Nine Ways Dealerships Can Use AI to Optimize Business

AI can help dealers streamline operations, improve customer experience and boost overall efficiency.

Len Short

November 7, 2023

4 Min Read
AI photo
AI allows dealership employees to focus on relationships with customers.

Incorporating technological changes into a business can be overwhelming, especially considering executives and their teams must work hard to keep operations running smoothly as updates are made.

At automotive dealerships, it can be easy to overlook the advantages of artificial intelligence (AI)-based solutions as dealers busily acquire new inventory, maintain sales levels, keep in touch with current and prospective customers and operate service departments. However, AI can help dealers streamline operations, improve customer experience and boost overall efficiency.

AI can be thought of as a machine that supports business goals by helping dealerships increase sales and guide strategy. However, like any machine, it can only offer effective solutions with quality input. By using AI that pulls from top-quality data, dealers can focus on strategies to make AI work as effectively as possible.

Below are nine AI applications dealers can take advantage of to optimize their operations.

  1. Inventory Management

Consumers’ buying power and preferences fluctuate constantly, making inventory management feel like a shot in the dark at times. AI can use historical sales data, market trends and other variables to predict demand for specific vehicle models. For vehicles on the lot, AI can help dealers monitor their condition and predict when maintenance is due.

  1. Inventory Search and Recommendation

Customers are just as busy as dealers, so smart web solutions can help them quickly find the vehicles they’re interested in on dealer websites. AI can enhance search functionality on dealer sites and suggest alternative vehicle options to customers based on their preferences and budget.

  1. Digital Advertising

Customers spend a lot of time online, so it’s essential dealers meet them where they’re at. AI can help target digital advertisements by identifying potential car buyers based on their online behavior, demographics and interests. This enables advertisers to deliver personalized ads. Through digital advertising, AI can also analyze user behavior and recommend the most relevant content, as well as allocate more advertising budget to sites buyers are checking more frequently.

  1. Customer Engagement

When customers see that dealers understand and respond to their individual needs, they trust them more and are more likely to purchase from the same dealer again. AI can keep customers engaged by using data to create personalized marketing campaigns, targeting potential buyers with relevant offers and promotions and by powering chatbots to handle customer inquiries 24/7.

  1. Pricing Optimization

The market fluctuates constantly, affecting vehicle prices. AI can pull the data necessary to adjust prices based on market conditions based on real-time data, competitor pricing and demand, helping dealers maximize profits. AI can also analyze pricing data to ensure consistency and transparency in pricing across different channels and locations.

  1. Sales Assistance

An informed sales team is an effective sales team. AI can tell sales teams which vehicles are most likely to sell in each market, helping prioritize sales efforts. AI can also help customer relationship management systems manage leads, track customer interactions and automate follow-ups.

  1. Customer Experience Enhancement

Augmented and virtual reality add value to the purchasing process and are powered by AI. These technologies can simulate test drives so customers can narrow their preferences before visiting dealerships. Augmented-reality offerings can also provide information about vehicles when customers point their smartphones or tablets at vehicles.

  1. Predictive Analytics for Maintenance and Service

Dealers can take the guesswork out of maintenance scheduling for their own vehicles as well as their customers’, saving the time and money necessary to check vehicle health manually. AI-powered algorithms can help dealerships anticipate when vehicles will require servicing as well as optimize service schedules and reduce service lane downtime.

  1. Fraud Detection and Security

Detecting fraud or security concerns can be difficult without proper training. AI can use data to find suspicious activity and report it to dealers by detecting fraudulent activities in financing and transactions as well as powering security systems that use technology such as facial recognition and access control. These solutions can often integrate into existing dealership technologies.

Len Short.png

Len Short

Time is valuable. Incorporating AI into dealerships gets simple tasks out of the way and opens employees’ schedules to focus on what’s most essential and what no machine can replicate: building relationships with customers and making human connections.

Len Short (pictured, left) is chairman and CEO at Lotlinx, a provider of VIN-specific solutions for inventory management in automotive retailing.

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