February 26, 2024

How AI is Changing the Car Dealership Business Model

A technology enterprise builder. Co-founder and CEO at RAVIN.ai.

AI is consuming almost every industry and business, including those that have been around for decades, such as car sales. These changes are putting auto dealers who have relied on traditional methods for advertising, customer service, management, inspection and repairs – and almost every other aspect of the business – under pressure to become more efficient.

Dealers looking to stay ahead of the curve should consider adopting AI and machine learning tools—because their competitors doing so. As sales shift more online and more automakers consider selling directly to consumersthe right AI tools can help dealers become more competitive, allowing them to achieve higher sales targets, increased customer retention, more efficient administration and a better customer experience.

How Sales and Advertising Data Change

In the past, sales were hit or miss. If the right person was reading your ad or listening to your radio or TV spot, and they wanted a car, liked your brand and were in the right demographic, they would come in for a test drive. To make a sale, dealers and customers would bargain until they made a deal.

AI slows down that process – but it can also improve it. By using data collected from manufacturer or dealership databases and external sources, dealers can target their outreach campaigns. specific demographic groups they are more likely to be customers.

Advertising campaigns can be carried out through various social media channels and AI to direct the messages to the specific target demographic. By reaching potential customers who are most likely to become actual customers, dealers can save time, money and effort, and ensure a much higher return on their outreach spend. The data they collect on their customers based on an initial sale can help them retain that customer when they decide it’s time to buy another vehicle.

Using Chatbots To Better Serve Customers

AI has a reputation as a cold, faceless technology. But the truth is that AI can help humanize the buying experience for customers. Sophisticated chatbots that draw on advanced AI-based conversational technologies help customers feel that someone is listening to them and immediately responding to their questions or concerns.

Advanced AI technology enables chatbots to answer a wide range of questions, and systems will also flag queries that the chatbot cannot answer, enabling a human member of the sales force to intervene and respond quickly.

Trust, of course, is one of the most important aspects of the customer-seller relationship, and studies show that close correlation between trust and communication; the easier it is for your customers to get answers, the more likely they are to trust the seller, and the more likely they are to buy and return. AI-powered chatbots can help dealers build that communication and trust.

Improvement of Repair and Inspection

Here, too, AI plays an important role – reducing costs for dealers, while ensuring that customers get what they want. AI audit systems—which, my company offers, is full disclosure—can parse through many parts of a vehicle and quickly determine what needs fixing. Often times, a symptom may be the result of a small part malfunctioning, such as an overheated engine; AI systems can solve the problem, saving the mechanics time and effort.

AI in the repair shop also helps increase customer confidence. Instead of relying entirely on a mechanic’s recommendation – which some customers may suspect is misleading them to increase their bill – an objective, AI-based diagnostic and inspection system can identify what should to repair, and even how much it costs. .

And in the case of an accident repair, the customer’s insurance company is more likely to accept without question a report provided by an AI system that uses advanced vision technology to locate damage, and help adjusters determine responsibility.

Preparing For The Sales Model Of The Future

As the world shifts to electric vehicles, the sales model is also shifting, with more sales moving online and with a number of manufacturers, including Ford and Volvopreparing to sell directly to consumers in the future.

In this changing sales environment, the role of dealers may be reduced. With AI, the best dealers can stay relevant and survive the competition that direct online sales will bring. By targeting customers in their own local markets, and appealing to them with special deals and personalized service – using AI-powered tools – dealers can build a bespoke sales and service platform for the mid-21st century.

Anonymous data on customer preferences, leisure activities, price points and thousands of other details can help dealers develop campaigns that precisely target the customers most likely to be interested in a particular vehicle. Dealers should consider partnering with data companies that specialize in developing algorithms to achieve this, and use this data to develop sales and marketing campaigns to reach specific customer groups. In this way, dealers will be able to make efficient use of their limited resources.

Dealerships have always faced challenges—competition, customer retention, customer satisfaction and more—but those challenges are few and far between now, as social and legal forces change the way people shop. , purchase and receive service. AI tools can even help dealers achieve things, giving them a fighting chance to not only survive but thrive in this new era.

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