What Every Dealer Needs to Know About AI Adoption in Automotive – Based on a True Survey!

The narrative that AI adoption is still sluggish in car dealerships is only the first of many myths about AI and the automotive industry that are just begging to be busted. Sure, the automotive sector may have been a bit slower in adopting these powerful technologies, but it’s time to put those rumors to rest, set the record straight, and dismantle some of the pervasive and damaging misconceptions about AI in the automotive space.

The Search for the Truth 

The recent report, “The 2025 State of AI Adoption in Car Dealerships,” commissioned by Fullpath, a CDP and marketing automation company in the automotive space, comes out strong on the side of dealership executives, owners, and general managers when it comes to integrating AI into their operations. Conducted by an independent research company, the results of the survey put a hard stop to the assumption that the dealer community is shying away from AI, instead proving that they are, in fact, extremely dedicated to creating future-proof, lasting, and successful businesses through AI adoption. 

Let’s take a dive into the findings of this report, bust a few of the biggest misconceptions surrounding AI in automotive, and take a good look at why embracing AI is proving to be not just beneficial, but essential for the future of car dealerships. 

Myth #1: Dealers Don’t See the Value of Implementing AI

Contrary to what many industry influencers and nay-sayers want you to believe, in 2024, dealers widely grew to understand the importance and the potential value of implementing AI technology. The survey report indicates that over 90% of dealers recognize AI as crucial for their future success, with 95% of respondents rating it from “important” to “very important.” With 81% of survey respondents indicating that they have already implemented AI at their dealerships or plan to deploy the technology in 2025, it’s clear that dealers have a good grasp on the potential AI holds for enhancing dealership operations and creating the best customer experiences possible. While there might still be a gap in current dealership AI usage and consumer expectations, dealers are highly aware of the fact that AI adoption can have a major impact on future success. 

Myth #2: AI Will Replace Human Employees at Dealerships and Eliminate Jobs

If your biggest fear about AI is that it is coming for your job, think again. An impressive 72% of the dealership leaders surveyed see AI, not as a replacement for their employees, but as a tool to enhance team performance, making it easier for their people to do their job in a better, more efficient way. This just goes to prove that “efficiency” is not a term that should scare employees because clearly dealership leadership values how AI can empower employees, not eliminate the critical role they play in building long-term success.

Myth #3: AI is Only Helpful for Big Dealerships

It’s time for a major reality check: Dealerships of all sizes with any number of cars on lot can deeply benefit from powerful AI technologies. When asked directly if AI can be beneficial for both large and small dealerships, a third of people surveyed strongly agreed that AI tools are essential for small and mid-sized operations. 

The survey results also show that AI can help smaller dealerships overcome issues surrounding data hygiene and activation to better engage customers on a more personal level. While 59% of total respondents indicated that AI helps their dealership overcome data activation challenges to a moderate extent, 47% of dealerships with fewer cars on lot indicated that AI should be used to a greater extent to overcome data activation challenges. Fact is, small and mid-sized dealerships can harness AI to stay competitive and drive significant growth the same way larger operations can. 

Myth #4: The ROI on AI Won’t Offset Implementation Costs

This is one of those myths that is doing potentially irreparable damage to the future success of car dealerships. AI is not only worth the cost and the effort, a mindblowing 100% of survey respondents who have already implemented AI at their dealerships shared that they have seen an increase in profits that can be directly attributed to the technology. In the last 12 months, 37% have seen a 10-30% increase in profits, and 18% have seen an over 30% increase. While the initial investment in AI can seem pricey, the return on investment dealers are seeing proves the real impact it can have on a dealership’s bottom line. With over 80% of dealers anticipating increasing their AI budgets in 2025, it is clear that there is a strong faith around the potential impact of AI and a deep commitment across the industry to AI expansion. 

Myth #5: AI is Only Useful for Marketing 

While marketing is typically the first use case that comes to mind when it comes to AI implementation, AI solutions are proving to be beneficial for any number of use cases across multiple dealership departments. The survey results indicate that AI implementation is pretty evenly spread across departments with customer relationship management and sales and customer service taking the top spots. Respondents indicated that AI adoption is also prominent in areas including fraud detection, predictive maintenance, and employee training and management, with further expansion expected over the next year. 

Marketing may seem like a natural choice for dealerships looking to dip their toes in the AI pool, but the options for AI applications are endless with more and more tools coming to market every day. Dealers need to take a close look at their pain points and then make an educated choice on where AI can make the biggest impact on their individual business. 

Slaying the AI Naysayers 

The impact of AI adoption in car dealerships is irrefutable. Wherever dealers are choosing to implement the technology, they are seeing meaningful results that are actively proving the naysayers wrong with improvements across the board. AI isn’t just the next big trend; it’s an essential tool that can help dealers actively enhance operational efficiency, drive customer satisfaction, and streamline financial growth. While we can’t fully predict what will happen in 2025, one thing is clear: AI is set to have its biggest year yet, so the real question is not whether or not to adopt AI, but rather, how quickly your dealership can get on board.

This article was originally published in AutoIndustry.AI on November 15, 2024.