AI Rewrites the Rules of Car Sales

Dealers are letting artificial intelligence (AI) take the wheel in reshaping how Americans shop for cars, steering buyers from smart ads to digital showrooms.

Car dealers embracing AI are seeing results, with all of them reporting revenue gains, according to a recent survey by auto customer information company Fullpath. The survey also found that eight in 10 dealers plan to boost their AI spending in 2025. The report shows that the technology is used for customer support, personalized marketing campaigns and optimization of digital advertising.

The technology is changing the traditional dealership model by analyzing customer data gathered during the car buying process to personalize offers and enable digital tools that give shoppers more control over their purchases.

“With AI platforms, dealerships gain a comprehensive view of the buying experience from start to finish, including online browsing habits and past purchase history, allowing them to accurately predict who is most likely to buy and when,” David Boice, the CEO and co-founder of Team Velocity, a B2B automotive tech company, told PYMNTS. “These predictive capabilities have transformed dealerships’ approach, allowing them to prioritize leads with the highest likelihood of conversion, ultimately driving more effective sales strategies.”

Car dealerships increasingly adopt AI to enhance customer experiences and streamline operations.

CarMax, for example, utilizes AI algorithms to provide personalized vehicle recommendations that closely align with individual preferences. Similarly, other dealerships have integrated AI-powered chatbots on their websites to promptly address customer inquiries and schedule appointments, significantly improving response times.

BMW employs AI for predictive maintenance, analyzing vehicle data to notify customers when service is needed before issues escalate. This proactive approach helps prevent potential problems and extends vehicles’ lifespans. Additionally, Cox Automotive uses AI for market analysis, assisting dealers in setting competitive prices and managing their inventory.

“Customer data is essential,” Boice said. “Without it, delivering a personalized customer experience would be significantly more challenging — a problem that AI has effectively addressed. As platforms like Amazon set new standards, consumers now expect tailored shopping experiences that align with their preferences. In the past, customers often walked into dealerships only to be offered cars outside their budget or interest.”

While auto lenders experiment with AI, one company is using the technology to tackle lending inequities.

Tricolor, a consumer development financial institution (CDFI), uses AI to assist Hispanic customers who struggle to secure car loans, Chief Strategy Officer Mauricio Delgado told PYMNTS. He explained how they use the technology to find affordable vehicles for customers and connect them with local buyers through their preferred communication channels.

“We extract profiles of our most successful buyers and build personas that we then use in online advertising,” he said. “The marketing team can place targeted online ad buys that directly reach desired buyers. This allows Tricolor to avoid the spray-and-pray brand advertising philosophy of other companies. This results in 80% of the leads being generated through targeted digital campaigns. It also dramatically lowers customer acquisition costs, with Tricolor paying hundreds of dollars per customer versus the thousands per customer spent by much bigger brands in the space.”

But traditional sales methods remain crucial to the car-buying process, Boice said. Customers still value test drives, face-to-face conversations with salespeople, and the personal touch these interactions provide.

“However, a hybrid experience has become increasingly important, with nearly 30% of consumers now preferring a remote car-buying option,” he said.

“Technology can enhance and streamline these interactions, boosting customer satisfaction while reducing the workload for dealerships — especially as new offerings like electric vehicles (EVs) continue to flood the market,” he added. “For example, AI can manage lead generation, initial platform personalization and follow-ups, leaving room for meaningful human interaction as soon as the customer is ready for it.”

The post AI Rewrites the Rules of Car Sales appeared first on PYMNTS.com.