AI & Automation Trends Driving Dealer Profitability

AI & Automation Trends Driving Dealer Profitability

Dealers are leaning into digitization. And the results are here. According to the 2024 Cox Automotive Digitization of Automotive Retail Study, omnichannel dealers are outperforming their peers across key metrics like close rates, customer satisfaction, and gross profit. That’s big news for the industry and great news for your dealership.  

Below is a list of the top five trends from the data that are reshaping dealership success you simply can’t afford to ignore. 

AI Adoption is Key 

The data: 49% of omnichannel dealers use one or more AI capabilities, compared to just 32% of other dealers.  

With AI no longer just a buzzword, you’re free to use it to your advantage. Nearly half of the study’s omnichannel dealers are leveraging AI to streamline operations, personalize shopper experiences, and optimize deal flow. These dealers are using predictive analytics to identify high-intent leads, automate follow-ups, and tailor offers based on real-time consumer behavior. This level of intelligence allows sales teams to work smarter, not harder, focusing their energy on the deals most likely to close. By integrating AI into their digital retailing strategy, top-performing dealers are gaining speed, precision, and control over the sales process, ultimately driving higher profitability and customer satisfaction. 

Kelley Blue Book (KBB) VIN-specific pricing recommendations and Instant Cash Offer (ICO) leverage AI and real-time market data to help dealers identify high-intent shoppers, personalize offers, and close deals with confidence.  When integrated into a broader digital retailing strategy, these tools help dealers align with shopper expectations while maintaining operational control and transparency. 

Digital Retailing Technology Drives Efficiency and Satisfaction

The data: 70% of dealers agree that online retailing tools create efficiencies and improve customer satisfaction.

Embracing digital retail technology can help you streamline your operations and deliver a better experience for both your shoppers and your staff. Online retailing tools make it easier to connect with your customers at every stage of the car buying journey—whether online, in-store, or somewhere in between. By automating routine tasks and gaining a unified view of shopper activity, you reduce friction, save time, and empower your sales teams to focus on building relationships and closing deals. The result: higher customer satisfaction, increased efficiency, and more profitable dealership.

Kelley Blue Book® Instant Cash Offer (ICO) and Price Advisor tools integrate seamlessly with digital retailing platforms, giving dealers real-time, market-reflective values and transparent pricing that shoppers trust. These tools support a more consistent and trusted experience, helping dealers deliver a more efficient experience that builds confidence and drives repeat business.

Omnichannel Dealers Outsource More, Win More

The data: Omnichannel dealers outsource an average of 4.8 online retailing capabilities, compared to 4.0 for other dealers. 

Outsourcing digital retailing capabilities lets you scale your business and stay ahead of changing consumer expectations. By partnering with trusted technology providers, you can focus on building relationships and closing deals, while experts handle the complexities of online retailing. This approach gives you access to best-in-class tools, reduces operational burden, and helps you deliver a seamless experience across every channel.

Kelley Blue Book® Instant Cash Offer offers a scalable way to bring consistency and credibility to the trade-in process. By embedding trusted, third-party valuations into omnichannel workflows, dealers can reduce friction, enhance transparency, and deliver a more unified experience—whether online or in-store.

Digital Retailing Boosts Close Rates

The data: Omnichannel dealers see 53% more positive impact on close rates from digital retailing than other dealers. 

Digital tools help you respond quickly to buyer inquiries, personalize the experience, and remove barriers that slow down the sales process. When you streamline workflows and leverage real-time data, you create a seamless path to purchase that gets buyers to “yes” faster and more often.

Tools like Kelley Blue Book ICO and Price Advisor help bridge the gap between shopper intent and dealer action. By integrating with your digital retailing strategy, you can build confidence at every step, accelerate deal-making, and convert more leads into closed sales.

Automation is Reshaping F&I and Credit Apps

The data: Dealers using automation save 42 minutes at the dealership for mostly digital car buyers compared to light digital buyers. 

No more manual data entry, reduced errors, and accelerated approvals sound like a dream come true? That’s the goal. Automation empowers your team to focus on delivering a seamless, transparent experience for every customer. When you streamline these critical steps, you not only save time but also create a more efficient and profitable workflow for your dealership.

Kelley Blue Book Instant Cash Offer (ICO) integrates into F&I and digital workflows—bringing automation to valuation and trade-in processes. This not only reduces manual effort but also supports a more transparent and efficient experience for today’s digitally minded car buyers.

Ready to Embrace AI and Automation? 

AI, automation, and digital retailing are no longer optional—it’s essential for driving efficiency, satisfaction, and profitability. Dealers who leverage these technologies are streamlining operations, building trust with shoppers, and closing more deals, faster.  As the retail landscape evolves, Kelley Blue Book continues to serve as a trusted source of data and insight—helping dealers navigate complexity, build trust, and deliver experiences that resonate with modern car buyers. 

Ready to see how KBB can help you outperform the competition? Request a demo today and discover the difference trusted data and seamless technology can make for your business. 

Source: 2024 Cox Automotive Digitization of Automotive Retail Study 

Why “Shop by Payment” Is Becoming a Must-Have for Lenders and OEMs 

Affordability remains top of mind for car shoppers for the forseeable future. With today’s high interest rates and rising vehicle prices, buyers are more cautious — and selective — about the vehicles they pursue. That’s why more consumers are turning to “shop by payment” as a way to understand what they can afford before ever stepping into a dealership. 

In a recent episode of the Small Bytes podcast series, Cox Automotive Research Manager Greg Payne sat down with Andy Mayers, Lender Strategist and AVP of Lending Operations, to discuss how Payment Services — a VIN-specific monthly payment calculation tool — is helping lenders and OEMs deliver the clarity and consistency buyers expect. 

“The first thing a shopper wants to know is, ‘Can I afford this car?’” Andy explains. “Payment Services gives them that answer — and keeps it consistent from your site to the dealer’s showroom.” 

What sets Payment Services apart is its robustness. It factors in every element that impacts the final calculation result: down payment, loan term, interest rate, trade-in equity, incentives, and even taxes and fees at the most local level. That unique level of sophistication gives buyers a realistic view of what they can expect to pay — and enables that result to carry over to the dealer experience.  

This consistency is key. When a buyer sees a monthly payment estimate online, they expect that number to hold up when they engage with a dealer. If it doesn’t, trust erodes — and deals stall. But when lenders and OEMs offer reliable, real-time payment calculations, they empower buyers to move forward with confidence. 

And that confidence translates into action for their dealer partners (and ultimately their business, too). 

By giving shoppers the self-assurance that they can afford the vehicle they’re interested in — all before they ever speak to a dealer — Payment Services reduces friction between the consumer and dealer, shortens deal-making and moves both parties to contract faster. In doing so, it also supports stronger dealer relationships, boosting your brand value to help win more of their business. 

As Andy puts it, “This isn’t just a nice-to-have. It’s table stakes.” 

For lenders and OEMs looking to stay competitive in a digital-first market, “shop by payment” isn’t just a feature — it’s a strategy. And it’s already delivering results. 

Listen to the full conversation here

Competing Beyond the Offer: Why Dealers Need a Long Tail Strategy Now

For The Road Forward Podcast - Micah Tindor

Guest Expert:
Micah Tindor
Senior Director of Strategy
Kelley Blue Book Instant Cash Offer

Guest Expert: Micah Tindor, Senior Director of Strategy for Kelley Blue Book Instant Cash Offer, joins Jade Terreberry to unpack the latest shifts in consumer behavior and what they mean for dealers. In this fast-paced conversation, they explore how evolving expectations are reshaping vehicle valuation, retail strategy, and the role KBB ICO plays in helping dealers stay competitive and meet buyers where they are.

Top Takeaways:

  1. Long tail ROI is a game changer: Dealers who track the total downstream value of every vehicle—including future trades, service revenue, and customer retention—are making smarter acquisition decisions and maximizing profitability.
  2. Data-driven strategies reveal hidden wins: Analyzing a year’s worth of sales and trade data helps dealers identify which vehicles generate the most additional revenue, allowing them to confidently invest more in high-value inventory.
  3. Competing with disruptors means rethinking value: Winning trades against Carvana and Carmax isn’t about matching the highest offer upfront; it’s about understanding and communicating the full value a vehicle brings to the dealership.
  4. Affordability challenges require new approaches: With more consumers underwater and juggling multiple offers, dealers must use long-term value to offer more competitive trade values and build trust with buyers.
  5. Start with your data foundation and expert support: Micah’s advice: build a robust data repository to identify vehicles with high downstream value, and consult client success managers to guide your strategy and implementation.

Timestamps:

0:00 – 1:40 – Introduction

Jade Terreberry welcomes listeners, introduces Micah Tindor as the most frequent guest, and previews the episode’s focus on long tail ROI and acquisition strategies.

1:40 – 2:19 – What is the Long Tail Approach?

Jade asks Micah to explain the long tail approach to vehicle acquisition and why it matters for dealers in today’s market.

2:19 – 5:05 – Breaking Down Long Tail ROI

Micah details how dealers should look beyond immediate profit and consider the total downstream value of each vehicle, including future trades, service revenue, and customer retention.

5:05 – 5:34 – Industry Blind Spots

Jade highlights that dealers often miss out on deals due to a lack of confidence in the long tail model, and asks Micah for strategies to overcome this.

5:34 – 7:47 – Real-World Strategies and Data Analysis

Micah shares how dealers can use historical sales and trade data to identify high-value vehicles, and gives examples of how this approach increases win rates and market share.

7:47 – 8:49 – Competing in Today’s Market

Jade and Micah discuss how dealers can compete with online retailers like Carvana and Carmax by focusing on total value rather than just front-end gross, especially as consumers arrive with multiple offers.

8:49 – 10:09 – Affordability Challenges and Consumer Experience

Micah explains how rising prices and constrained consumer budgets make the long tail approach even more critical for building trust and offering competitive trade values.

10:09 – 10:59 – First Steps for Dealers

Jade asks Micah for actionable advice. Micah recommends starting with a robust data repository and consulting client success managers to identify vehicles with high downstream value.

10:59 – 12:01 – Closing Thoughts

Jade wraps up the episode, thanking Micah for his insights and encouraging dealers to embrace new strategies for appraisals and acquisitions. She previews upcoming content and invites listeners to subscribe.

POP QUIZ: Is Your Dealership Digitally Ready? 

Today’s car buyers expect to move seamlessly between online and in-store experiences—sometimes starting their journey on a smartphone, continuing it at home, and finishing it at your dealership. The pressure is on for dealerships to deliver a digital-first, customer-centric experience at every touchpoint. 

According to the 2024 Cox Automotive Digitization of Automotive Retail Study, the most successful dealerships are making strategic investments in omnichannel solutions—tools and processes that let customers shop online, in-store, and everywhere in between. In fact, 73% of these leading dealers say their current technology provides a good omnichannel experience, helping them meet buyers wherever they are

But how does your dealership stack up? Take our quick quiz to see if you’re truly delivering the kind of experience today’s shoppers expect—or if there’s room to improve with help from AI and automation. 

Digital Experience Readiness  

When customers complete paperwork online, do they still have to repeat those steps when they arrive at your dealership?  

Why it matters 

A smooth transition from online to in-store isn’t just a nice-to-have—it’s what today’s car buyers expect. Customers expect to be able to start their journey online and pick up right where they left off in your showroom. When dealers get it right, this kind of seamless experience pays off: 81% of digital-leaning buyers report high satisfaction with their dealership when the process is truly connected. In a competitive market, delivering this level of convenience and consistency can be the difference between winning a customer for life or losing them to a more digitally savvy competitor. 

Operational Efficiency 

Are your sales and BDC teams still manually following up with every lead, instead of using automated tools to prioritize hot prospects? 

Does your team lack instant access to key customer data—like vehicle interest, trade-in value, or buying power—before a lead is even submitted? 

Why it matters: 

When your team can quickly identify and focus on ready-to-buy customers, they’re able to close more deals, faster—and with less wasted effort. Instead of spending valuable time chasing cold leads, your sales and BDC professionals can zero in on the opportunities that are most likely to convert. VinSolutions Predictive Insights brings these high-potential customers front and center, providing your team with actionable information and clear next steps. This not only streamlines your sales process, but also empowers your staff to communicate, negotiate, and close with greater confidence and efficiency. Having this kind of targeted insight can make all the difference in meeting your sales goals and delivering a standout customer experience. 

AI & Automation 

Are your marketing campaigns and follow-ups still handled manually, without adapting to each shopper’s behavior? 

Are repetitive tasks—like follow-ups and proposal generation—still done by hand, instead of being automated? 

Why it matters: 

Personalization is expected from every interaction to keep up with today’s customers. When your marketing campaigns and follow-ups are handled manually, it’s easy for messages to become generic or for leads to slip through the cracks. AI-powered automation changes the game by adapting your outreach to each shopper’s unique behavior and preferences, ensuring that every message is timely and relevant. This not only saves your team valuable time by taking repetitive tasks off their plate, but it also helps you build stronger relationships with customers. VinSolutions GenAI turbo charges these messages so your dealership can deliver a truly personalized experience at scale, making every customer feel seen and understood—while your team focuses on what they do best: selling and serving. 

Fixed Ops Integration 

Do your service and sales teams still have to manually share customer data, instead of using integrated systems? 

Why it matters: 

When your sales and service teams operate in silos, valuable customer information can get lost or overlooked, leading to missed opportunities and a fragmented experience for your buyers. Manual data sharing is not only inefficient, but it also increases the risk of errors and delays. By integrating your fixed operations with your sales processes, you create a seamless flow of information that benefits both your team and your customers. This connectivity means your staff can identify new sales opportunities, offer timely trade-in deals, and follow up on service visits with relevant offers—turning every interaction into a chance to build loyalty and drive future business. Dealerships that break down these barriers are better positioned to deliver the kind of consistent, high-quality experience that keeps customers coming back. 

Scoring Your Results 

If you answered “YES” to any of these questions, your dealership may not be fully digitally ready. The good news? VinSolutions can help you deliver the results your team—and your customers—expect. 

Get the Dealers’ Guide to AI-Powered Retailing 

Learn how dealers are using powerful AI and automation to deliver the experiences buyers expect. 

Source: 2024 Cox Automotive Digitization of Automotive Retail Study

Episode 4: Managed Services

Join Danielle Warner, Senior Product Consultant, as she guides you through proven strategies to elevate your dealership’s online presence. Discover how integrated solutions like enhanced shopping experiences, increased visibility, and improved ad targeting can drive real results. 

You’ll learn:  

  • SEO: Are shoppers finding your site easily? Learn how to improve your visibility in Google search results and attract more qualified traffic. 
  • Content & Creative:Is your website content personalized and engaging? Explore best practices for optimizing slideshows, landing pages, specials, and ads to connect with your audience. 
  • Social & Reputation Management: What does your dealership’s online reputation say about you? Discover tools and tactics to strengthen your presence and build trust with potential buyers. 
  • Website Management: Streamline operations with smart site monitoring, OEM compliance, and managed services that keep your website running smoothly and efficiently. 

Omni-Channel, AI, and Engagement: What Dealers Should Prioritize Now

Guest Expert: 
Patrick Janes 
AVP of Business Development 
vAuto

Patrick Janes, AVP of Business Development for vAuto, joins Jade Terreberry to unpack how omni-channel strategy and AI are reshaping automotive retail. Patrick explores the importance of connecting inventory management with customer engagement, the impact of AI on trade-in appraisals and process efficiency, and the need for collaboration across dealership teams. He shares actionable insights on sourcing inventory, optimizing trade capture, and leveraging technology to drive profitability, streamline operations, and build lasting consumer trust—all ahead of their session at Digital Dealer.

Top Takeaways:

  1. Omni-channel strategy is now essential: Dealers must connect inventory management with customer engagement across digital and in-store experiences to stay competitive in 2025 and beyond.
  2. AI is transforming trade-in appraisals: Voice-driven and data-powered AI tools are helping dealers deliver more accurate, transparent offers and build consumer trust—often “sight unseen.”
  3. Identifying and addressing risk zones is critical: The biggest pain points for dealers are in trade-ins, purchases, and F&I; data-driven processes help solve these challenges and keep customers engaged.
  4. Process optimization drives profitability: Defining, measuring, and collaborating on dealership processes—especially for trade capture and inventory sourcing—are key to maximizing ROI.
  5. Inventory sourcing starts in the service drive: Top-performing dealers are leveraging internal opportunities, like the service drive, to source inventory and capture more trades.

Timestamps: 

0:00 – 0:42 – Introduction

Jade Terreberry introduces the episode and welcomes guest Patrick Janes, AVP of Business Development for vAuto, previewing a discussion on omni-channel strategy, AI, and dealership trends.

0:42 – 2:53 – Why Omni-Channel Matters

Patrick explains why omni-channel strategy is now essential for dealers, emphasizing the need to connect inventory management with customer engagement, and previews their upcoming session at Digital Dealer.

2:53 – 4:57 – AI’s Impact on Trade-In Processes

Jade and Patrick discuss how AI is transforming trade-in appraisals, improving accuracy, transparency, and efficiency for dealers and consumers.

4:57 – 7:43 – Addressing Risk Zones

Patrick identifies the biggest pain points for dealers—trade-ins, purchases, and F&I—and shares how data-driven processes help solve these challenges.

7:43 – 10:59 – Process Optimization and Measurement

The conversation shifts to the importance of defining, implementing, and measuring dealership processes, especially for trade capture and inventory sourcing.

10:59 – 13:26 – Inventory Sourcing and Service Drive

Patrick shares best practices for sourcing inventory internally, highlighting the service drive as a key opportunity for capturing trades.

13:26 – 15:39 – Real-World Success and Closing Advice

Patrick offers actionable recommendations for closing the year strong and maximizing dealership profitability.

15:39 – 17:21 – Closing Thoughts

Jade wraps up the episode, encourages listeners to subscribe, and previews upcoming conversations with industry leaders.