Automotive: AI at the Autoshop: Dealers Excited, Customers Cautious

Why it is the topic trending: Examining the Divergence Between Automotive Industry Innovation and Consumer Sentiment

• Car dealers are rapidly increasing their adoption of Artificial Intelligence (AI) in their operations.

• A recent survey highlights a growing disconnect between dealer enthusiasm for AI and customer sentiment regarding its role in the car buying process.

• Despite increasing awareness of AI in the automotive space, positive consumer sentiment towards its involvement has declined year-over-year.

• Understanding this divergence is crucial for dealers to effectively implement new technologies while maintaining customer trust and satisfaction.

• The article delves into specific areas, like electric vehicle (EV) adoption and direct-to-consumer (DTC) sales models, where dealer and customer priorities also differ significantly.

Overview: Dealers and Customers on Different Roads Regarding AI in Car Buying

A new survey conducted by Urban Science and the Harris Poll reveals a widening gap between car dealers and their customers on several key industry trends, particularly regarding the integration of Artificial Intelligence (AI) into the car buying process. While dealers are enthusiastic about the potential of AI and are actively implementing it in their operations, consumer sentiment towards its involvement has actually declined. This disconnect, alongside differing views on EV adoption and direct-to-consumer sales models, highlights the challenges dealers face in balancing innovation with customer expectations and concerns about affordability and transparency.

Detailed findings: The Divide Between Dealers and Customers

• Dealers are highly enthusiastic about the increasing adoption of AI in the automotive industry.

• Positive consumer sentiment regarding the involvement of AI in the car buying process has declined year-over-year.

• Despite the decline in positive sentiment, car buyers' awareness of AI in the automotive space has grown.

• Dealers believe consumer interest in EVs will grow, but only 47% of car buyers think EV-only options will be viable by 2040, with 48% stating they may never be ready for EVs.

• The survey suggests that the discrepancy in AI sentiment may stem from visibility: dealers experience the behind-the-scenes operational upgrades, while buyers interact with dealerships infrequently.

• Both dealers and buyers share concerns about the affordability of vehicles and the potential negative impact of tariffs on the auto industry.

• 93% of dealers view the direct-to-consumer (DTC) sales model as a competitive threat.

• 90% of car buyers would prefer a traditional dealership experience, compared to only 52% who would be open to buying from an online-first retailer.

• 94% of dealers believe the DTC model appeals to buyers, but only 64% of car shoppers agree, with Gen Z showing a preference for in-person buying experiences.

• Car buyers' top concern with the DTC model is the inability to test drive, while the biggest draw is transparent, upfront pricing.

• Dealers are focused on preparing for an AI-driven, electric future.

• Customers are primarily concerned with immediate cost pressures and the affordability of vehicles.

Key success factors of product (trend): Bridging the Gap Between Tech and Trust in Car Sales

• Transparency: Addressing customer concerns about AI and ensuring transparency in how the technology is being used in the buying process.

• Focus on Customer Needs: Balancing the implementation of innovative technologies with a continued focus on addressing customers' primary concerns, such as affordability and a positive buying experience.

• Education and Communication: Clearly communicating the benefits of AI and digital retail solutions to customers in a way that resonates with them.

• Maintaining Human Connection: Even with increased AI adoption, ensuring that customers still have access to knowledgeable and trustworthy human interaction throughout the buying journey.

• Addressing Affordability: Recognizing and actively working to mitigate customer concerns about vehicle affordability.

Key Takeaway: Dealers Need to Balance Tech Enthusiasm with Customer Concerns About Cost and Trust

While car dealers are eager to adopt AI and prepare for an electric future, they must remain attuned to their customers' primary concerns about affordability and the potential impact of technology on the car buying experience. Success will hinge on finding a balance between innovation and addressing these fundamental customer needs and hesitations.

Main trend: The Automotive Industry's Technological Leap Meets Consumer Hesitation

The main trend is the growing disparity between the automotive industry's rapid embrace of technological advancements, particularly AI, and the mixed to declining positive sentiment from consumers regarding these changes in the car buying process.

Description of the trend: Innovation vs. Acceptance: Navigating the Future of Car Sales

This trend describes the challenge facing the automotive industry as it integrates advanced technologies like AI into various aspects of the dealership and sales process. While dealers see the potential for increased efficiency and improved operations, customers are expressing caution and even declining enthusiasm about these changes. This divergence is influenced by factors such as a lack of visibility into the benefits for consumers, concerns about transparency, and a continued prioritization of traditional aspects of the car buying experience, like test drives and human interaction.

What is consumer motivation: Affordability, Transparency, Trust, and Familiarity

• Affordability: A primary concern for car buyers is the overall cost of vehicles and whether technological advancements will further increase prices.

• Transparency: Customers seek transparency in pricing and the overall buying process, and there may be concerns about how AI could impact this.

• Trust: Building trust with the dealership and sales personnel remains crucial for car buyers, and they may be hesitant about relying too heavily on automated systems.

• Familiarity: Many consumers are accustomed to the traditional dealership model and may be wary of significant changes like a shift to online-first or AI-driven interactions.

• Experiential Aspect: The inability to test drive vehicles is a major concern with direct-to-consumer models, highlighting the importance of the tangible experience for car buyers.

What is motivation beyond the trend: A Major Purchase with Significant Implications

• High-Value Transaction: Purchasing a vehicle is a significant financial decision for most consumers, leading to a greater need for confidence and trust in the process.

• Safety and Reliability: Buyers prioritize the safety and reliability of their vehicles and want to feel confident in their purchase decision.

• Long-Term Investment: Cars are typically a long-term investment, and buyers want to ensure they are making the right choice for their needs and budget.

• Personal Connection: For many, a car is more than just transportation; it's a personal asset and a reflection of their lifestyle, leading to a desire for a more personal buying experience.

Descriptions of consumers: The Car Buyer in the Age of AI

• Consumer Summary: The car buyer in the age of AI is increasingly aware that technology is being integrated into the car buying process, but they have mixed feelings about it. While they may appreciate certain aspects of digital retail, they are hesitant about a fully AI-driven experience and are concerned about transparency and maintaining human interaction. Their primary concerns remain the affordability of vehicles and the ability to experience the car (like a test drive) before making a significant purchase. They generally prefer the traditional dealership model over direct-to-consumer options and value trust and transparency above all else.

• Who are them: Individuals in the market to purchase a new or used vehicle.

• What kind of products they like: Vehicles that are affordable, reliable, safe, and meet their transportation needs. They also value transparent pricing and a positive buying experience.

• What is their age?: Spans across all age groups, with Gen Z showing a surprising preference for in-person buying experiences despite their digital native status.

• What is their gender?: Likely a fairly even distribution across genders.

• What is their income?: Varies widely depending on the type of vehicle they are looking to purchase, but affordability is a shared concern across income levels.

• What is their lifestyle: Diverse lifestyles depending on their age, family situation, and occupation, influencing their vehicle needs and preferences.

• What are their shopping preferences in the category article is referring to: Overwhelmingly prefer the traditional dealership model due to the ability to test drive and engage with sales personnel. While open to some digital aspects, they are hesitant about a fully online or AI-driven experience.

• Are they low, occasional or frequent category shoppers: Low frequency shoppers as vehicle purchases are typically made every few years.

• What are their general shopping preferences-how they shop products, shopping motivations): Value transparency, upfront pricing, the ability to physically inspect and test drive products (especially for major purchases like cars), and trust in the seller. Their primary motivations are to find a reliable vehicle that meets their needs and budget, with a positive and transparent buying experience.

Conclusions: Navigating the Uneven Terrain of Automotive Innovation

The automotive industry is at a crossroads, with dealers eagerly embracing technological advancements while consumers remain cautious, prioritizing traditional aspects of the car buying process and expressing concerns about affordability and transparency. Bridging this gap will be crucial for dealers to effectively integrate AI and other innovations in a way that builds trust and ultimately drives sales.

Implications for brands: Understanding and Addressing Consumer Reservations

• Focus on Transparent AI Implementation: Clearly communicate to customers how AI is being used and what benefits it offers them, ensuring transparency and addressing potential concerns about data privacy and impersonal interactions.

• Maintain a Human Touch: Even with increased AI adoption, ensure that human sales personnel remain readily available and empowered to provide personalized support and build trust with customers.

• Address Affordability Concerns: Actively work to mitigate cost pressures and offer solutions that make vehicle ownership more accessible to a wider range of consumers.

• Enhance the In-Person Experience: Continue to invest in the physical dealership environment and the quality of face-to-face interactions, as this remains a strong preference for most car buyers.

• Offer Flexible Buying Options: While most prefer traditional dealerships, explore hybrid models that integrate beneficial digital tools while still prioritizing the in-person experience and test drives.

Implication for society: The Evolving Role of Technology in Major Consumer Purchases

• Balancing Efficiency with Personal Connection: Society is grappling with how to integrate technology into high-stakes consumer transactions like car buying without sacrificing the need for trust and personal interaction.

• Potential for Increased Automation and Reduced Human Interaction: The increasing adoption of AI could lead to more automated processes in dealerships, potentially reducing the need for human sales roles in the long term.

• Shifting Consumer Expectations: As technology evolves, consumer expectations for the car buying experience may also shift, but the current survey indicates a strong preference for traditional elements.

Implications for consumers: Navigating a Changing Car Buying Landscape

• Potential for More Efficient Processes: AI could streamline certain aspects of the car buying process, such as initial information gathering and personalized recommendations.

• Need for Vigilance Regarding Transparency: Consumers will need to be vigilant in ensuring transparency in pricing and how AI is influencing their purchase options.

• Continued Importance of Research and Due Diligence: Even with technological advancements, thorough research and in-person evaluation (like test drives) will remain crucial for making informed car buying decisions.

Summary of Trends:

• Core Consumer Trend: Cautious Tech Adoption in High-Stakes Purchases: Consumers are more hesitant to fully embrace technological integration, particularly AI, in significant purchases like vehicles, prioritizing trust and transparency.

• Core Consumer Sub Trend: Preference for Traditional Dealership Experience: Despite increasing digital literacy, a strong majority of car buyers still prefer the traditional dealership model over fully online options.

• Core Social Trend: Generational Nuances in Buying Preferences: While often seen as digitally inclined, even Gen Z shows a significant preference for in-person car buying experiences.

• Social Drive: The Need for Trust and Tangible Experience: For major purchases like vehicles, consumers are driven by the need to trust the seller and have a tangible experience with the product before committing.

• Core Trend: The Dealer's Dilemma: Balancing Innovation and Customer Comfort: Car dealers face the challenge of adopting new technologies while addressing customer concerns and preferences for a more traditional buying journey.

• Core Strategy: Hybrid Approach to Car Sales: The most successful strategy may involve a hybrid model that integrates useful digital tools while still prioritizing the human element and in-person experience.

• Core Industry Trend: Rapid Technological Advancement in Automotive Retail: The automotive retail industry is experiencing a rapid influx of new technologies, including AI and digital retail solutions.

• Core Consumer Motivation: Ensuring a Transparent and Affordable Car Buying Process: Above all else, car buyers are motivated by the desire for a transparent and affordable way to purchase a vehicle.

Strategic Recommendations for brands to follow in 2025: Steering Towards Customer-Centric Innovation

• Invest in Training for Sales Personnel: Equip sales teams with the knowledge and skills to explain and demonstrate the benefits of new technologies to customers in a clear and reassuring way.

• Prioritize Transparency in Pricing and Processes: Ensure that all pricing is upfront and transparent, and clearly explain how technology is being used throughout the buying journey.

• Offer Personalized Hybrid Experiences: Provide options that allow customers to leverage digital tools for research and initial steps but still maintain the option for in-person interactions and test drives.

• Actively Solicit and Respond to Customer Feedback on Technology Integration: Continuously gather feedback from customers about their experiences with new technologies and make adjustments based on their needs and concerns.

• Focus on AI Applications That Directly Benefit the Customer: Highlight AI applications that enhance the customer experience, such as personalized recommendations or streamlined financing processes, rather than focusing solely on back-end operational improvements.

Final Conclusion: Navigating the Road Ahead with Customer Needs in Mind

The automotive industry stands at an intersection of rapid technological advancement and evolving consumer expectations. While the enthusiasm for AI among car dealers is understandable, the survey data clearly indicates a need for a more balanced approach. Success in the future will depend on the industry's ability to integrate innovation thoughtfully, ensuring that it ultimately serves and enhances the customer's experience while addressing their fundamental concerns about affordability, transparency, and trust in the car buying process.

Core Trend Detailed: The Balancing Act: Human Experience vs. AI Integration

The core trend within the automotive retail sector revolves around the delicate balance between the industry's push towards AI-driven processes and the enduring value consumers place on the traditional, human-centric car buying experience. While dealerships are increasingly adopting AI to enhance efficiency and potentially personalize interactions, customers exhibit a level of caution and a clear preference for certain aspects of the traditional model, highlighting a need for a thoughtful integration of technology that complements, rather than replaces, human interaction.

Key Characteristics of the Core trend: Navigating the Tension

• Dealer Enthusiasm for AI: Dealerships are actively exploring and implementing AI-powered tools for various functions, from inventory management to customer service and sales support.

• Consumer Preference for Human Interaction: Despite growing awareness of AI, customers still highly value the ability to interact with knowledgeable sales personnel, particularly for guidance and building trust.

• Importance of Tangible Experience: The inability to test drive and physically inspect vehicles remains a major drawback for consumers considering online-first or fully digital buying models, underscoring the importance of a physical presence.

• Desire for Transparent and Affordable Transactions: Customers prioritize clear, upfront pricing and a sense of fair dealing, and there's a concern that AI could potentially complicate or obscure these aspects.

• Seeking a Balance of Convenience and Personalization: While customers may appreciate the convenience of some digital tools, they don't want to sacrifice the personalized attention and expertise that a human salesperson can provide.

Market and Cultural Signals Supporting the Trend: Evidence of Conflicting Preferences

• Declining Consumer Sentiment Towards AI: The survey data showing a year-over-year decline in positive consumer sentiment for AI in car buying indicates a potential pushback or unease with over-reliance on technology.

• Strong Preference for Traditional Dealerships: The overwhelming majority of car buyers preferring traditional dealerships over online-first retailers highlights the enduring value of the in-person experience.

• Gen Z's Return to In-Person Buying: The fact that even the digitally native Gen Z demographic is showing a preference for in-person car buying suggests that there are fundamental aspects of the experience that technology alone cannot fully replicate.

• Focus on Affordability as a Primary Concern: Customers' primary focus on affordability suggests that they may be wary of technologies that could potentially increase vehicle costs without clear and direct benefits to them.

• Concerns About Lack of Test Drives in DTC Models: This specific concern clearly demonstrates the importance of a hands-on, experiential aspect of car buying that many consumers are not willing to forgo.

How the Trend Is Changing Consumer Behavior: Adapting to a Tech-Infused Process

• More Research Online Before Visiting Dealerships: Consumers are likely to conduct extensive research online using digital tools before visiting a physical dealership, potentially seeking to become more informed before engaging with sales staff.

• Increased Scrutiny of Online Pricing and Information: Buyers may be more critical of online pricing and information, potentially seeking verification and clarification from human representatives.

• Potential for Selective Adoption of Digital Tools: Consumers might embrace certain digital conveniences, like online appointment scheduling or virtual tours, but still prefer in-person interactions for key decision-making stages.

• Seeking Transparent and Trustworthy Information Sources: Customers will likely prioritize dealerships and salespeople they perceive as honest and trustworthy, especially when navigating the integration of new technologies.

• Expressing Hesitation or Seeking Clarity on AI's Role: Consumers may directly inquire about how AI is being used and its potential impact on their buying experience and the final price.

Implications Across the Ecosystem: The Impact of Balancing Tech and Touch

• For Brands and CPGs (Automotive Manufacturers): Manufacturers need to support dealerships in finding the right balance of technology integration, ensuring that it enhances the customer experience without alienating those who prefer a more traditional approach. They also need to address consumer concerns about EV technology and affordability.

• For Retailers (Car Dealerships): Dealerships must invest in training their staff to effectively utilize AI tools while still providing excellent customer service and building trust. They need to be transparent about their use of AI and demonstrate how it benefits the customer. Balancing online and in-person experiences will be key.

• For Consumers: Navigating a More Complex Buying Journey: Consumers will need to adapt to a car buying process that increasingly incorporates technology. They will need to be informed consumers who can leverage online tools while still asserting their need for human interaction and a tangible experience with the vehicle.

Strategic Forecast:

• The automotive retail landscape will likely evolve towards a hybrid model that seamlessly blends online and in-person experiences, leveraging AI for efficiency while preserving the crucial human element.

• Dealerships that prioritize transparency and customer trust in their adoption of AI will be more successful in the long run.

• The importance of the test drive and the ability to physically inspect a vehicle will likely remain key factors for most car buyers.

• Addressing consumer concerns about vehicle affordability will continue to be a major priority for the industry.

• The role of the human salesperson will evolve but not disappear, shifting towards becoming more of a knowledgeable guide and trusted advisor in a tech-integrated environment.

Areas of innovation:

• AI-Powered Personalized Customer Service: AI tools that can provide tailored information and support while seamlessly escalating complex issues to human representatives.

• Augmented Reality (AR) Enhanced Showroom Experiences: Using AR to provide detailed information about vehicles and features, complementing the physical showroom experience.

• Transparent AI Pricing Tools: AI algorithms that can provide clear and easy-to-understand pricing breakdowns, fostering trust and transparency.

• Hybrid Online-to-Offline Buying Platforms: Integrated platforms that allow customers to seamlessly move between online research and in-person dealership visits and test drives.

• AI-Driven Tools to Enhance Salesperson Effectiveness: AI applications that provide salespeople with real-time data and insights to better understand customer needs and preferences.

Final Thought: Finding the Right Technological Harmony

The future of car buying lies in finding the right harmony between the efficiency and personalization potential of AI and the enduring human need for connection, trust, and a tangible experience with a significant purchase. Dealerships that can navigate this balancing act, prioritizing customer comfort and addressing their concerns, will be the ones to successfully steer through the evolving automotive retail landscape.

Source: https://news.dealershipguy.com/p/as-dealers-ramp-up-ai-adoption-customers-have-mixed-feeling-survey-2025-07-18