The imminent evolution of A.I. in car dealerships: What to expect

Welcome to another edition of expert insights from the Car Dealership Guy Podcast, a reading companion and episode recap designed to take you a level deeper into the conversation.

Today’s guest is Devin Daly, Co-Founder and CEO of the A.I. communications platform Impel, who discusses the current tech landscape and what the future of machine learning holds for dealers. Devin explores the challenges of current A.I. generations and how relying on one fully integrated system can help dealers improve efficiency. He also talks about Impel’s recent acquisition of marketing automation firm Outsell and what it means for the car industry.

You can stream the full episode now on YouTube, Spotify, or Apple.

1. What is Impel?

Impel is the market-leading conversational A.I. provider to the auto industry. “Our goal is to really use A.I. to manage all customer communications throughout the life cycle,” Devin explains. Over the next five years, the company expects machine learning to become increasingly capable. Devin expects that by automating communications with car buyers, dealerships will go from “massively human capital intensive, employing 150 people per store or per rooftop, to being much more A.I. and automation enabled.”

2. The life-cycle of A.I.

A.I. is still evolving rapidly, with major innovations arriving in just the last six months. Devin notes that he’s never seen a new sector develop quite as fast as machine learning in his 15 years of investing in technology. New technologies typically follow the same cycle in terms of adoption. Enthusiasm for an innovative product is eventually followed by disillusionment as limitations and challenges become more clear. Devin believes we’re in that cooldown phase now, with many businesses realizing that A.I. won’t drive results without the right tools and strategies in place.

3. Advantages of A.I.

There are three key areas where A.I. can deliver business value. The first is sales and lead management. Technology can help dealers improve their long-term follow-ups on leads and take care of inquiries that come in during off hours. The second area is service and loyalty. Dealers have immense volumes of data that can be difficult to process on their own. A.I. can help them analyze this information and identify worthwhile insights. Finally, A.I. can be used to refine online chat experiences, helping customers faster and making communication more efficient for businesses.

4. Growth of machine learning.

Demand for A.I. has accelerated in recent years, especially in the retail auto sector. This has grown Impel’s customer base to include roughly 8,000 dealerships, many of which are part of major groups. “We feel like we’ve definitely crossed the chasm where the large majority of dealerships, large groups, large publicly-traded retailers, are reaching out to us asking what can we do to implement your A.I. products across our store.”

5. Outsell acquisition.

Impel recently acquired Outsell for roughly $100 million, a move that Devin believes will bring the company closer to its goal of becoming the ultimate provider of A.I. solutions for dealers. “Outsell is known as a market-leading automotive marketing automation platform, but I think what they bring to us that excites us even more is they’ve got really, really rich data of customers going back 20 years,” he explains. For the last two decades, Outsell has monitored everything from how often customers take their vehicles in for service to the number of times they visit their dealership website. Leveraging this information to train its A.I. services will ultimately help Impel improve the effectiveness of its own products.

6. The future of A.I.

As time goes on, Devin expects the use cases for A.I. to expand as new products arrive to the market. Eventually, dealers will leverage a single A.I. system to handle everything from managing website chats and conducting post-purchase surveys to reaching out to sell F&I products or schedule service appointments. “That will allow humans to delegate or hand off those tedious, repetitive tasks and allow them to focus on relationship-building and rapport-building,” he comments.

7. Is one A.I. better than multiple systems?

Following the cyberattack on CDK Global, which disrupted DMS software around the U.S., many dealerships are worried that relying on a single platform for multiple tasks makes them more vulnerable to disruptions. However, Devin believes that the benefits of a singular A.I. system capable of managing multiple touchpoints outweigh the perceived risks. This is because machine learning is most useful when it has access to large amounts of data. Using the same A.I. across multiple departments will allow dealers to generate insights they would not be able to use various non-integrated services. It will also make their operations more cost and time-efficient, requiring less input from employees.

8. Consolidation.

Big mergers can create problems for vendor clients. “I think dealers are very sick of some of the large companies in our space that are aggregating up a bunch of solutions, buying a bunch of companies, and never actually integrating them,” Devin explains. In fact, consolidation is a problem plaguing many industries, with many acquisitions actually hurting the parent company’s value in the long run, he adds. Impel plans to avoid this by taking the time to properly coordinate its merger with Outsell and integrate its products effectively.

9. Cybersecurity concerns.

Cybersecurity is a top priority for dealers following June’s DMS outage. Devin says that Impel is more safeguarded from digital threats than other providers as it uses a microservices architecture. This means that its products aren’t contained within a singular piece of software, as is the case with monolithic infrastructure, but is rather a group of small, independent services working together. While vulnerabilities can be found in both microservice and monolithic systems, the damage is usually less impactful and easier to contain in the former. Impel has also conducted an internal review of its security policies following the CDK Global cyberattack, which returned positive scores for the company’s defense measures.

10. Closing thoughts.

As time goes on, Devin expects A.I. to see expanded use in the dealership. He is particularly excited for what the marriage between marketing automation and A.I. communication can accomplish for the car industry. While dealers of today are faced with the challenge of coordinating and paying for separate systems that don’t communicate with each other, the future will see this problem disappear as technology becomes more capable at handling a variety of tasks.

You can stream the full episode now on YouTube, Spotify, or Apple.

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