AI is rewriting the rules of car sales

Dealers are letting artificial intelligence (AI) take the wheel to reshape the way Americans buy cars, guiding buyers from smart displays to digital showrooms.

According to a recent survey by auto customer information company Fullpath, car dealers that use AI are seeing success and all report increased sales. The survey also found that eight out of 10 retailers plan to increase their AI spending in 2025. The report shows that the technology is being used for customer support, personalized marketing campaigns and digital advertising optimization.

Technology is changing the traditional dealer model by analyzing customer data collected during the car buying process to personalize offers and enable digital tools that give buyers more control over their purchases.

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

AI is changing the way retailers serve their customers

Car dealerships are increasingly turning to AI to improve the customer experience and optimize processes.

CarMax, for example, uses AI algorithms to provide personalized vehicle recommendations that are closely tailored to individual preferences. Similarly, other retailers have integrated AI-powered chatbots on their websites to process customer inquiries and schedule appointments in a timely manner, significantly reducing response times.

BMW uses AI for predictive maintenance, analyzing vehicle data to notify customers when service is required before problems escalate. This proactive approach helps prevent potential problems and extend the life of vehicles. In addition, Cox Automotive uses AI for market analysis and helps dealers set competitive prices and manage their inventory.

“Customer data is important,” Boice said. “Without it, delivering a personalized customer experience would be significantly more difficult – a problem that AI has effectively solved. With platforms like Amazon pushing the boundaries, consumers now expect tailored shopping experiences that meet their preferences. In the past, customers often went to dealers only to be offered cars that were outside of their budget or interest.”

AI-powered car lender combines digital and traditional sales

As auto lenders experiment with AI, one company is using the technology to address lending disparities.

Tricolor, a consumer development financial institution (CDFI), is using AI to help Hispanic customers who are struggling to secure an auto loan, Chief Strategy Officer Mauricio Delgado told PYMNTS. He explained how they use 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 create personas that we then use in online advertising,” he said. “The marketing team can make targeted online ad buys that directly reach the desired buyers. This allows Tricolor to avoid other companies’ brand advertising philosophy. This results in 80% of leads being generated through targeted digital campaigns. Additionally, customer acquisition costs are dramatically reduced as Tricolor pays hundreds of dollars per customer while much larger brands in this space spend thousands per customer.”

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 improve and streamline these interactions, increasing customer satisfaction while reducing the workload for dealers – especially as new offerings such as electric vehicles (EVs) continue to flood the market,” he added. “For example, AI can manage lead generation, initial platform personalization and follow-ups, creating space for meaningful human interaction once the customer is ready.”