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Artificial intelligence in automotive retail

Jun 18, 2025 · Authored by A. Michael Mader

The automotive retail industry is undergoing a profound transformation, fueled by the rapid advancement of artificial intelligence (AI). Once considered a futuristic concept, artificial intelligence in automotive retail is now a practical tool reshaping how dealerships operate, engage with customers and drive profitability. From streamlining operations to enhancing customer experiences, AI is no longer luxury – its becoming a necessity.

In this month’s episode of Up to Speed, Mike Mader, principal with Baker Tilly’s dealership advisory service team, discusses the future role AI will play in the dealership industry alongside CEO of QoreAI, Todd Smith.

Turning data into gold

At the heart of AI’s potential in automotive retail lies data. Dealerships are sitting on vast reservoirs of transactional data: sales records, service histories, CRM entries and more. However, this data is often siloed, unstructured and underutilized. The key to unlocking its value is not just collecting it but refining it into actionable insights.

Think of dealership data as crude oil. It’s valuable, but only after it’s extracted, cleaned and refined. AI excels at this process. By aggregating data from disparate systems and applying machine learning algorithms, dealerships can identify patterns that would otherwise go unnoticed. For example, AI can detect when a loyal service customer hasn’t returned in months, flagging them for outreach before they defect to a competitor. It can also predict which customers are most likely to be in-market for a new vehicle, enabling targeted marketing that’s both efficient and effective.

Automating the mundane

One of AI’s most immediate benefits is its ability to automate repetitive, time-consuming tasks. In dealerships, this includes everything from lead follow-up to payroll processing. For instance, calculating commissions for variable pay plans – often a complex and error-prone task – can be streamlined with AI. Once trained, AI systems can execute these tasks with perfect consistency, freeing up staff to focus on higher-value activities.

This automation doesn’t mean replacing humans. Instead, it augments their capabilities. Employees remain in the loop, reviewing and validating AI-generated outputs, but they’re no longer bogged down by tedious processes. The result is a more efficient, productive workforce.

Enhancing the customer experience

AI is also revolutionizing customer interactions. Traditional lead response emails are often generic and impersonal. AI can change that by crafting personalized messages based on a customer’s behavior, preferences and communication style. This level of personalization at scale was previously unattainable but is now within reach.

Moreover, AI-powered voice assistants are beginning to handle service appointments and inquiries, often so seamlessly that customers can’t tell they’re not speaking to a human. While these systems are still evolving, they represent a significant step toward more intuitive, responsive customer service.

Predicting the future

Perhaps one of the most exciting applications of artificial intelligence in automotive retail is predictive analysis. By analyzing a customer’s purchase history, financial profile and lifestyle data, AI can forecast what vehicle they’re likely to buy next, with surprising accuracy. In some cases, predictive models have achieved nearly 80% accuracy in identifying the make, model and trim a customer will choose.

This capability allows dealerships to proactively engage customers with relevant offers, improving conversion rates and customer satisfaction. It also helps optimize inventory management by aligning stock with anticipated demand.

Overcoming data challenges

Despite its promise, AI’s effectiveness hinges on data quality. Many dealerships struggle with outdated, duplicate or inaccurate records. Common issues include multiple entries for the same customer, vehicles listed under previous owners and even deceased individuals still receiving marketing communications.

Addressing these issues requires a deliberate data strategy. Dealerships must take ownership of their data, extract it from vendor systems and invest in cleaning and organizing it. Only then can AI deliver reliable, meaningful insights.

A phased approach to adoption

For dealerships wary of a full-scale AI overhaul, there are plenty of low-hanging fruit. Starting with simple applications, like improving email communications or automating lead responses, can yield immediate benefits. Tools like ChatGPT can be used off the shelf to enhance messaging and customer engagement.

The key is to start small, learn and scale. As AI tools become more sophisticated and accessible, dealerships that build a strong data foundation today will be best positioned to capitalize on tomorrow’s innovations.

Looking ahead

The trajectory of AI in automotive retail is clear: faster development cycles, smarter systems and deeper integration into every aspect of the business. As AI continues to evolve, it will become a trusted co-pilot – an ever-present advisor helping dealerships make better decisions, serve customers more effectively and operate more efficiently.

Soon, AI will shift from being a tool to being a strategic partner. Dealerships that embrace this shift will not only survive but thrive in the new era of automotive retail.