The Future of Automotive: Embracing AI Technology to Drive Change

The age of Artificial Intelligence (AI) is upon us.

According to Crunchbase, AI deals accounted for 37% of the $38 billion raised by VC-backed companies in Q3 2024, with four of the 10 largest deals involving AI-related companies. The latest increase in AI-related investments is still expected to be just the beginning of a longer-term trend. 

OpenAI's current valuation is mind-blowing $157 billion, after raising $6.6 billion in a funding round led by Thrive Capital. This valuation makes OpenAI one of the highest-valued privately held companies. 

As a result of AI becoming the most buzz-worthy technology, dealers had best get ready for an onslaught of new AI-powered vendors pitching aggressive value propositions. 

I believe that we’ll see AI innovation for dealerships develop in three phases .

Phase 1: The AI-Powered “Co-Pilot”

GitHub CEO Thomas Dohmke is able to measure what percentage of software code is now being written by automated bots, and that number is now an average 46% — almost half the code on average is written by AI “Co-Pilots.” Dohmke believes that it won’t be too long until 80% of all software code is automated and written by AI bots.

NVIDIA CEO Jensen Huang believes that software coders should probably start planning for a different career. He views software development and coding as a volatile career path for future generations, recommending biology, education, manufacturing, or farming as plausible alternative career options.

During Google parent Alphabet's recent earnings call, CEO Sundar Pichai revealed that more than a quarter of Google's new code is generated using AI (he did indicate that the AI-generated code is double-checked by engineers for errors and mistakes before it's accepted – for now).

Think of an AI Co-Pilot as being a virtual assistant that increases the average dealership employee’s IQ by 10 points, and increases their productivity by double.

In other words, the BDC agent that used to be able to respond to 40 leads per day? Now they can respond to 80. 

The accounting clerk that took 7 hours to reconcile that bank statement? Now can do the same job in 3.5 hours.

The exciting thing about AI Co-Pilots is that they can tackle the hard parts of the job that no one likes to do, and employee engagement increases dramatically as a result.

Phase 2: The AI-Powered “Intelligent Agent”

If Phase 1 is the AI-powered “Co-Pilot” then Phase 2 will involve into that of the “Intelligent Agent.”

An AI agent is defined as a software program that can interact with its environment, collect data, and use the data to perform self-determined tasks to meet predetermined goals.

Examples of AI agents include intelligent personal assistants like Siri and Alexa, autonomous robots in manufacturing and logistics, AI-driven chatbots in customer service, and sophisticated systems in gaming and finance for decision-making and strategy development.

For the automotive dealership, we’re already seeing AI systems that will answer the phone 24/7 and schedule service appointments after hours. Gone are the days of leads coming in overnight and your BDC having to respond at 9:00 AM when they get into the dealership. 

The AI Intelligent Agent can be trained up and then work tirelessly 24/7 to be a force-multiplier for your employees.

The 24/7 dealership has already arrived.

Phase 3: AI Begins to Replace Headcount

If phase one of the AI evolution is the implementation of Co-Pilots for many of dealership employees, and phase two is the introduction of the Intelligent Agent, third phase is fully autonomous bots that can replace certain roles. 

Walk into any automaker factory today, and you’ll often have a hard time finding a human, for the sea of robots working the production line.

Within two years Amazon will have more robots than humans working in their warehouses.

By my calculation, between 60% to 80% of a dealership’s cost structure is human capital. Dealers often lament about employees that are either impossible to hire, challenging to train, or hard to retain. Pre-COVID, salesperson turnover was greater than 60% per year.

As AI evolves from Co-Pilot to Intelligent Agent, it will become apparent that any roles at the dealership that involve repetitive labor will inevitably be replaced by automation.

This will be net-positive for dealership profitability and will drive a wave of new technology innovation from the software vendors that sell into dealers.

For the dealership employees out there, my suggestion is to embrace this change and keep both your knowledge of AI, and of the vendor landscape up to date. The best way to ensure you can survive and thrive in this new environment is to be on the cusp of this wave of change, and play a key role in helping your dealership evolve down the path to greater AI innovation.