Traditionally, the car marketplace has been a face-to-face industry, trailing behind most other industries in the shift to online transactions. While websites for buying and selling cars have been around for quite some time, the online vehicle marketplace only really has taken off in the past few years. However, in light of the COVID-19 pandemic, the online auto industry is growing exponentially as dealerships expand their web presence and emphasize online transactions.
Though the number of sites out there may seem overwhelming, the constantly-improving Artificial Intelligence (AI) and algorithms used by our browsers and search engines are making some very big changes to how we buy and sell cars in any condition online.
Many customers are finding it easier than ever to find the cars they want, and at very competitive prices as well. The used car market is also thriving with AI streamlining the process for buyers and sellers alike. Dealerships also find themselves confronting fundamental changes to how they interact with their market — and facing potential failure if they can’t adapt.
Changes for Buyers
AI has become a day-to-day part of our lives, and for most of us, it has set some new standards for how we engage with the digital world. Our streaming services recommend movies we might like or make playlists based on what we listen to, and many of us have realized searching for a product once will make you see ads for that product for weeks after. So, how have these algorithms changed the experience of buying or selling a car?
To understand how car shopping has changed due to AI, it’s important to think about how the algorithms AI uses are informed. As we go through our daily lives, we create a data “footprint” of sorts. This footprint is made up of things like our browsing and search habits, shopping decisions, and more. AI is able to take this data and “learn” about you, and create not only advertisements but promotions and pricing offer personalized specifically for you.
Advertising has always had the intention of reaching the desired market at just the right moment and in just the right way. The average consumer nowadays is largely reliant on at least one form of personal technology, like a smartphone, providing a narrower-than-ever market to advertise to.
Using AI and the data trail left behind by your smartphone and other habits, the ads you’ll see and when you see them will be tailored to your preferences and lifestyle. Beyond that, AI has the ability to use information about your financial habits to create promotions or set prices that are just for you. These offers are able to take much more information into account than any dealership would be able to form a conversation and some paperwork.
Changes to the Used Car Marketplace
AI has also had a big impact on how used cars are bought and sold, namely by making the process more convenient. AI is capable of simplifying a lot of the research that typically goes into buying or selling a used car — research that can be daunting for people who don’t know much about cars or aren’t interested in the time involved.
Algorithms can be used to do things like predicting your car’s estimated value using its VIN number and data about your location and recent sales in your area. They can also provide insight on if selling and buying now or later will be more sensible, and connect compatible buyers and sellers in your area.
This technology is allowing people to sell their used cars for the best possible price in days rather than weeks, as well as connecting buyers with the best values on used cars near them.
Changes for Traditional Dealerships
While the used car industry and consumers have quickly adjusted to the inclusion of algorithms into their vehicle transactions, traditional dealerships are needing to make some substantial marketing overhauls in order to compete.
AI’s popularity with customers is demonstrably profitable, but many traditional dealerships have had a minimal online presence at all until fairly recently. The inclusion of this new technology requires fundamental changes to how marketing is conducted as well as how sales offers are made to customers.
With AI informing online price points, it could ultimately be very costly for dealerships who don’t choose to keep with the times. Taking on this technological and marketing overhaul may be a daunting prospect to traditionally run dealerships.
There may be upfront costs to incorporating AI technology that is intimidating, if not prohibitive. Only time will tell how the showroom floor performs in a rapidly modernizing market.