The automotive industry stands at a critical juncture—a transformative era where traditional dealership strategies must rapidly evolve to match changing market conditions. Entering 2025, dealerships face an increasingly challenging landscape marked by inventory hurdles, escalating carryover rates, and intense pressure to sustain profitability. These factors are pushing dealerships to rethink and modernize their sales, marketing, and operational approaches.
Amid these challenges lies a significant opportunity brought forth by artificial intelligence (AI) and machine learning. AI is rapidly transitioning from a mere buzzword into a fundamental necessity for dealerships determined to stay competitive. The question is no longer about whether AI will impact automotive retail but about how swiftly dealers can adopt and integrate these technologies.
Navigating a Tighter Market
Traditionally, the automotive business thrives on competition and margins that are frequently under pressure. While the past years have yielded unprecedented profits due to supply shortages and robust demand, the market dynamics are swiftly reverting to pre-pandemic norms.
Inventory carryover is emerging as a prominent concern, with current new-car carryover rates rising sharply to around 56%, compared to 45% in previous quarters. The longer vehicles remain unsold—beyond dealers’ optimal window of 45 days for new cars and 30 days for used—the deeper the cuts into profitability.
Indeed, data reveals that once a vehicle crosses this critical selling period, the average time to sell significantly increases from 12 days to 98 days, necessitating markdowns. Alarmingly, 76% of markdowns on new cars happen without prior shopper interaction, pushing dealers into costly cycles of reactive pricing strategies.
The Limits of Traditional Strategies
Historically, dealerships relied heavily on intuition and manual processes for inventory and pricing decisions. However, in today’s fast-paced, data-driven market, instinct alone is insufficient. While dealerships have embraced Customer Data Platforms (CDPs) and advanced CRM systems, data accumulation without effective application is futile.
AI disrupts this traditional reliance by offering continuous, real-time analysis of dealership data, recognizing emerging patterns, and proactively identifying vehicles at risk of aging.
Transforming Inventory and Pricing Management with AI
AI transcends simple automation by empowering human decision-making with unprecedented precision. It revolutionizes dealership operations through:
- Proactive Inventory Management: AI anticipates which vehicles might stagnate, enabling dealers to implement strategic sales and marketing initiatives proactively, thus avoiding costly markdowns.
- Optimized Pricing Strategies: AI evaluates competitive prices, local market trends, and shopper engagement, facilitating dynamic and real-time optimal pricing decisions. This approach significantly reduces unnecessary markdowns, potentially saving thousands of dollars per vehicle.
- Lead Activation and Retargeting: AI platforms identify when shoppers remain interested even after their initial choice has sold, automatically presenting alternative options and improving lead conversion rates.
- Avoiding Unnecessary Discounts: AI prevents premature markdowns by recognizing vehicles that still garner active interest, preserving margins by applying strategic pricing reductions.
- Enhanced Operational Efficiency: Acting as an intelligent assistant, AI provides dealership managers with succinct, actionable recommendations, allowing them to prioritize execution over endless data analysis.
The Cost of Falling Behind
The automotive industry’s shift toward AI-driven operations parallels the early adoption of internet sales in the late ’90s and early 2000s. Dealers hesitant to embrace digital transformation eventually found themselves outpaced by competitors who quickly adapted. A similar scenario is unfolding with AI today.
Dealerships slow to adopt AI risk not only operational inefficiencies but also losing competitive edges in customer experience. Modern consumers expect personalized, swift interactions, which AI enables dealerships to deliver seamlessly. Those who can efficiently predict preferences, streamline transactions, and swiftly present relevant inventory will naturally dominate the market.
Why SAM is Ideal for Dealers
In this AI-driven future, solutions like SAM are perfectly positioned to address dealers’ specific needs. SAM helps dealerships anticipate inventory challenges, optimize pricing in real-time, and significantly enhance lead engagement. Its predictive analytics capabilities ensure vehicles are sold efficiently, minimizing markdowns and protecting profitability. SAM provides actionable insights, empowers proactive decisions, and fundamentally transforms dealership operations for sustained success.
As automotive retail progresses further into 2025, embracing solutions like SAM is not merely strategic—it’s essential for dealerships intent on thriving in the new normal.
