Personalization Enabled By Automation, AI Will Improve Car Buying, Ownership


Auto dealers and consumers agree that personalization enabled by automation and artificial intelligence (AI) has the potential to greatly improve the car-buying process and the overall ownership experience.

Artificial intelligence – advanced data techniques that allow computer systems to make predictions, make decisions and work more like the human brain – is currently transforming many industries, including automotive retail.

According to a new study by Cox Automotive, 67 per cent of car buyers believe personalization technology will improve the car-buying experience. Nearly as many, 63 per cent, believe personalization technology will improve car ownership.

“Automotive retail is going through a period of transformation right now,” said Marianne Johnson, chief product officer at Cox Automotive. “AI is not just a buzzword. It’s already impacting the way consumers gather information about cars, learn about which car to purchase, and decide when to interact with a dealer. Artificial intelligence is also helping dealers become more efficient and transparent and deliver a better consumer experience.”

It is well known in the automobile industry that the car-buying process needs to be improved. According to the most recent Cox Automotive Car Buyer Journey Study, 61 per cent of buyers believe the process did not change or became worse since their last purchase. Research also shows that buyers are visiting fewer dealerships, so it is more important than ever for dealers to make every contact count. Insights gathered in the Cox Automotive Technology and Transformation of Retail Study show that one path to improvement is the smart adoption of AI technology.

Know Thy Customer

Advanced data techniques enable the harvesting and management of vast amounts of personal data, and some consumers are leery of privacy issues related to personal data. At the same time, 68 per cent of consumers surveyed in the Technology and Transformation of Retail Study indicated that they don’t mind dealers using personalization technology if it improves the overall vehicle-buying experience. In fact, 76 per cent of consumers expect their dealer to know something about them before they walk onto the showroom floor.

The study indicates that technology used smartly delivers a more personalized, customer-based approach to selling that helps U.S. auto dealers build better, long-term relationships with their customers. Shifting from a seller of products to a trusted advisor is ultimately what most consumers are seeking from the dealership staff. 62 per cent of respondents want a more trusting relationship, where their dealer is more of an advisor, mentor, partner or friend – not just a retailer. Technology adoption can help make that happen.

The Dealer’s Conundrum

In the Cox Automotive Technology and Transformation of Retail Study, 63 per cent of dealers agree that adoption of automation and/or AI is necessary to adapt to changing dealership pressures. And while there is wide scale awareness of AI and automation, only about half of dealers know “a lot” about these technologies, making adoption more challenging.

Many obstacles are slowing the adoption of automation and AI technology at U.S. dealerships, the study shows, with “not worth the cost,” “staff resistant to change” and “wouldn’t fit in current process” cited as top challenges.

Importantly, the survey indicates that 72 per cent of dealers see AI technology as a tool to help improve efficiencies and provide time for staff to focus on other areas of the dealership. Conversely, only 28 per cent of dealers believe adoption of AI will lead to staff reductions. Slightly more than half of dealers surveyed indicated that adopting automated processes can help them deliver a better customer experience and improve retention and loyalty.

As the process of car buying and owning transforms, the biggest priority will be personalization – the ability for dealers to deliver an experience that feels unique for each consumer. Approximately three-out-of-four consumers (74 per cent) feel that a personalized experience at the dealership is important. This is particularly true with younger cohorts, where 87 per cent of people ages 18-24 and 81 per cent of people ages 25-34 say a personalized dealership experience is important.

Personalization also means understanding that most consumers feel strongly that human interaction is a necessary and irreplaceable part of the vehicle buying and owning experience. For example, 62 per cent of respondents want to review and sign the final documents and contracts in person, with a dealership representative. In other words, a 100 per cent online buying experience is still not the preference of the majority.

Staying in touch after the purchase is important as well, the new study shows. More than eight in 10 consumers want to hear from their dealership in some capacity after a vehicle purchase, a process that can be automated with AI technology. A majority of vehicle owners believe automated and/or AI technology should be used to help improve the service process. Nearly nine in 10 vehicle owners expect a dealer’s service department to know something about them when they reach out for service. Typical new-car owners want to be contacted via email every three to six months with information about special service promotions and advice on the best time to trade in a vehicle. Alerts on open recalls are also welcome.

“Customer interaction must be carefully managed,” cautioned Lori Wittman, senior vice-president of Cox Automotive Dealer Software Solutions and general manager of VinSolutions, a CRM provider. “This new study clearly underscores what we see with CRM usage every day: New-car owners do not want to be spammed or stalked by their dealership. Having the right data at the right time to be relevant instantly is paramount to successful personalization.”

Cox Automotive Technology and Transformation of Retail Study

The Technology and Transformation of Retail Study was undertaken to discover the latest trends in automation and artificial intelligence technology and help guide the industry through the ever-changing dealership landscape. The study was led by Cox Automotive’s VinSolutions team and conducted from April 30 to May 23, 2019. The results were compiled from a survey of 532 franchised dealerships and 2,032 recent automotive consumers.