AI Presents Benefits, Pitfalls for Car Dealers

“Don’t hide from it,” Erik Nachbahr advises auto dealers about artificial intelligence. “Embrace it carefully. Be thoughtful.”

Steve Finlay, Contributing Editor

June 14, 2024

2 Min Read
Dealers should be “cautiously optimistic” about AI.Getty Images

Artificial intelligence learned a lesson at a California car dealership: Don’t even think again about offering to sell a Chevrolet Tahoe (base price $53,659) for a buck.

The cautionary tale about how a prankster tricked Chevrolet of Watsonville’s AI chatbot into going off script and agreeing to that deep discount has made the rounds in the auto retailing world. (Humans at the dealership ultimately killed the deal, even though the bot had said, “No takesies backsies.”

“No ‘takesies backsies’?” Erik Nachbahr, president of Helion Technologies, says incredulously after highlighting the goof during an online presentation on both the benefits and potential pitfalls of inviting AI into a dealership.

AI’s so-called hallucinations “can make some crazy decisions,” he says.

That said, Nachbahr is excited about the expanding development of AI and the opportunities it offers to dealers. He doesn’t preach against its sins. But he cautions against letting it run the show and the showroom without human oversight.

“Don’t hide from it,” he advises dealers. “Embrace it carefully. Be thoughtful.”

Many dealers are doing just that, such as Andrew DiFeo, who heads Hyundai of St. Augustine (FL).

“Our level of interest is high, but we are cautiously optimistic about implementing it,” he tells WardsAuto. “We want to make sure what it is presenting to our guests is accurate.”

Despite the current buzz it’s getting –  although some detractors say it’s been massively overhyped — AI didn’t just suddenly show up. It’s been around for a while in various forms, such as tools that correct grammar and finish sentences in digital communications.

But it is becoming a force because of today’s massive data sets and powerful computing abilities, which are only getting stronger.

“Every 18 months, computing power doubles,” Nachbahr says.

Dealers who collect huge amounts of customer information are well-positioned to use AI in various ways. But many of them don’t. “I’m always surprised dealers, in general, don’t leverage it,” he says.

Yet, he cites a survey of auto dealers that says 76% think AI would improve their overall business, 63% say it would enhance customer service, and 61% believe it would boost sales.

Because of its 24/7 availability, it can play an important role in digital chats with customers.

“It allows for more customer engagement when a service or salesperson is unavailable,” Nachbahr says.

Beyond that, it can also adjust prices as an inventory management aid, forecast sales, recognize ROI opportunities to offer service specials at particular times and fine-tune marketing efforts.

“It is incredible and amazing in what it can do, but cybersecurity is something to think about,” says Nachbahr, whose company provides such services to dealer clients.

Among other cyber-breach concerns, he warns of AI-generated phishing that is focused on seeking access to databases.  

Protecting dealerships from outside AI incursions requires proactive detection, real-time remediation and regular threat assessments, he says. “We see cyberattacks at dealerships daily.”

How far can AI go?

“There are so many implications,” Nachbahr says. “We have to accept that one day we’ll have robot overlords.”  

About the Author(s)

Steve Finlay

Contributing Editor, WardsAuto

Steven Finlay is a former longtime editor for WardsAuto. He writes about a range of topics including automotive dealers and issues that impact their business.

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