As the auto industry begins to stabilize, dealers and OEMs face a new set of challenges. Slowly rising inventory levels, declining margins, brittle supply chains, and persistent labor shortages mean that pre-pandemic playbooks won’t drive the success they used to. While the industry is no stranger to these challenges, more and more dealers are adopting AI technology to maximize performance and future-proof their operations. Reported results generated from successful AI deployment include 30-50% increases in sales appointments, 18-25% increases in booked service appointments, and an average increase of more than one hundred thousand dollars in monthly Repair Order revenue.

At Impel, we’ve been working with generative AI technology long before the hype of Chat GPT. As we’ve collaborated with thousands of dealers and OEMs around the globe, we’ve identified a set of challenges that hinder effective AI adoption – and we’ve developed best practices that drive successful implementation and superior business results. Time and again, we’ve observed that successful AI operationalization hinges on a clear strategy, thoughtful planning and change management, seamless system integration, and effective control mechanisms. Unfortunately, dealers that limit their efforts to narrow use cases and siloed applications achieve minimal ROI. The most successful dealers embrace a broad set of AI applications that provide foundational support across every area of their business.

How AI is Impacting Automotive Retail

AI is growing in popularity as a lead management solution, but AI can also intelligently automate and address many more touchpoints across the entire customer lifecycle.

• At the earliest stages of the customer shopping journey AI can help get more leads in the door by enhancing vehicle image quality, thereby improving the VDP user experience.
• Computer Vision AI is now being used to showcase vehicles in virtual photo booths, delivering studio-quality 360-degree walkarounds without the need for dedicated physical space or capital investments.
• Conversational AI is gaining broad traction, enabling dealers to engage shoppers in highly personalized and human-like dialogue across a variety of channels, including webchat, SMS text, email and even voice interactions.
• Full lifecycle AI platforms carry this hyper-personalized engagement to every touchpoint, from the very first website visit to post-purchase vehicle servicing and even future trade-ins and subsequent vehicle purchases.
• Additionally, AI enables dealerships to scale or streamline operations in response to demand fluctuations more easily and cost-effectively than doing so with personnel, empowering dealers to maximize current resources.

Best Practices for Getting Started with AI

Opt for a platform over point solutions

For maximum impact, AI should be incorporated as the foundation or “brain” of a dealership’s tech stack. Deep integrations that facilitate a seamless exchange of data between the AI and all other platforms and applications are critical to success. When AI is properly integrated with CRMs, dealer management systems, inventory feeds, and scheduling systems, dealers are able to achieve meaningful operational efficiencies. For example, through DMS integration, AI applications can continuously mine customer sales and service records, enabling timely and personalized outreach that drives incremental service appointments and greater customer loyalty. Most fixed operations departments simply don’t have the resources to do this consistently, nor at the scale and speed that AI can.

Choose an AI trained in automotive retail

Friendly conversations alone won’t move the needle in automotive. Large Language Models (LLMs) used for automotive retailing need intentional, industry-specific customization, prompt engineering, guardrails, and training to achieve desired business results. Unlike generalized open-source models, verticalized automotive LLMs are designed to drive dealer-specific outcomes like test drives, trade-in appraisals, service appointments, and more. Deep system and data integrations make these AI platforms even smarter and more effective in engaging and influencing consumers to take desired actions.

Make security and control a top priority

Data security and performance safeguards need to be a strategic priority when implementing AI. Without strict controls place, dealers face the risk of data breaches and leaks. And without proper safeguards, off-the-shelf LLMs are prone to “hallucinations,” where the AI provides inaccurate information or says things that are inappropriate. Open-source LLMs are also vulnerable to jailbreaks and manipulations that can cause irreparable reputational damage and even significant financial loss for dealers. That’s why it’s important to understand the built-in controls and safeguards that are in place before choosing any AI solution.

Plan for change management

Deliberate communication and change management can make AI adoption an exciting shift rather than an intimidating one for dealership staff:

• Clear communication explaining how AI will make teams more efficient and productive is critical.
• Defining the specific role of AI, charting out what tasks AI will take on (and why that benefits the team), and modifying processes and workflows to minimize duplicative efforts are also key to securing employee buy-in.
• Dealers also need to consider how teams will be incentivized and rewarded as they work alongside the AI and shift their focus to higher-order activities.

AI providers who are well-versed in the automotive industry can help effectively guide management and staff through this important process.

The Road to Sustainable Success

AI is full of promise – from enhancing the customer experience and empowering staff to driving sustained operational efficiency and greater business results. It enables dealership personnel to reduce or eliminate menial or manually intensive tasks, so that they can focus on what matters: building relationships, providing white-glove service during appointments, maximizing upsell opportunities, and more. Automotive retailers and OEMs that embrace AI stand to reap real rewards, while successfully navigating the headwinds the industry faces today. The best practices outlined in this article provide a solid starting point in the journey to successful implementation.

Impel offers automotive dealers, OEMs, and third-party marketplaces the industry’s most advanced AI-powered customer lifecycle management platform. The company’s end-to-end omnichannel solution leverages proprietary shopper behavioral data and generative conversational AI technology to deliver hyper-personalized experiences at every touchpoint. To hear what customers are saying about Impel or book a demo, come visit us.