Study finds 76 per cent of dealers already had or will be integrating AI into their dealerships within three years.
For years, the finance office in dealerships across the country has remained, for the most part, a bastion of tradition, untouched by significant shifts in process.
Then the pandemic hit, fast-tracking the emergence of online digital retail, a transition that, while much needed, presented its own set of hurdles for business managers.
Suddenly, there were remote TO’s to handle and the intricacies of digital contracting to navigate. Yet, despite these incremental changes, the core of the business office largely persisted in its time-tested ways.
The introduction of Artificial Intelligence (AI) and machine learning in this space feels like flinging open a window in a room that’s been sealed tight for ages — providing a breath of fresh air that hints at profound transformations just around the corner.
The market is already witnessing the emergence of tools that harness the power of machine learning to analyze credit files and predict lending approvals. What’s most impressive is that these systems are designed to learn.
If they predict an approval and it’s wrong, they self-correct, refining their algorithms for future predictions. This means the more they operate, the smarter they get, lifting the curtain behind each lender’s buying practices.
The adoption of AI in the F&I process isn’t just about efficiency. AI’s knack for data analysis also means reducing fraudulent transactions, a better overall customer experience and a streamlined way to ensure regulatory compliance.
A recent survey conducted by CDK Global in March of 2023 titled “What Automotive Dealers Think About Artificial Intelligence”1 not only serves to shine some light on the areas of AI that dealers are interested in but also the level of adoption we are already seeing.
Based on the survey, dealers are not only interested in AI’s predictive lending abilities but also its ability to predict a customers propensity to buy accessories and F&I bundles by analyzing their CRM profile and past buying behaviour, providing a personalized experience.
The survey also highlighted that a notable 76 per cent of surveyed dealers are aware of AI as an emerging technology and 76 per cent also indicated that they either already had or will be integrating AI-based applications into their dealerships within the next three years.
The adoption of AI in the F&I process isn’t just about efficiency. AI’s knack for data analysis also means reducing fraudulent transactions, a better overall customer experience and a streamlined way to ensure regulatory compliance.
But as with any significant change, challenges are bound to arise. The upfront investment in technology and potential training is a consideration. There’s also the need to manage team apprehensions about technology and the concern that it could potentially overshadow human roles.
With increased digitization comes the added responsibility of ensuring data security protocols, especially in a time where data breaches are unfortunately not uncommon.
So how does this impact the role of the finance manager? Will that role become obsolete? The short answer is, no.
While AI can process and analyze data with remarkable speed and accuracy, the nuances of decision making, relationship management, and ethics require human insight.
AI might be the tool that aids in simplification, but humans remain at the helm, guiding the ship based on the unique challenges and opportunities each situation presents.
As for when this integration of AI becomes mainstream, it’s likely to be a gradual journey. Over the next half-decade, early adopters will likely start reaping the benefits of AI tools. Another five years down the line, we might find it challenging to find a dealership where AI isn’t an integral part of the F&I process.
With dealerships poised for the notable shift with the growing integration of AI, it’s important to remember that this tech isn’t just about streamlining.
Although it’s reshaping how we approach F&I by adding precision and personalization, the value of personal relationships and human interactions remains paramount. The evolving landscape suggests a balanced future, where AI’s capabilities complement, rather than replace, human expertise.
The path forward is shaping up to be a collaboration between advanced technology and our innate human skills.
REFERENCE:
1 CDK Global. (2023). What Automotive Dealers Think About Artificial Intelligence. https://cms.cdkglobal.com/sites/default/files/2023-07/AI_Automotive_Retail_Ebook_July2023.pdf
