The automotive retail industry is on the cusp of a monumental shift driven by artificial intelligence. As AI capabilities advance exponentially, everything from the car buying journey to inventory management and customer experience will transform for dealerships. According to a recent IBM survey,
“over 75% of auto executives believe AI will disrupt traditional business models. The time is now for dealerships to prepare for an AI-first world”
AI is already making inroads into dealerships. Chatbots handle initial customer queries online, while recommendation engines suggest vehicles and services tailored to consumers’ stated preferences. A number of dealerships are testing autonomous delivery vehicles to bring sold vehicles right to buyers’ doors. AI underlies complex loan approval processes and catching fraud. As self-driving technology matures, AI may also enable autonomous test drives and parking lot assistance.
Behind the scenes, dealers leverage machine learning algorithms to optimize complex inventory decisions, predictive maintenance, targeted marketing campaigns and personnel hiring. The AI opportunity spans the entire automotive retail ecosystem. Global Market Insights predicts automotive AI revenues will grow from $2.3 billion to $10 billion between 2023 and 2030. We are only scratching the surface when it comes to AI’s current capabilities and future possibilities.
So how soon until dealerships enter an AI-first paradigm? The past year saw an explosion of enabling technologies indicating the AI revolution will accelerate starting in 2024:
• Quantum computing achieves practical application – Quinn Thomas, Chief Innovation Officer at a major OEM, explains: “With quantum machine learning, recommendations to customers can account for billions of signals to achieve unparalleled personalization.”
• 5G maturation powers connected vehicles – 1 in 4 vehicles sold globally in 2024 will be connected, per Gartner, laying the foundation for vehicle data capture and embedded recommendations.
• Voice recognition accuracy hits new high – Carmakers like BMW achieve over 95% accuracy for speech interfaces, enabling multifunctional voice assistants.
• Blockchain & smart contracts reach 50% adoption across industries – They reduce purchase friction by eliminating paperwork, speed end-to-end transactions, and slash authentication costs.
The stage is set for AI assimilation in dealerships due to this convergence of breakthrough technologies with AI itself achieving new performance milestones. The sheer volume of connected car data, edge computing capabilities facilitating split-second retail decisions with reinforced encryption and security protocols make now the point of inflection for AI adoption.
In the dealerships of tomorrow, sophisticated digital systems will precisely align inventory with current market demands, minimizing the duration cars remain in stock. Additionally, test drives will be elevated through AI’s advanced support features. While AI enhances safety and provides driving assistance, it also personalizes the driving experience by adjusting vehicle settings to match the prospective buyer’s preferences, ensuring a sophisticated and tailored car-buying journey
Conversational Interfaces & Advisors – Chatbots, virtual assistants and voice-based interactions drive the customer experience aided by emotion detection and intent analysis. They answer queries, perform needs assessments, and make recommendations supported by AI models harnessing volumes of external and proprietary data. Conversational systems help optimize marketing, financing terms, accessory bundles, and service plans for each client.
Dealers demo immersive, interactive in-vehicle experiences powered by augmented and virtual reality. Customers walk through true-to-life representations of vehicle models configured specifically for them based on individual preferences, budget and usage needs pulled dynamically from external data like social media profiles and connected vehicle history.
Autonomous Self-Driving Test Drives – Dealerships employ autonomous vehicle fleets starting in geo-fenced areas expanding over time for customers to safely evaluate models reflecting their unique specifications without salesperson accompaniment. Natural language interfaces gather feedback during the self-guided drives.
Streamed Inventory Supply Chains – Automated inventory monitoring leaned on predictive data modeling keeps only optimized stock on-hand while dynamically ordering customized selections from OEMs as purchases occur. Blockchain and smart contracts enable secure transactions, while IoT sensors track real-time location and condition. Delivery coordination happens autonomously while machine learning optimizes distribution routes and capacity.
Lifetime Customer Recognition & Relationship Building – Dealers leverage AI to nurture relationships beyond the purchase with predictive recommendations and virtual product specialists tailored to customers served up through in-vehicle assistants, mobile apps and multi-channel marketing touchpoints. Hyper-personalization derives from analysis of aggregate vehicle sensor data and individual usage patterns.
The Way Forward
The AI retail transformation promises improved experiences for consumers and streamlined efficiencies for dealerships. As AI advances, dealers must strategically prepare to reinvent processes, staff skill sets and customer interfaces. They must also vigilantly attend to responsible AI practices as the technology permeates operations and business functions. Only enterprises recognizing AI’s risks, ethical implications and opportunities will sustainably thrive. By embracing AI-readiness now, dealerships position themselves to win market share and meaningfully enhance consumer relationships for the long term.
