With 68% of dealers saying that artificial intelligence has positively impacted their operations, according to CDK research, it’s no wonder auto dealer AI is here to stay. The global automotive AI market is projected to grow to $7 billion by 2027, per CDK’s AI in Automotive: Insights and Innovations Survey 2024.
What exactly is auto dealer AI and how is it impacting dealerships nationwide? Auto dealer AI is artificial intelligence technology designed to improve automotive retail operations. It can be leveraged in many capacities and offers many benefits, including increased efficiency, the potential for higher profits, and an improved customer experience.
Current auto dealership challenges
It’s no secret that automotive dealerships face significant hurdles. The most prominent of these include:
Declining foot traffic: The shift to online car buying means fewer buyers go to physical dealership sites to purchase cars. Dealerships now face increasing competition from online car vendors. According to Consumer Affairs statistics released in 2024, the global online car-buying market is expected to reach $722.79 billion by 2030.
Increasing service department competition: Car service departments face competition from other service providers. In Consumer Reports’ 2024 survey, more members preferred independent shops or chains over dealerships. Pricing was a top reason cited in the survey.
Managing online reputation: The importance of online reviews and social media cannot be understated. Car shoppers often read or watch online reviews before visiting dealerships. It’s essential that dealerships effectively manage their online reputation via reviews and online feedback. The time is takes to manage this online reputation management can be a challenge for dealerships.
Meeting evolving customer expectations: Today’s customers expect personalized experiences and instant and consistent communication. A Salesforce study found that 67% of U.S. consumers are frustrated when customer service can’t resolve their issues instantly. They expect quick answers and assistance. For dealerships, this can be difficult if they don’t have the processes in place.
Staffing challenges: According to the CDK survey, the top problem reported by respondents was managing employees and staffing shortages — for the third consecutive year. These personnel issues make it difficult for dealers to provide effective customer service and boost their revenue.
How can AI address these problems?
CDK’s AI in Automotive survey found that 52% of executives have considered incorporating artificial intelligence for car dealerships into their operations. The question for many is how does AI fit into their processes. Here’s a breakdown of how it can be leveraged in an automotive retail environment:
AI in the sales department
Sales teams that leverage AI are reporting the positive impacts. According to CDK, 66% of auto dealerships with a sales volume of 500-plus units report being “extremely familiar” with AI. For variable operations departments, the greatest opportunities are in “propensity to buy” and “suggested vehicle” features. Overall, sales teams are using the technology for many routine and essential tasks, including:
Lead qualification and prioritization: AI tools can help dealerships with identifying high-potential leads.
Personalized communication and follow-up: Automating email and SMS campaigns is especially helpful when service and sales department staff are overburdened.
Pricing optimization: Some AI solutions can provide insights on dynamically adjusting prices based on market conditions, helping boost revenues.
Predict sales forecasts: AI-powered analytics can accurately forecast sales trends, identifying seasonal fluctuations, market shifts, and emerging opportunities, enabling data-driven decision-making and informed inventory management.
One key tool to consider is STELLA's AutoPilot solution. STELLA Automotive AI partnered with Dealer Funnel and Client Command to launch a new automotive AI offering. AutoPilot harnesses the power of innovative technologies to seamlessly connect with in-market buyers, driving unprecedented sales and service expansion through personalized engagement and targeted interactions.
AI in dealership marketing
Beyond sales, AI can also enhance marketing for sales and service departments. Four key roles of the tech are:
Targeted advertising: Reaching the right audience with personalized ads.
Campaign optimization: Analyzing data to improve campaign performance.
Customer segmentation: Grouping customers based on their behavior and preferences.
Social media management: Automating social media posts and interactions.
AI in the service department
Among the most popular AI use cases for fixed operations are “predictive service” and “service retention” insights, according to CDK. For service personnel, artificial intelligence is already helping automate these essential responsibilities:
Predictive maintenance: Dealer AI can help anticipate maintenance needs and reduce service bay downtime. It can send customers reminders about needed routine services or recalls.
Automated appointment scheduling: AI voice agents or chatbots streamline the scheduling process.
Proactive customer communication: AI-powered messaging ensures customers are informed about service updates.
Parts inventory management: AI can optimize inventory levels and help managers reduce waste.
STELLA's Service and Reception solutions offer many of these key capabilities and more. STELLA acts as a conversational AI voice agent that can take calls at any time of day, 365 days a year. Even when dealerships are closed on holidays and weekends, STELLA remains online, answering calls on the first ring. It offers support in Spanish for biliingual customers.
STELLA understands customer requests and recognizes more than 270 opcodes, allowing it to book appointments efficiently and correctly. It can also recognize if a person who calls a dealership's service department owns a vehicle in need of recall repairs and book the correct appointment. Customers who need to cancel an appointment can do so in less than 30 seconds, minimizing frustration.
Inventory management using AI
Effective inventory management is crucial for dealerships to stay competitive. Artificial intelligence can play a significant role in optimizing inventory levels, reducing costs, and improving customer satisfaction.
AI-powered predictive analytics can help dealerships forecast demand and adjust their inventory levels accordingly. By analyzing historical sales data, market trends, and seasonal fluctuations, AI can identify potential stock imbalances and provide recommendations to avoid overstocking or shortages. This ensures that dealerships have the right vehicles in stock, reducing the need for costly relocations or emergency shipments.
By leveraging AI in inventory management, dealerships can:
Reduce inventory costs and minimize waste
Improve customer satisfaction through better vehicle availability
Enhance operational efficiency and streamline processes
Gain a competitive edge in the market through data-driven decision-making
Choosing the right auto dealer AI solution
Dealerships that want to stay on top of customer preference trends and effectively compete with independent repair shops and chains need to implement technology. Choosing an AI solution requires weighing many factors, including features, integrations, and support.
While many voice AI solutions exist on the market, dealerships should choose one that is designed specifically for the automotive sector by people who have worked in the industry and understand its nuances. That’s a key differentiator between STELLA Automotive AI and other offerings.
STELLA’s founder, Josselyn Boudett, partnered with top automotive dealers and investors who were passionate about building intelligent AI solutions to help dealers deliver a modern customer experience. STELLA’s proprietary technology makes it not just another AI voice agent, it’s a powerful digital voice assistant that speaks in a natural, conversational manner. Current CEO Rich Sands is an industry veteran who has continued the collaboration with dealers to improve the product’s capabilities as needs evolve.
With the official launch of STELLA as Microsoft's Copilot for Automotive in 2024, dealerships can tap into the power of market intelligence at a group level, fostering seamless collaboration with OEMs while retaining full control over their operations.
Success story
STELLA's impact is undeniable. In one case study, the Tom Wood Automotive Group, based in Indianapolis, successfully improved its service operations by implementing STELLA Automotive AI.
To reduce inbound call volume by 20%, the dealership integrated STELLA AI to streamline operations and improve customer service. The results exceeded expectations, with the call center shifting from primarily handling inbound calls to achieving over 50% outbound call activity, allowing the team to pursue new business opportunities. STELLA AI achieved a remarkable 63% efficiency rate at the group's Audi store, surpassing the initial goal of 30%.
By enhancing existing processes and complementing human efforts, STELLA AI enabled the dealership to focus on strategic tasks, drive revenue, and strengthen customer relationships, serving as a compelling example for dealerships considering AI solutions to improve efficiency and customer service.
Learn more about STELLA's solutions by booking a demo with our team.
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