This article initiates a series analyzing this year’s Urban Science/Harris Poll survey. The survey delves into consumer perceptions of the relevance of the traditional automobile dealership model.

As Artificial Intelligence (AI) continues to become more commonplace throughout business, smart dealers are embracing the technology and educating customers about the benefits.

There is still an array of buyers who want to shop and purchase in the traditional way of visiting dealerships and working one-on-one with staff from start to finish. And dealers report a significant number of buyers are skittish about both AI in the dealership and the rapid adoption of in-cabin technology, including in-camera radar, driving monitoring systems and even environmental sensors. But dealers can shift the attitudes of shoppers into those who fully embrace the benefits of AI, whether in the dealership or vehicle.

To understand more about AI and consumers, consider the age groups that now shop for vehicles —

• Gen Z, born between 1997-2012
• Millennials, born between 1981-1996
• Generation X, born between 1965-1980
• Baby Boomers, born 1946-1964

Yes, the age range is vast, but retail experts note it’s important not to stereotype buyers’ technologic acumen based on age. Auto buyers of all ages may hesitate to adopt new AI auto buying options and the array of technological options within vehicles. But – perhaps not surprisingly – this year’s Urban Science/Harris Poll survey shows those that 59% of those that buy electric vehicles are aware of AI in the car buying process compared with 27% of buyers that select ICE vehicles.

Moving more consumers toward embracing AI is vital for dealership and automaker efficiency. Here’s where dealers and consumers currently stand on the technology.

Auto Buyer’s Limited Awareness of AI’s Role

Consumers are aware of AI, of course. As we mentioned, the “Amazon effect” is one of several factors that compels dealers to embrace AI. Although our survey shows consumers realize that positive benefits of AI including easing comparison shopping (63%), exploring brands and models (57%), configuring vehicles (52%) and more, we’ve found that 34% of consumers haven’t used AI.

Dealers’ Dilemma Balancing AI’s Benefits and Drawbacks

Of course, AI has more advantages for dealers and auto buyers than those of which customers are aware. Those advantages include enhanced lead conversion and follow ups, more effective targeting and customer segmentation and streamlined sales and service processes.

As vehicles’ technologies become more sophisticated and financing becomes challenging for some, off-loading routine and repetitive tasks to AI systems allows dealership staff to more fully serve customers’ personalized needs.

It’s important for dealers to understand that AI – both in dealerships and vehicles – is no longer an option but a necessity for those that want to remain competitive. But to reap AI’s rewards, dealers must develop a specific plan to integrate it into their stores.

Yes, AI integration can be expensive but it’s important to realize that many of the new offerings can be combined with existing CRM systems saving dealerships’ money. Although many cases of integration are straightforward, that does not mean dealers should go it alone. Those who have succeeded agree with consultants who say dealerships should hire technology experts to ensure their systems are optimal.

And ongoing staff training is a must.

The Role of Vendors in AI Adoption (Urban Science’s Perspective)

As data and technology experts, Urban Science helps dealers refine their sales process and improve lead conversion with enhanced analytical capabilities. As mentioned above, integrating AI and machine learning into your performance analysis solutions can boost profits, customer satisfaction and staff efficiency.

But, again, time has proven that dealerships should not try to go the integration of AI and technological advancement alone. Such technology is not “one size fits all” and should be personalized for each dealership. AI technology can help dealers refine their sales process, improve lead conversion and enhance analytical capabilities that offer them a myriad of customer insights.

Here are some of the key points we advise dealers to heed if they want to be successful with AI:

• Lean on Trusted Vendors: 88% of dealers trust their vendors to guide them through AI adoption, ensuring proper integration and maximizing value.
• Bridge Internal Gaps: AI offers a unique opportunity to align general managers (GMs) and sales managers (SMs), creating a cohesive strategy across sales, marketing, and service departments.
• Look at the Full Customer Journey: Dealers should leverage AI not just for sales but to optimize the entire customer lifecycle, from initial inquiry to post-purchase service.

Urban Science’s AI-Fueled Solutions for Dealerships

We believe that combining the power of big data, advanced analytics and human expertise empowers actionable decision making that drives improved sales and marketing outcomes. Our solutions are fueled by a combination of predictive modeling and prescriptive analytics that help dealers sustain competitive advantage and mitigate risk.

• Future-Focused Solutions: Urban Science’s predictive modeling gives dealers insight into demand trends and consumer behaviors, helping them stay ahead of industry shifts and operate more efficiently, strategically and effectively.
• Enhancing Sales and Service Processes: AI is key to gaining actionable insights from customer data, leading to more personalized, efficient interactions that benefit both the dealer and the buyer.

Yes, AI can transform a dealership by boosting its profits and customer satisfaction. But that requires dealers to make concerted efforts to meld AI into their stores.

One mistake some dealers make is to try to integrate it without developing clear objectives aligned with their business strategies, investing in the right partners for tools and technologies, training and empowering staff, and more.

Dealers who take the time to outline how they can use AI to capture interest, service and sales can better all service buyers, including those looking for the “Amazon effect.”

1. Source: Urban Science Online Consumer and Dealer Studies, February 2024. These surveys were conducted by The Harris Poll on behalf of Urban Science among 3,005 U.S. adults aged 18+ and 250 U.S. automotive dealers.