural, rather than temporary, according to a study released by Spyne, which sells AI-driven technology for dealerships.
Margin compression, rising labor costs, average transaction prices (hovering around $50,000 for new cars and $30,000 for used cars that are 3-years-old), together with customers expecting immediate responses, all add up to a pressure cooker for dealers.
“AI adoption has accelerated precisely because it addresses these pressures simultaneously,” the report said. “Dealers did wake up wanting AI. They were pushed toward it.”
And, about 76% of dealers plan to increase spending on AI products, according to the study.
That spending can’t come fast enough, according to the report.
Driving the news: Dealers now use a patchwork of AI tools to cover different operations, such as for pricing, chat and merchandising.
But tying those tools together and using AI at an operational level will become imperative in the next two years, the report said.
A gap is widening between dealers and staff who are prepared for AI and those who are not.
“Al in auto retail has moved past the question of whether to adopt it,” Spyne CEO Sanjay Kumar Varnwal said in the report. “The real divide now is between dealerships using Al tactically and those embedding it as part of their operating model.”
Between the lines: Using AI tools in a fragmented way leads to diminishing returns because data stays in silos, customer context gets lost, reporting becomes fragmented and more time gets spent working with software, not customers.
Citing recent industry data, Spyne said 68% of used car dealers think AI helps increase leads to sales, but not as many have full systems integrated into their operational core.
Dealers are starting to realize that adding more AI tools isn’t the path to value, it’s “connecting intelligence across the dealership journey.”
“The dealerships that win aren't reacting to where the market has been; they're building for where it's going,” Brian Benstock, general manager of Paragon Honda, said via Spyne. “Al is part of that shift. It's about anticipating buyer behavior, moving faster than change, and executing before the puck gets there.”
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Looking ahead: Spyne estimates that the next five to six years could prove important in the timeline of AI evolution.
2027–2028: AI manages bounded autonomous tasks, which could include repeat follow-ups, scheduling, etc.
2029: Systems orchestrate cross-functional processes, human escalation becomes the exception.
2029-2030: Agentic systems expected to evolve into trusted participation in the purchasing journey, assist with trade-ins, incentive comparisons, and inventory discovery (under defined guardrails).
Worth noting: Spyne said that AI tools in the next two to five years will deliver real-time, context-aware personalization for customers that can help combat direct-to-consumer models that have raised customer expectations.
Evolving workforce: AI is rapidly redefining dealership roles, forcing leaders to close that growing digital skills gap within 18–24 months to stay competitive, but it’s about redefining roles, not cutting people, the report said.
Eventually, humans will collaborate directly with AI systems and future teams will require AI literacy and data proficiency.
Technical skills in electrification and cybersecurity will become essential by 2031.
The signal: Dealers who want to stay ahead of the AI evolution should focus on integrating AI as an operational necessity, not just a hodgepodge mix of unrelated tools. Spyne said that doing that successfully rests on three pillars: evolving the workforce, unifying data architectures and managing risk.
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