ARTIFICIAL Intelligence has the potential to transform car retailing because it has the ability to provide solutions to problems which, for lack of resources, have plagued dealerships for years.

In this second in our series on AI, an expert panel brought together at this year’s AADA Convention and Expo continues to peel back the implications of AI for dealers and discuss the way AI can increase the revenue per employee at a time when dealers are experiencing slimmer margins.

The fact that you can talk to your AI device, do it in any language and that AI can reason are just three of the benefits that dealers are seeing that can make the workplace more rewarding for the business and the staff.

Here we continue from last week’s story Will AI run dealerships? Part One: click here to read Part One

Moderator Wade von Bibra asked the panel: “If we can get AI reaching out to our online leads, and then we’ve got voice activated AI that’s handling our incoming phone inquiries, how close are we where potentially, as a business owner, I can say to my sales team: I don’t want you to touch an email. I don’t want you to text. I don’t want you to pick up the phone.

Wade von Bibra – Dealer and panel moderator 

“Let AI take control of all of that. All I want you to do is be ready when that customer comes in for the two o’clock appointment on a Friday afternoon, or whatever it might be, then it is Game On to present, test drive, negotiate and get the deal done. In what sort of time frame will we get there?” 

CEO & co-founder of Podium, Eric Rea said: “That is happening with dealers in California today. 

He cited the general sales manager of a large Toyota store who tells his team that Jerry or Jarvis (AI) follow the exact recipe they’ve outlined in the policies and procedures to get that buyer in the door.

“And then when that person walks in, they just tell them that Jerry’s their work-from-home guy, and they take over and take the test drive and so on. That’s happening today.”

Mr Rea added: “The advice I give to you all is that when you buy AI, it is not the same thing as buying software. AI is so different. You are basically buying an employee. And so when you’re buying AI, you have to treat it like you’re interviewing your next employee. And when you’re talking to the company that’s building your AI, you have to ask them those questions that you ask when you interview an employee.

Eric Rea – CEO & co-founder of Podium

“These agents are communicating with your customers all the time without any intervention and you have to train them.” 

MD of Impel, Ben Cooper said: “You have to tell the AI about your business, your warranty, your finance, your inventory; all those things that make an employee effective. You have to tell the AI, and you have to keep the AI updated with those things. 

“The best things in our industry still happen when you have a great service person or a great salesperson and a customer having a genuine human interaction. So you should think of AI as an enabler to make more of those things happen, rather than a replacement, per se, of any people. 

“AI gives you operational leverage. It’s a little bit of an elephant in the room, but it gives you the ability to rethink your resource allocation. But as an industry, we should still be looking to put great people in front of great people, because that’s really where the magic happens.” 

Ben Cooper – MD of Impel

Asked about where AI is in finance and what might happen over the next few years, the CEO of youX Auto Finance Simon Penhaligon said that about 80 per cent of buyers begin the journey online. 

“So how do we engage with them in a high quality cadence online to give them certainty of transacting?  It’s about getting people into the dealership and I think that is where AI can be really beneficial. Think about online conditional approvals, leaving deposits, booking test drives; all online with an AI.”

Mr Penhaligon told the panel that, apart from never taking a sick day 24/7, AI, when interacting with customers, will always stick to the script, will always be compliant, and can now actually interact with customers in any language. 

He said that AI will “increase our odds of getting the customer into the dealership where we can hand over to a human to finish up the transaction”. 

Simon Penhaligon, CEO of youX Auto Finance

“So I think that is really the low-hanging fruit at the moment. When we consider that we are at $21 billion as an industry of new vehicle finance sales, and then we think about the fact that around 85 to 90 per cent of vehicles are actually financed, and we’re at 35 per cent penetration, so there’s a lot left on the table.”

Mr Penhaligon said: “The next piece is probably how we can become more proactive. So think about the customer interactions and engaging with AI and the data that we’re getting through that customer transaction, whether that’s high quality finance data, whether it’s servicing data or just their general habits and buyer behaviors along the way.

“Thinking about when the time is right to re-market that customer, we have Carsales using predictive insights. We have AutoGrab using AI and their predictive pricing models. We can overlay that data on all this information that we have about the customer ready to trigger, not six months out from loan term expiry, but actually when they’re at equity parity. 

“So we can sell the same customer more vehicles throughout the life cycle. And as we see the auto industry and manufacturers churning out vehicles on a faster refresh cycle of models, customers will want to upgrade more actively. 

“So it’s in our interest to take advantage of these tools. In summary, if you think about success being when opportunity meets timing, I think the timing element is probably where AI can help us the most. 

Asked by Mr von Bibra if AI could help dealers increase finance penetration Mr Penhaligon said: “We have to start looking at omni finance channel solutions (consistent communication and data flow across channels like web, mobile, ATMs, and branches). That’s probably the way forward. 

“One of the benefits of AI is that we can have omni-channel finance journeys. It’s not about not respecting or adhering to our retail support ratios and our captive funders, but it’s about thinking about a customer’s wants and needs. We’re in the age of convenience so we have to be able to offer up more than one solution.”

Asked what administrative tasks within the dealership are ripe for AI automation that may free up those people for more value-added activities Pentana Solutions’ Brooke Ebbett told the panel that within a dealership, there are many repetitive behaviors across all the different departments.

Brooke Ebbett – Pentana Solutions

“No two dealerships do it the same, but they’re all trying to get to the same outcome,” he said. 

“So I think AI is the big enabler. If you think about daily tasks for your staff, 80 per cent of their day-to-day work is manual grunt work. It is the filling out the forms, it’s the follow ups etc. The 20 per cent is the high-value interactions, the face-to-face in the dealership, closing the deals, etc. 

“So that’s where I think the biggest opportunity is; to let the technology do the grunt work and increase the revenue per employee. 

“There are only so many levers we can pull in this industry. There are so many external factors that put downward pressure on margins for our dealers, but I think decreasing costs, increasing efficiencies, and using AI technology to enable that, so revenue per employee in a dealership, is  where the massive opportunity is.”

Eric Rea: “There’s so much latent revenue potential in every dealership in Australia, in America, and around the world, on the sales and service side and AI is going to unlock on the fixed ops and the variable side all of the latent revenue potential that you’re not capturing today because you can’t hire more people. Car sales is a low margin business. You can’t afford to hire enough people to do the jobs that you want to do to capture that revenue. 

“So you are going to make a lot more money in the future with a lot less people. 

“Like right now, we’re working with a really large auto dealer in the United States. They have hundreds of locations, and they sell like 12 cars per rep per month right now and I think we’re going to get them to 20 over the next 12 months. That is an awesome opportunity.”

Simon Penhaligon said: “The flip side of the coin is we actually will have more engaged people and more job satisfaction in our human workforce because the one thing the AO is doing is that it is chasing those leads that nobody wants to call. 

“Where’s your job satisfaction when you’re calling leads that convert less than 1 per cent. It is pretty low against job satisfaction when customers are converting at 30, 40 or 50 per cent. We know there’s a scarcity of high quality talent, but our ability to retain that talent will increase.”

Ben Cooper said that dealers will end up with smaller workforces, but happier workforces. 

Brooke Ebbett said: “Think of your sales department, where someone might be doing 10-15, maybe at best 20 units. In five years time, they could be doing 80. They’ll be closing deals on the showroom floor while AI is doing the heavy lifting and the low value repetitive administration tasks.” 

Michelle Low said: “I think it will be the new normal way of doing business; co-pilots everywhere, and new ways of engaging with those models. But for a customer, it should be just a new standard.”

Simon Penhaligon said: “I want to take it outside the dealership and the concept being proactive. Imagine brushing your teeth in the morning. Hey, Siri, what’s on today? It’s like you have this meeting, drop the kids at soccer. 

“By the way, your service is due. And did you know (your dealer) is offering very generous trading bonuses on vehicles that are traded in the next month. Do you want me to book you an appointment? So I think it’s going to come back to using AI and that sort of natural search to actually be proactive with customers.”

Michelle Low – Executive GM, technology & data at Carsales

Eric Rae said: “I think the time of all of us sitting at our desks and looking at these huge screens and software all day long, is coming to an end. I think even into the next two years you will be talking to your software a lot more than you’ll be looking at it and typing into it. 

“I think everybody’s gonna have a Jarvis (AI assistant). I think you will wake up in the morning and call up Jarvis who will tell you everything that is going on in the dealership. 

“How many test drives were booked overnight? What are the service lanes looking like? What are the opportunities? What are the campaigns that AI has queued up because it knows that you have some openings in your service drive. Or there is a new incentive coming out from the manufacturer and AI has already looked through your database and found every single person who was interested in that vehicle that now has an incentive. 

“I don’t think that’s pie in the sky. That will happen in the next two years, and I think it’s going to be awesome for everybody,” Mr Rae said.

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