Artificial intelligence and machine learning are becoming integrated into many aspects of a dealership’s operations
Mention artificial intelligence and how it is being used by dealerships in marketing, sales, finance and service, and you’ll discover it already exists but just isn’t yet fully understood by the people using it.
Software provider CDK Global did a survey in March 2023 with 230 executives and department heads of dealerships in North America to understand the role of AI in the auto retail business and how it can help identify potential challenges.
The survey, which was a follow up to one the company did in 2021 because of the rapid advancement of AI, was conducted with a mix of roles, regions, departments and sales volumes, and 91 per centof the respondents had been in the dealership business for more than 20 years.
The big takeaway of the survey was that 76 per cent of the respondents indicated that AI has positively impacted their sales, inventory management, service and parts.
Some other aspects of the survey indicated dealerships are capitalizing on the benefits of AI, with 67 per cent using it to assist in identifying and targeting qualified lead opportunities through email, text and chat. That was an increase from 56 per cent in the 2021 survey. Moreover, 60 per cent of dealers who plan to use AI anticipate positive outcomes, compared to 56 per cent in 2021.
“Over the last two years, the auto industry has seen significant movement in productizing AI to stay competitive in today’s market by continuing the journey from shopping and purchase to service through added automation,” said Emily Hernandez, CDK Data and Intelligence Product Marketer at CDK Global, in the survey. “AI also assists dealership staff with identifying predictive maintenance before issues occur, creating easy and convenient customer experiences while strengthening trust.”
Rosa Hoffmann, Chief Executive Officer and Co-Founder of DecisioningIt, which uses a proprietary platform that combines AI and human data for dealerships to use in helping their customers with vehicle financing, said machine learning is still evolving in terms of knowing about its usage.
“It’s something we’ve been working on for eight years and I think back then whenever we talked about artificial intelligence it was such a buzzword that people didn’t really understand what it meant,” said Hoffmann in an interview with Canadian auto dealer. “Now when we talk to people about the fact our system uses AI, there is more knowledge around what AI is and how it works. So when we do our demos we tell dealers our system is powered by machine learning and AI.”
The CDK Global survey noted there were dealers who were hesitant to adopt AI because of concerns about the loss of personal touch, human connection and the possibility of not receiving a solid return on their investment. Additional concerns included potential difficulties in setup and training, and employee resistance to change.
Shahin Alizadeh, President/CEO of the Toronto-based Downtown Auto Group, said he has been approached by vendors selling AI programs that they claim will revolutionize the business.
He said there are companies that have DMS software that has AI included in it but aren’t using it to its full capability. He had an audit done of his system and the results were “disappointing and shocking” in terms of connecting the dots to educate the staff to properly use it. That was addressed by a company brought in for training to get the most out of the technology.
He added most dealers will find their DMS, if properly used, is pretty “intelligent” and that any of the existing systems will have enough tools in their platforms to assess everything needed with the push of a button.
“To me, that’s AI for our business,” said Alizadeh. “I’m sure AI in its broader form has tons of value, but what I’m saying is that at this point auto retailers are well served by their existing DMS technology, assuming they utilize it. It’s that simple. It’s not a long-winded, scientific-based position I take. I take it based on the practicality of what’s available. I certainly wouldn’t consider myself a techy, but I now understand when someone comes in and tries to BS you on how effective their AI technology is going to revolutionize your business.”
He said an issue in the business is there is more value placed on the conquest of potentially new customers than on existing ones.
“I would rather invest on the 70,000-80,000 names of people I have on my database and make sure I am connected with them than to see how far I can predict the likelihood of someone making a phone call to me to find out how likely they are to come in and buy a car,” said Alizadeh. “It makes a hell of a lot more sense to recapture or rebuild or retain the tens of thousands of customers with whom I’ve dealt with in the past rather than try and conquest the other five and a half million people in Toronto that I haven’t had dealings with. AI is great for a business that has a widespread footprint across the globe, across the country, across an entire city. My business is very local.”
Steven Pigozzo, who consults with car dealerships on CRM and DMS process improvement and also provides management and sales training, said much of the AI technology that is being sold now is replacing administration or sales staff, but it still has a ways to go to be able to handle everything.
“If you ask me if we’re there yet, I’d say no — not the way it’s being described,” said Pigozzo. “There’s certain things AI can do, absolutely, but there’s also a number of other things a human has to look at and that is where your CRM and DMS will tell you. You just have to curate them each and every day. I think we’re years away from that level of automation,” he said.
“If you’re going to tell me there’s an algorithm that’s going to figure all that out, I’d love to see it. You still have to have a human looking at it. Can it parse and consolidate some information and present it to us? Sure. But it’s going to have to be a user to finalize and correct most of the data.”
Steve Roessler, Chief Evangelist Officer of DriveCentric, spoke highly of ChatGPT, an acronym for Generative Pre-trained Transformer, during a presentation last year at Canada’s Used Car Conference in Toronto. He said ChatGPT can help salespeople leverage online communication with their customers if they are willing to embrace the technology.
“If you choose not to use it because you don’t trust it, that’s on you,” said Roessler. “For the first time in the car industry you have to look at your digital communication like chat on your website. The days of waiting 15-30 minutes (to a text or email) are long gone. Your closing rates will go down if you are waiting too long to respond to a lead. You have to feel that sense of urgency now more than ever. Don’t let the customers wait. There is no way a customer would walk into your store right now and wait 10 minutes for a salesperson to attend to them.
“For the first time, this is a digital showroom you need to be aware of. A customer that is talking to your store is a digital showroom (opportunity). If they are not talking to you, they are not buying.”
Hoffmann said an AI system is only as good as the people training them and how many years of experience that AI system has been in existence.
“I think ultimately what it comes down to is, are people willing to go away from the personal touch?” said Hoffmann. “I don’t think so. Automation is a really good thing. It brings structure. It brings a lot more transparency to consumers and I think it helps streamline a lot more of the processes in the dealership as well,” she said.
She said if you consider a business development centre, you could automate some of the processes, like doing customer outreach. “But the automotive industry has proven time and time again that it is very much an industry of touch, feel and need to communicate with a human being. I don’t think that’s ever going to go away, no matter what people think or no matter how people want it to be.”
