The sale of new and used cars has traditionally been a highly human-centered process, involving price negotiation and selection of options, where AI might seem to play little role. However, a recent Cox Automotive study reveals that AI is now broadly impacting auto retail much like the internet and e-commerce once did. Although AI adoption is in early stages, it features prominently in every auto retail tech pitch. Yet, retailers increasingly demand proof of AI’s sales benefits rather than just presentations. Most franchise leaders agree AI should enhance the retail experience, with many seeing tangible results primarily in marketing and customer support through faster responses and more precise targeting. AI is also effectively used for personalized recommendations, decision automation, pricing, inventory management, and financing. Lori Wittman, president of retail solutions at Cox Automotive, emphasizes dealers’ focus on measurable outcomes such as increased sales, reduced inventory costs, and higher profits, not AI for its own sake. The survey surveyed 537 qualified participants spanning marketing, sales, finance, insurance, service, and management from franchise stores selling at least five vehicles monthly. Results, collected in April, June, and August 2025, show 81% believe AI is here to stay, 74% see more opportunity than risk, and 63% view current investment as a foundation for long-term strength. Still, about a quarter remain cautious, a third are exploring AI options, and only a few have fully integrated AI into core workflows, reflecting a conservative pace of adoption. In marketing and business development, AI commonly supports chat for lead engagement, personalized messaging, targeted campaigns toward ready buyers, automation of repetitive outreach, and SEO content creation. These augment existing efforts and improve metrics like first response times, appointment setting, and showroom traffic. Cox Automotive distinguishes “basic” AI—covering insights, predictions, and simple automation—from “complex” AI, which includes recommendations and decision automation. About 25% of dealers are advanced users who employ complex AI, reporting stronger current performance, recent improvements, and higher confidence for the upcoming year. Barriers to AI adoption include fears over errors, doubts about data and algorithms, and a need for training. Dealers want transparency into AI decision-making processes and the ability to audit or override AI outputs when real-world conditions differ from model expectations.

Consistency in AI results is crucial to maintaining confidence. Wittman stresses that AI must be integrated within robust data infrastructures that unlock actionable intelligence to solve dealer pain points and deliver measurable results, making connected data a major competitive advantage. Broader industry data aligns with these findings. J. D. Power’s Dealer Financing Satisfaction Study notes rising AI use in finance but dealer concerns about AI in credit decisions. A Lotlinx poll early in 2025 found 78% of dealers uncertain about using predictive data, with only 5% employing AI in core operations. McKinsey’s global AI survey observes a sharp increase in generative AI adoption, especially in marketing and sales, validating Cox's results. Earlier McKinsey research showed AI-powered marketing can boost revenue by 3–15% and sales ROI by 10–20% when scaled. Additionally, recent IAB research ranks AI as the second most influential shopping source after search, with shoppers relying on AI for option comparisons and navigating toward retailers with higher buying intent, benefiting dealers equipped with conversational discovery tools and clean product data. While substantial AI adoption growth remains possible, most dealers accept AI's inevitability. Only a minority have formal AI rollout plans, yet those with roadmaps report stronger performance and improved efficiency over the past year. Wittman cautions that successful dealers choose partners with established automotive AI expertise to discern genuine AI solutions from hype. In summary, AI is rapidly becoming integral to auto retail, especially in marketing, customer engagement, and operational automation. Though challenges around trust, transparency, and integration persist, dealers with strategic plans and strong data foundations are already realizing measurable benefits in sales and efficiency, signaling a transformative shift in the industry.