Navigating the AI Era: Is Your Car Dealership Ready to Thrive or Fade Away?

Navigating the AI Era: Is Your Car Dealership Ready to Thrive or Fade Away?

Dealers who want to survive this paradigm shift need to invest in modern leadership coaching and relevant sales training, building a solid team based on the same core values, powerful vision and mission.

Adapt and Thrive Amidst the Rise of AI, or Risk Being Replaced?

By Velko Tuhchiev, founder and president of Velko Academy

I separate the professionals in our industry in two types: “Relational – Buyer Oriented” and “Transactional – Deal Oriented.”

Presently, we have three generations of dealers, managers and salespeople in action. The eldest, with over 25 years of experience, hail from the “Negotiations Era.”

Back then, buyers lacked information, necessitating visits to multiple dealers for car values. “Transactional” salespeople and managers employed fast techniques, becoming adept manipulators.

They capitalized on unverifiable information, crafting perceptions that translated into buyer expectations and realities. Closing tricks and an assertive approach led to a 35% success rate, celebrated as mastery.

With the advent of the internet, dealers initially dismissed it, hoping it would fade. They said it was a “fluke” that would go away. They were reluctant to relinquish their unfair advantages and substantial leverage.

This marked the onset of the “Informational Age.” Buyers became savvier, uncovering industry secrets and growing frustrated. Thus, the “Race to the Bottom” emerged, with the next generation focusing on tactics like upselling, offering rebates “unqualified” buyers couldn’t claim, and engaging in creative pricing games.

Around 2010-2015, social media’s influence surged. Dealers, clinging to nostalgia for the “Negotiations Era,” were slow to adapt. Again, they said it was a “fluke” and most stubbornly refused to be a part of it, some even today. Platforms like Yelp, Google and Facebook exposed antiquated methods, fostering more informed and irate consumers. They forced the attention of the dealers and they started investing in “clients’ online experience”.

We officially entered the “Experience Age.”

Buyers cared about respect and trust more than ever before. They had the information, but desperate for respect an easier and more efficient experience.

Then came COVID-19. Record-breaking profit margins, achieved with lean operations, led to complacency and hubris among sales staff, becoming comfortable, lazy and arrogant. Managers claimed undue credit for this unprecedented success, stoking their egos.

Today, the average buyer has cycled through the six stages of grief, facing substantial financial loss. Given new rates and economic crises, a slowdown is inevitable for many.

Manufacturers align with consumers, prioritizing a 100% online experience, minimizing human interaction. They have a plan to turn dealers into bigger service centers and deliver vehicles after completing the transaction online. We reside in a tech-dependent world.

This transformation is ongoing. The car industry is evolving swiftly, and I’m here to offer hope.

There will always be individuals who prefer buying from humans, but it’s a “catch and keep” scenario. Loyalty and Trust. It’s evolving into a premium service, reserved for higher-tier professionals.

I predict that sooner than anticipated, “transactional” salespeople, managers and dealers will be supplanted by AI and vending machines. Their own malicious intentions will destroy them.

“Transactional” management roles will be supplanted by tools or reduced to a single position. Naturally, they dismiss this as a fluke, once again insisting, “Customers will remain naive, uninformed and stupid.”

We see that pattern of refusing to accept reality and those rare cases of old school techniques still working are keeping them hopeful. Blockbuster still had people renting to the very end before they lost everything to Netflix.

At present:

• We face the highest turnover rates in history. While the desire to succeed in car sales endures, outdated leadership methods let salespeople down.

• Expectations from sales staff are at an all-time low.

Dealers who want to survive this paradigm shift need to invest in modern leadership coaching and relevant sales training, building a solid team based on ethical core values, powerful vision and mission.

Salespeople are desperate for great leadership. There are brilliant people who can bring fresh perspective, build a personal brand on social media and they still need to develop interpersonal skills, communication skills, product knowledge, modern presentation, negotiation and closing skills, and most importantly — learn to create their own opportunities.

It’s time to collaborate with your buyers and offer exceptional service, genuine trust, a unique and memorable experience, an easier more efficient buying process, focused on convenience, credibility, entertainment and education.

Transactional buyers lured in by false ads will gravitate toward machines and remove “transactional salespeople.”

Salespeople and dealers who cultivate relationships and create loyalty with their buyers will persevere. Buyers valuing relationships will invest in the premium.

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