Auto dealerships plan to make a “substantial commitment” in 2025 to integrate artificial intelligence (AI) in their operations.
At least that is what the authors of “The 2025 State of AI Adoption in Car Dealerships” published by Fullpath reported, as 81 percent of dealerships are expecting their AI budgets to rise next year. The survey, conducted in October 2024, highlighted that 34 percent of dealerships are currently utilizing AI for marketing and advertising—a trend projected to expand significantly in the coming years.
Among those dealers leveraging AI, 55 percent are already experiencing a remarkable increase of over 20 percent in their return on investment (ROI).
“The automotive industry is poised for a major leap forward with increased AI investment, which can fundamentally change how dealerships operate and interact with customers,” said Ilana Shabtay, VP marketing at Fullpath, in a statement with the release of the report.
Why the Need for AI
AI and consumer behavior changes are the top factors expected to influence dealership success in the coming year. According to the report’s findings, this suggests that, although there may be a gap between the level of AI adoption in car dealerships and consumer expectations regarding AI, dealers recognize that consumers are already accustomed to personalized, AI-powered shopping experiences, and are aware of the impact of AI on their success in 2025 and beyond.
As a direct response to this, dealers are choosing to further expand their investments in AI as they have concluded AI technologies drive success, profitability, and overall enhanced customer experiences.
Key findings from the report include:
- Customer relationship management leads the way in current AI usage, followed by sales and customer service, fraud detection, and predictive maintenance;
- General managers (25 percent) and dealer principals (22 percent) are particularly vocal about expanding AI budgets;
- car dealers, at a 72 percent rate, view AI as an enhancement to current operations and not as a replacement for human employees; and
- 36 percent strongly agree AI tools don’t just benefit large dealerships but are essential for small and mid-sized operations as well
ROI Already There
Dealerships that implemented AI programs have already a positive ROI from their AI solutions in the past 12 months —37 percent of survey respondents reported a revenue increase of 20-30 percent, 26 percent saw a more modest increase of 1-10 percent,19 percent of respondents experienced a revenue boost of 10-20 percent, and 18 percent indicated a growth of over 30 percent.
As a result, 18 percent of respondents predict their AI budget will increase by more than 25 percent in the coming year, reflecting a strong commitment to AI adoption.
Dealerships accumulate a significant volume of first-party customer data but do not always leverage it effectively. The top challenges they face are obtaining real-time customer insights and preferences (28 percent), providing predictive maintenance alerts for customers (20 percent) and accessing the right technology (18 percent), all of which rely on AI for data processing and personalizing customer communications, highlighting the importance of increased AI adoption.
Helping with Data
While 28 percent of dealers believe their customer data is currently being used very effectively, 62 percent believe it is being used only somewhat effectively for personalizing and improving the customer shopping experience.
With AI playing a crucial part of efficient segmentation and personalization for large datasets, respondents see it as a critical component for dealers to accelerate their AI adoption—91 percent reported AI plays a significant role in helping them overcome data activation challenges to a moderate or great extent.
Fullpath’s Shabtay summarized that “the anticipated growth in AI budgets underscores dealers’ commitment to leveraging technology for enhanced competitiveness and success in the evolving marketplace.”