As we begin exploring AI and its impact on automotive retail operations, we will do our best, to begin with high-level discussions in an attempt to keep the industry aware of the technology. Our goal is to stir up interest more and encourage our readers to reach out for a deeper personalized discussion. In this article, we will try to do just that. One disclaimer, AI cannot replace human input and thankfully that is the model that seems to show best so far. Human application and execution are critical to take the output of AI and apply it correctly. If left to run rogue, AT has the potential to do more harm than good. That is our stance at The Automotive Advisor Team.
Our focus for this article is on inventory management and the timing couldn’t be any better. This subject has been on the top of everyone’s mind over the last 15 months. Our current economic state, supply, and demand trends have mandated that we be better at it than at any other time in recent history. Here is how we can start exploring AI technology to help gain competitive efficiencies and advantages in acquiring retail inventory.
AI can help automotive dealers with inventory management in several ways. Here are just a few:
- Forecasting demand: AI can analyze historical data and market trends to predict the demand for specific vehicles, allowing dealers to optimize their inventory levels. Imagine having a lens into what vehicles are demanded by what shopper audience a what times of the year under want market conditions? Then AI can accelerate the relationships between the KPIs to reveal the best possible outcome. AI will even suggest the application of that outcome to achieve the best results. This is when your team of experts would use this data and outcome analysis to build your strategy.
- Pricing optimization: AI can help dealers determine the best prices for their vehicles based on factors such as demand, inventory levels, and competition. Think of it like this in its simplest form. If you could combine all the different software solutions available for inventory management, then input all of the most important current industry trends into that software and finally tailor the learning and outcome to be personalized to your area, region, rooftop, and/or nameplate, that is what it would look like. Then accelerate the learnings 1000 fold and you have as close to a crystal ball as you can get.
- Acquisition Guidence: AI can automatically place orders for vehicles based on inventory levels and predicted demand, ensuring that dealers always have the right vehicles in stock. How about no more challenging discussions with your OEM reps about allocation based on their supply or their needs and have this solely focused on the demand in your market for your product by segment, trim, year, price, and so on? That is a glimpse into the near future. Being aware of this technology will allow you to drive this interaction with your partners not just be influenced by it.
- Vehicle identification: AI can use image recognition technology to quickly identify vehicles in inventory, saving time and reducing errors. How many times have you been on a lot walk only to find a vehicle that was traded for weeks ago collecting dust in a back corner of the property? Or maybe you just couldn’t find the vehicle you were looking for at all. Whatever the case may be, AI can find vehicles using visual recognition so you don’t have to look for, identify and verify everyone.
- Predictive maintenance: AI can analyze sensor data from vehicles to predict when maintenance will be needed, allowing dealers to proactively schedule service appointments and reduce downtime. This one has so many revenue applications for fixed ops it’s scary. We keep hearing
about how EVs will kill service absorption with fewer ROs and infrequent visits. AI has an answer. With predictive maintenance, AI can not only inform the dealer service center when service is needed but it can also alert the vehicle owner that service is needed before it happens. These two touch points almost guarantee either the advisor can call and set a diagnostic appointment or the vehicle owner will before they do. With the high-tech nature of these iPhones on wheels, the tendency to ignore the warning signs is much less. We see more Fixed ops opportunities, not less.
Overall, AI can help automotive dealers improve inventory management by providing more accurate forecasting, optimizing pricing, and acquiring while also improving lot operations, time to the front line, and enabling predictive maintenance touchpoints initiated by the vehicle to both the owner and their dealership.
However, AI can be confusing. Like with any new tech, our initial reaction is to let it play out to see who the winners and losers will be before we jump in. Unlike new tech, AI has been around for a long time and the appetite to advance its application in the industry is picking up steam. The more you know now the better equipped you will be to use it to your advantage. Reach out to the Automotive Advisor Team to start a discussion about using AI to enhance your retail operations.
The Automotive Advisor Team