Today’s Tech Dance Can Be Awkward

Product providers who shared their views about emerging technologies’ role in auto dealerships say it can make a sometimes dramatic difference. But at least some also point out its current limitations and how proceeding with patience and skepticism can be healthy.

They all agreed agents should be dealers’ guides in making sense of sometimes opaque innovations and helping pull together all the new tools for an integrated approach that smooths the customer’s experience and the dealership’s.

The changes have come at warp speed, partly due to the accelerating pace of innovation and partly because of the pandemic’s effects. Since Covid temporarily demanded remote transactions, “We figured out e-contracting, digital retailing, using new tools like [artificial intelligence],” said Barry Schwartz of StoneEagle.

“The problem is now we’re starting to come back down from those trends and starting to fall back into those patterns … I think the technologies are out there. Now it’s just holding our foundation. It’s up to us as consultants for the dealer and the dealers themselves in training staff.”

Agent Needs

For instance, “As dealerships place greater emphasis on timely updates, there's growing demand for agents to receive real-time notifications about critical events,” said Mark Nagelvoort of PCMI, who foresees “massive change” in the industry through technology, AI playing “a critical role.”

He said agents are now handling the entire life cycle of F&I products for dealers and thereby enhancing their value using technology. An example is integrating automated notifications for Gap policy claims.

“Imagine if a dealer received an immediate alert when a GAP claim is initiated—this would enable them to promptly reach out to the customer, ensuring they receive the necessary support from the selling dealer, whether their vehicle is totaled or undergoing repairs. It strengthens the customer-dealer relationship while leading to a potential new sale, which is a huge benefit.”

But he added that agents need streamlined information to help them do the job, especially since many independents represent multiple third-party administrators. That’s where the new technologies can come in.

“The stakes are so much higher to have a successful agency model than there was five to 10 years ago. How do you do that and lower your cost and not increase your cost?” he said, adding that today’s technology “moves the needle,” especially in cutting expenses.

Potential Futures

One technological change the experts see as needed is integration of the various tools so that the consumer doesn’t experience a confusing and sometimes frustrating journey to purchase. The subject came up, though, when they were asked what a “cutting-edge” dealership would look like in five years, so they seem to think it will be a while.

“Future dealerships will need to adopt integrated tools that cover the entire customer journey—presale, post-sale, and service support—ensuring a holistic view where all information is shared across systems,” Nagelvoort said.

Beyond the customer’s direct shopping and buying experience, technology can provide a big lift behind the scenes in both compliance and sales staff development, said Marty Hu of AutoTrainer, which develops AI technology for finance-and-insurance functions.

Another area of growth, as Schwartz sees it, is leveraging technology to pinpoint unsold products and other missed opportunities. “How can dealers retarget customers and sell more?”

AI: A Mixed Bag

As for AI, the specialists acknowledged it’s not a cure-all but said it’s already starting to make up for human limitations. Hu said it can reach underneath the plentiful data generated nowadays, which he calls “level one,” figuring out from that data what went wrong – level two – and determining what needs to be adjusted and how – level three.

“AI can get to levels two and three,” he said, “give us that action plan and figure out how” to take it from there. “I think there can be a lot of improvement across the whole life cycle.”

Ironically, Hu said he hasn’t seen much technological improvement in the past few years, though he considers AI full of potential to elevate dealers’ processes.

“I actually think AI is an almost perfect fit for the F&I industry,” he said, dividing that potential into three key areas for improvement: per-vehicle-retailed; customer experience, and compliance.

“I see all those things coming together and being valuable for the dealer and agent.”

Take regulatory accountability. “Even with the CARS act,” Hu said, referring to the pending Federal Trade Commission car-shopping rule, “accountability is becoming harder and harder. I see AI as way to get to the truth of what’s actually happening. It becomes a truth serum.”

He referred to AI’s ability to quickly transcribe recordings of F&I meetings with customers to ensure compliance and to train sales staff in presenting products most effectively.

Growing regulatory pressure makes it imperative that agents update their ability to help dealers comply, added Nagelvoort, who agreed AI and F&I are a good fit, including for detecting fraud and streamlining data.

Still, as with any new technology, there are kinks to be worked out, the tech specialists said.

“When it comes to AI, I believe the past two years have pushed us 10 years,” Schwartz said, complimenting AutoTrainer’s AI technology as “brilliant” and saying AI has a solid role in creating efficiencies and solutions, including with one of his specialties: mergers and acquisitions.

But, “We’re still trying to figure out AI,” he quickly added, pointing out that auto retail is a people business and that the industry should weigh the costs and benefits of where and how it integrates the emerging technology. “I’m not trying to discredit it at all … The only question is the data backing it – if it’s incorrect.”

Hu acknowledged AI’s limitations, saying “we’re probably at the very beginning” of its development but adding that it’s “exceptional” at tasks like automation and process consistency.

“It’s not exceptional at, ‘I’m going to throw you out in the water and figure out what’s new,” he said. “AI thinks way too far outside box, so you have to build a box around it.”

Other imperfections will have to be overcome as the technology develops, the specialists said.

Though AI can analyze customers’ histories to suggest products that fit their needs and buying habits – for instance, if someone buys a cellphone warranty, he or she is more likely to buy one for a new car – it also presents tricky quandaries and complexities to work out, Nagelvoort said.

“The challenge is who owns the chatbot? And the capital being spent – there is a lot,” he said.

Schwartz said he’s unconvinced that AI is the best tool for handling customer objections, for instance.

“There is a need, but it’s that final stretch where you have a customer that’s never bought a back-end product in their life, and they’re being presented with a warranty.”