About a decade ago, dealers began to adopt what's known as velocity selling, based on the premise of pricing vehicles transparently and competitively to turn inventory faster. Companies such as vAuto analyzed dealership inventory and identified which vehicles dealers could price below the market average to increase their turn.
But "once everyone started to use same technology, the advantages started to go away because then it just became, 'We're lowering our gross; we're giving away profits just to turn inventory,' " said Jeremy Alicandri, managing director at automotive consultant Maryann Keller & Advisors.
Today, more dealers are turning to artificial intelligence to set themselves apart and boost their bottom lines.
Artificial intelligence is defined broadly and has a few distinct levels, and dealerships are still only scratching the surface of intelligent data. While not all retailers have embraced the tools, dealership use of AI can do more than enhance the customer experience; it also can bolster store profitability.
There are hurdles to clear, such as trusting a process that's difficult to understand, but with a plethora of data, many dealers are using AI to get more efficient. Not only can they better deploy employees, whose time can be freed up through AI tools, but they also can make better pricing and inventory choices and sell vehicles faster.