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Daily Maverick
4 days ago
- Automotive
- Daily Maverick
Built for export, boxed in at home — SA vehicle sector calls for decisive action
While May brought a surge in local car sales according to the National Automobile Dealers Association's latest reporting, a sharp contraction in exports and rising global tariff tensions have pushed South Africa's automotive industry to a crossroads. South Africa's automotive industry may have enjoyed a high-revving May in local markets, but the road ahead is looking increasingly precarious. Local vehicle sales surged 22% year-on-year, according to the latest Automotive Business Council (Naamsa) data, yet exports dropped 14.6% overall, with passenger vehicle exports plummeting by nearly 35%. The African Growth and Opportunity Act (Agoa), a long-standing US trade programme that allows duty-free access for eligible African exports – including South African vehicles – faces renewed uncertainty under the Trump administration. With the White House pushing for reciprocal tariffs and stricter eligibility reviews, South Africa's preferential access could be one executive decision away from suspension. Speaking to Daily Maverick, Nada's vice-chairperson Thembinkosi Pantsi painted a picture of both resilience and distress. 'We're adapting, we're consolidating, and we're innovating to survive,' he said, referring to the shift toward multi-brand dealerships and used vehicle expansion. 'But make no mistake – we are nearing a cliff edge.'The automotive sector value chain in its entirety supports around 110,000 jobs, according to data from Naamsa, Stats SA and trade union data, with countless families relying on those employed in the sector to put food on the table. The industry – if you include both manufacturing and sales – contributed 5.3% to our GDP in 2023, and is the single largest manufacturing sector. Local sales surge, but export markets faltering While May saw strong domestic demand – driven partly by an influx of East Asian vehicle imports – it also underscored a growing contradiction: consumers want affordability, but the domestic industrial base relies on export volume to remain viable. 'We are seeing more Chinese brands enter the market with cost-effective models,' said Pantsi. 'This is good for consumer access, but doesn't help the thousands employed in export-geared manufacturing.' Volkswagen SA chairperson and managing director Martina Biene echoed the sentiment during her keynote address at Nada Connect in March of this year. 'Sometimes, as a local manufacturer, we don't feel as valued as we should be,' she said. 'There's a lot of investment here – jobs, skills, community development – but little relief from systemic pressures.' Biene disclosed that VW SA had spent more than R130-million on diesel generators to cope with load shedding. 'Every day I run them, it's R1.6-million in cost. That goes straight into the vehicle price,' she said. Add port congestion, road freight insecurity and policy drift, and 'you get a toxic mix,' she warned. What this means for you If global trade shocks persist and local manufacturing continues to contract, thousands of jobs across the auto value chain could be lost. Consumers may benefit from cheaper import options, but the broader consequences – shrinking local industry, fewer employment opportunities and weakened export competitiveness – pose a long-term economic risk. The off-and-on again Trumpian promise – tariffs Trump's revived steel and aluminium tariffs have reignited fears of a protectionist spiral. Pantsi warned that such moves could 'compound local challenges' and further disrupt trade patterns. 'Tariffs don't only raise costs. They erode investor and consumer confidence,' he said. 'We need urgent interventions – rebates, subsidies and export duty relief.' Biene concurred, calling for incentives over protectionism. 'We contribute massively to GDP and jobs. But sometimes it feels like the government is dazzled by short-term imports at the expense of long-term industrial strategy.' She said Agoa's uncertainty was more than symbolic. 'Agoa isn't a given,' Biene warned. 'If we lose that access, it's not just a dent in our balance sheets – it's a question of whether we keep local production viable.' Pricing inaction For every vehicle exported, dozens of suppliers – from tyre producers to seat manufacturers – depend on consistent output. A dip in export volumes, Pantsi noted, ripples across the entire automotive value chain. 'The automotive industry is the second-largest contributor to GDP after mining. If we allow it to shrink, the consequences will be systemic,' he said. Beyond the 110,000 people the sector employs directly, it supports hundreds of thousands more through components, logistics and retail. Both Pantsi and Biene urged the government to move past platitudes. 'We need a granular, not generic, state response,' said Pantsi. 'Targeted logistics reform. Decisive Agoa diplomacy. Training institutions revived. It's the details that matter now.' The sector at a T-junction Despite strong local sales buoyed by competitively priced imports, the export decline is a red flag. 'We have the infrastructure, the people, the expertise,' Pantsi said. 'What we lack is policy certainty and logistical coherence.' Biene was blunter: 'We're here for the long haul. But we can't keep pouring money into diesel and delays. The government needs to decide if it wants this sector to thrive – or merely survive.' DM.
Daily Mail
29-04-2025
- Automotive
- Daily Mail
BREAKING NEWS Trump makes yet another tariffs U-turn this time for the auto industry
President Donald Trump will sign an executive order Tuesday to relax some of his 25 percent tariffs on cars and their parts, the White House said. It's the latest significant reversal from the White House, following American automakers' consistent complaints that import taxes threatened to harm domestic manufacturers. But don't expect the tariff relief to help consumer wallets, analysts said. Details around the reversal remain sparse. But automakers and independent analysts have said the tariffs will raise prices, reduce sales, and make US production less competitive worldwide. White House press secretary Karoline Leavitt said at a Tuesday briefing that Trump would sign the order later in the day but declined to provide details on the order. Treasury Secretary Scott Bessent, who joined Leavitt at the White House briefing, said the goal was to enable automakers to create more domestic manufacturing jobs. 'President Trump has had meetings with both domestic and foreign auto producers, and he´s committed to bringing back auto production to the US,' Bessent said. 'So we want to give the automakers a path to do that, quickly, efficiently and create as many jobs as possible.' Car industry analysts told that the tariff u-turn won't have an impact for drivers in the market for a new vehicle. 'For consumers, business as usual,' Erin Keating, the senior director of economics and industry insights, said. 'While the proposed changes are a signal of Trumps willingness to take industry input into consideration when implementing tariffs, they don't materially change the cost implications and of course have not been declared officially.' Keating suggests that shoppers hoping to grab a new set of wheels should make their purchase as soon as possible to avoid paying the added costs from tariffs. She suggested consumers remain flexible on vehicle size, color, and trim. 'There is a tariff-free sales event happening right now,' Mike Stanton, the president and CEO of the National Automobile Dealers Association (NADA), said during a conference at this April's New York International Auto Show. 'If you're part of [a group of interested EV buyers], do it now.' Meanwhile, automakers are expressing relief in public after the Trump administration pulls back from some of its tariff policies. Automakers in the US asked the administration to reconsider their tariff policies This is another massive change to Trump's core economic policy Stellantis Chairman John Elkann said in a statement that the company appreciates the president's tariff relief measures. 'While we further assess the impact of the tariff policies on our North American operations, we look forward to our continued collaboration with the US Administration to strengthen a competitive American auto industry and stimulate exports,' he said. But behind the scenes, auto execs are far less diplomatic. This marks the third major tariff shift automakers have had to react to this year. The companies initially dealt with surprising Canadian and Mexican import taxes in February and again in March. Neither move had been teased on the campaign trail, catching many executives surprised by the massive policy shifts. Then, he slapped the auto industry with its own 25 percent tariff after the industry was already working through the implications of steel and aluminum taxes. Automaker executives told that the singling out of their industry has put them at a major disadvantage. Executives told that the policy whiplash has left them at a disadvantage — and that it's making one of their biggest challenges even harder: .
Business Journals
23-04-2025
- Automotive
- Business Journals
Auto dealers face uncertainty amid tariff shifts
By submitting your information you are agreeing to our Privacy Policy and User Agreement . Veteran San Antonio auto group executive says the industry's new reality is the great unknown. Economic instability has made it tough for the auto dealership industry to predict consumer demand with much certainty. The White House's ever-shifting tariff policies have compounded the problem, making it tough even for established operators to know when and how to pivot. 'When tariffs were first announced, I had anticipated providing a list to the public of vehicles affected and those that were not. However, it didn't take long to find out that information would not be useful to anyone,' April Ancira, vice president and managing partner for the Ancira Auto Group, told me in an exclusive interview. GET TO KNOW YOUR CITY Find Local Events Near You Connect with a community of local professionals. Explore All Events Within days after President Donald Trump signed an executive order in early February to impose tariffs on imports from Canada, Mexico and China, the National Automobile Dealers Association warned of the potential impact. 'New-car affordability is a persistent challenge for consumers and dealers alike,' NADA President and CEO Mike Stanton said. 'Tariffs on U.S. trading partners, who are vital to our automotive supply chains, would make it harder for average Americans to afford the new vehicles of their choice. It is our hope that we can address many of our nation's challenges without the use of tariffs that would so significantly impact the U.S. auto industry, jobs and consumers.' Don't miss the latest San Antonio business headlines! Sign up here for SABJ newsletters and make sure to download the app. Others in the industry, including the American International Automobile Dealers Association, have raised red flags in more recent days. As of April 3, U.S. auto manufacturers were set to face a 25% tariff on imported passenger vehicles, light trucks and auto parts. Ancira said some automakers, including General Motors, had indicated they would eat the added costs as long as they could. Since then, the Trump Administration has announced a 90-day pause on the rollout of those tariffs. 'The manufacturers are trying to wade through this but the uncertainty is what is making it difficult,' Ancira said, noting that auto dealers face a similar plight. 'We don't really have a new reality to settle into.' Amid the uncertainties, some dealers are rethinking their inventory strategies, stocking up on new and used vehicles to meet heightened demand ahead of expected price increases. It's a bit of a gamble, though. If the tariffs are dropped, some dealers may have too much inventory on hand and will have to absorb higher interest fees. 'The most important thing for us right now is inventory management, which is no easy feat considering we are not 100% sure about what everyone's tariff exposure will be and for how long,' Ancira said. Law Firms by Women Partners No. of women partners locally Rank Prior Rank Business name 1 1 Langley & Banack Inc. 2 2 Dykema 3 3 Jackson Walker LLP View this list
Yahoo
28-03-2025
- Automotive
- Yahoo
Some EV tax credits risk being rejected by IRS on 2024 returns for long list of reasons
Taxpayers could fall into plenty of potholes if someone takes a wrong turn when claiming an attractive tax credit for buying an electric vehicle on their 2024 tax return. And they might get into trouble if their dealer didn't correctly report the sale or ran into issues with a new IRS portal. The Internal Revenue Service will reject those returns — and has already done so for some early filers — and delay your refund, if you run into a glitch. You might end up getting a notice from the IRS that you'll need to address. The rules relating to EV tax credits shifted gears in 2024, which made it easier to use a tax credit to buy EVs and plug-in hybrids and get money upfront instead of waiting to file a tax return. Beginning in 2024, EV buyers could receive an "instant rebate" at the time of purchase at the dealership when buying an emission-free car or truck. Or buyers could wait to claim the credit when filing a tax return. You have a choice. But the tax rules remained strict, which means many people don't qualify for taking a tax credit now. Worse yet, some buyers experienced glitches after dealers made mistakes or faced troubles with the new system. Some consumers have been unable to claim new clean vehicle tax credits when they file their taxes due to discrepancies between clean-vehicle time-of-sale reports and IRS records, said Jared Allen, vice president of public affairs for the National Automobile Dealers Association. IRS data indicates that only 7% of consumers who were eligible for a new clean vehicle tax credit between Jan. 1 and Oct. 1, 2024, opted to receive the credit when they filed their taxes, Allen said. The majority of buyers, he said, "opted to receive the credit upfront in the form of 'cash on the hood' at the time of sale." And those buyers who benefited at the point of sale don't now qualify for a tax credit when filing a tax return. It's important to realize that you cannot claim a clean vehicle tax credit, if you already benefited from it when you bought the vehicle. "That's called double-dipping," said Mike Mader, principal and leader of Baker Tilly's dealership practice. A second scoop is great for a dish of ice cream. "Not for tax law. It doesn't work," Mader said. The credits can be up to $7,500 for eligible new EVs and up to $4,000 for eligible used electric vehicles. For vehicles placed in service April 18, 2023, and after, for example, you'd receive up to $3,750 if the vehicle meets the critical minerals requirement only. An eligible clean vehicle can't contain any critical minerals that were sourced by a "foreign entity of concern," such as China. Or you'd receive up to $3,750 if the vehicle meets the battery components requirement only. Or you'd receive up to $7,500 if the new qualifying EV meets both. Starting in January 2024, dealers turned to the IRS Energy Credits Online website to determine credit eligibility and the amount of the credit at the time of sale. The dealer must complete and submit the time-of-sale report online. The report is to be accepted or rejected in real time. The time-of-sale report is due within 72 hours of the vehicle being placed in service. The IRS automated their systems so that they could give a real time verification based on the vehicle identification number. If the buyer wanted the money upfront, Allen said, the dealer was then responsible for securing reimbursement for the credit through the IRS portal. NADA is aware, he said, of instances where dealers have been unable to secure their own reimbursement due to portal issues. Car buyers beware: Big tax credit on electric vehicles is in limbo And there are issues where taxpayers are having trouble getting the correct paperwork to obtain the credit. "We have heard from dealers who have attempted to re-file time-of-sale reports on behalf of their customers but were not able to do so successfully because the IRS is not accepting submissions past the three-day deadline following the sale," Allen said. NADA is advocating aggressively for the IRS to remedy this and other issues, Allen said, by immediately reopening another window for dealers to file late time-of-sale reports from 2024. Allen said the group, which represents more than 16,000 new car dealers, has been continuously engaged with the IRS to resolve "many portal-related issues that dealers have faced throughout the year." "Dealers have faced persistent issues with portal registration, and portal communication, since the program was initiated," Allen said. Mader, at Baker Tilly, notes that the dealer must complete a Form 15400 "Clean Vehicle Seller Report," which includes the VIN number, Social Security number of the buyer, and other information. That form is essential for claiming the credit. Check your paperwork before you finalize a deal — and now at tax time. See the box called "Credit Transfer Election" to find out if the buyer transferred the credit to the dealer at the time of the sale or did not. If you transferred the credit to the dealer to get a better deal on the spot, you don't qualify for a tax credit when filing a 2024 return. The EV tax credit rules are complicated — and will not work for everyone. The credits do not apply to every electric vehicle or plug-in hybrid. Buyers must meet set income limits. You can see to search for eligible vehicles and better understand the rules. The IRS has a fact sheet online relating to questions about new, previously owned and qualified commercial clean vehicle credits. The Taxpayer Advocate Service has an alert on "Electric Vehicle Tax Credits: Issues and Pitfalls." "Taxpayers need to understand and verify both their vehicle's eligibility and their personal income qualifications before making a purchase," the report notes. Currently, the tax credit is available for purchases through Dec. 31, 2032, unless the law changes. Some speculate that President Donald Trump plans to kill the EV consumer tax credit, according to reports by Reuters and elsewhere. Trump issued an executive order Jan. 20 that talked of eliminating "unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies." Allen defended the credits, saying, "EV tax credits have helped offset EV affordability challenges and have contributed significantly to deliveries of EVs, which is particularly important in times of high inventory on dealer lots and sluggish demand. "Any elimination of these credits has to be done over time to help dealers promote and sell the billions of dollars of EV inventory they currently have on their lots that isn't moving through natural market demand," Allen said. As more people file their 2024 tax returns, it's apparent that mistakes can be made when it comes to claiming the credit on Form 8936 for clean vehicle purchases last year. Here are potential problems that could cause the IRS to reject your return if you claim a clean vehicle credit: Many drivers leased their EVs, thanks to some very attractive lease deals being offered on electric vehicles in 2024. Last year, about 35% of electric vehicles were leased, according to Cox Automotive. In 2024, some 1.3 million electric vehicles were bought or leased by consumers, according to Cox Automotive. That's up 7.3% from 2023. But individual taxpayers cannot claim a clean vehicle tax credit when filing a 2024 federal income tax return if they leased an EV. If you do, tax experts warn, the IRS is likely to reject that return because you're not qualified to receive the credit. A loophole in the Inflation Reduction Act of 2022 gave auto dealers a sweet edge when it came to promoting a more affordable monthly lease payment for new EVs and plug-in hybrids last year. But that doesn't mean you can claim a tax credit. Leased electric vehicles are classified as "commercial vehicles," which means that they're eligible for the full federal clean vehicle credit without meeting strict battery and sourcing requirements. Any savings would be passed onto the buyer at the discretion of the dealer. But here's the rub at tax time: The EV tax credit belongs to the lessor, not the driver who agreed to lease the car or truck. So the individual taxpayer isn't going to be able to claim a tax credit when filing an income tax return for 2024. The driver should be able to benefit by receiving a lower lease payment. One issue that some consumers could face, Mader said, is that they thought they would qualify for a tax credit when buying an EV in 2024 because they expected that their 2024 income would be under the required limit. But, perhaps, they changed jobs for an eye-popping raise and a bonus to boot last year. Or maybe they sold stock at a profit and that move drove up their adjusted gross income. To qualify for the EV credit, your modified adjusted gross income may not exceed: $300,000 for married couples filing jointly or a surviving spouse $225,000 for heads of households $150,000 for all other filers You can use your modified AGI from the year you take delivery of the vehicle or from the previous year, whichever is less. If your modified AGI is below the threshold in one of the two years, you can claim the credit. If you don't qualify for the credit because your income was above the limits in both years, you'd need to pay back the credit if you received a benefit when you bought the electric vehicle. You cannot claim the credit on your tax return if your income is too high in both of those years. In some cases where tax returns claiming EV tax credits are rejected, some auto dealers may have failed to adjust for the new reporting requirements that kicked off Jan. 1, 2024, according to Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting in Riverwoods, Illinois. "The IRS," Luscombe said, "was even encouraging submission of the time-of-sale report before finalizing the transaction so that the parties could have advance information that the vehicle was approved." But in some cases, he said, a dealer might have realized only later that the dealership failed to submit the report. The IRS would then reject the time-of-sale report as being untimely if it was received after the 72-hour window, Luscombe said. Now, it appears, Luscombe said, that the IRS is working on ways taxpayers and dealers can correct violations of the 72-hour rule, perhaps by letting the taxpayer submit a proof of purchase directly to the IRS. But taxpayers could face some hiccups there and need to clarify if that's possible with the IRS. Luscombe said more than 300,000 vehicles were approved for the credit by the IRS. Yet, he said, the overwhelming majority of credits were in the form of rebates and would not qualify to be claimed for a tax break the credit on the tax return. If you transferred the credit to a dealer to get a reduced sales price, you will still need to file Form 8936 with your tax return. In 2022, IRS data online indicated that 255,551 tax returns included filing Form 8936 for the qualified plug-in electric drive motor vehicle credit. The IRS doesn't disclose stats on rejected claims. As with any new program, Mader said, some issues did crop up with that new IRS online portal initially in 2024. Dealers struggled, he said, and faced some confusion with using the portal, which sometimes didn't work like the government said it would initially. Mader said his group worked with the National Automobile Dealers Association to try to resolve some issues early on behalf of their dealers. "The IRS did some extensions for a while to allow dealers more time because the portal wasn't working," Mader said. "But a dealer also had to sign up for the program and not every dealer in the country signed up for the program." Allen said the NADA has strongly encouraged franchised dealers to sign up for the portal. Bob Moczulewski, tax director with Baker Tilly's federal tax credits and incentives practice, said the IRS portal system is one way to try to prevent people from trying to make fraudulent claims about EV transactions. Yet, Moczulewski said there are always glitches to overcome "with these portal systems, whether it's the IRS or some other independent parties." And information, he said, is relayed back to the IRS about these sorts of glitches. For the buyer to obtain the tax credit, the dealer is required to provide the buyer with a copy of the time-of-sale report. Auto dealers must register online, according to the IRS, and report the same information to the buyer and the IRS. "If they don't, your vehicle won't be eligible for the credit," according to the IRS. If the dealer did not properly submit the paperwork on time, taxpayers could discover that the IRS will reject their claims for an EV tax rebate. Much could depend on if the IRS will allow a retroactive submission at some point as glitches are worked out. A consumer in New Mexico, for example, said the IRS rejected her 2024 return when claiming the EV credit after buying a plug-in electric minivan, according to a "Morning Edition" report on NPR. Her dealer, according to the report, acknowledged that a mistake was made. Sometimes, buyers don't pay attention to all the details, such as whether their specific EV model would qualify for a tax credit. The availability of the credit will depend on several factors, including the manufacturer's suggested retail price for the vehicle, whether the final assembly was in North America as required, and if the EV meets the sourcing requirements for critical mineral and battery components. The IRS has two maximum limits listed for the manufacturer's suggested retail price for a certain vehicle to qualify for the tax credit. It's up to $80,000 for vans, sport utility vehicles and pickup trucks. And it's up to $55,000 for other vehicles. If your clean vehicle isn't on the approved list, you don't qualify for the credit. Right now, it's too early in the tax season for tax professionals to get a handle on how many EV tax credits are being rejected by the IRS. A big percentage probably have not been rejected, Mader said, but there are many reasons why these returns could be rejected. He said his firm has not seen any rejections yet. Alison Flores, manager at the Tax Institute at H&R Block, said her firm has already seen more EV credits rejected than might be expected. The 2023 returns filed last year, she said, were somewhat simpler. Taxpayers didn't face the issue of getting the right paperwork in hand to show that they either got the benefits of the credit at the time of purchase or that they still could claim the credit. That nuance cropped up in 2024. Correct paperwork needs to be in hand if you're claiming a credit now because you didn't get a rebate as part of the sale. Earlier, Flores said, "dealers weren't under as strict a time frame to submit verification of a sale to the IRS as they are now." Yet there are — and continue to be — issues with entering in a VIN wrong or a dealer forgetting to submit a report that resulted in an IRS rejection of the return, Flores said. Taxpayers need to make sure that they're using the correct VIN. Are there any mistakes on the paperwork? You can find that long vehicle identification number on your title or the driver's side dashboard under the windshield. Taxpayers who are entitled to the clean vehicle credit should claim the credit, but they also need to make sure that they truly do qualify. Going forward, it can help EV buyers in 2025 to take a few extra steps to avoid tax headaches next year. "Taxpayers might want to verify that the dealer is submitting the new time-of-sale report, which can be submitted even before the purchase is finalized," Luscombe said. Shoppers want to do their own research about the tax credits, know the income limits and EVs that qualify for the credit. Confirm whether the dealership is participating in the IRS point-of-sale EV tax credit program. "For consumers who are purchasing an EV, it's important to advocate for yourself at the point of sale to avoid tax surprises later," said Flores, of H&R Block. Make sure you receive copies, she said, of Form 15400 "Clean Vehicle Seller Report." "If the dealership cannot provide clear answers or written confirmation, consider consulting a tax professional before finalizing the purchase to avoid issues when claiming the credit later," Flores said. "Specifically, ask how they process the tax credit and what steps they take to ensure the necessary IRS paperwork is filed correctly and timely." Contact personal finance columnist Susan Tompor: stompor@ Follow her on X @tompor. This article originally appeared on Detroit Free Press: Claiming 2024 EV vehicle tax credit: Mistakes to avoid Sign in to access your portfolio
Chicago Tribune
17-02-2025
- Automotive
- Chicago Tribune
‘Better than we can': How AI is helping dealers sell more cars and book more repairs
The next time you call to book a service appointment for your car, you might not need to speak with a human. Companies with artificial intelligence-powered tools are pushing into all corners of the dealership experience, from car buying to the repair shop. AI is now in dealers' website chatbots, text and voice assistants, sales lead tools, and repair schedulers. It's helping decide whether customers get financing and helping dealers themselves make financial decisions, such as whether it's a good time to sell or expand their businesses. 'There are a lot of things that it's going to do better than we can,' said Jeff Laethem, who heads a Buick and GMC dealership in Detroit. Laethem uses an AI product to help manage customer phone calls and book appointments after hours. Another tool automatically reaches out to customers who might be interested in a car and knows when to follow up a few weeks later: Are you still interested in that Buick Enclave? A third AI software, the dealer said, cross-references various sales reports and can spot geographic sales trends or fresh customer leads. AI was a hot topic at the National Automobile Dealers Association convention in New Orleans last month, as dealers chatted about how to incorporate it into more of their businesses. And companies on the expo floor hawked products underpinned by the technology. Among the most common uses being pitched were for automating phones and chats, and streamlining the car repair booking process. Executives with one Texas-based outfit, Blink AI, said their product can handle a majority of a dealership's inbound calls, give customers status updates on repairs and book appointments, freeing up staff to deal with more complex tasks. CEO Dave Perry said the goal is to ensure customers don't get frustrated when they call or try to make an appointment and then give up. That's where the artificial intelligence plays a role. 'In order to use any sort of automation to manage customer engagements, you've got to understand what their intent is, right?' he said. 'And sometimes it's unclear. Humans, just by nature, aren't so specific as computers are about what they're trying to do. And so you've got to infer, oftentimes, what it is that this person is trying to do.' Dealers often miss out on one out of every three calls, said Shelli Clark, marketing director of Stella AI, which offers voice and chat assistants. AI can help ensure those prospective customers aren't lost: 'You can put her on the phone tree wherever it makes sense for your dealership,' Clark said of 'Stella.' Companies like are solely focused on the repair side of the business, a key profit driver for dealerships. The northern Virginia firm has an AI-backed texting service that helps customers schedule their vehicles in the shop. It sends reminders, can answer questions, and books an appointment without sending the customer to a different scheduler page. The AI knows how to steer conversations and monitors how busy the shop is on a given day, said Vishal Vadodaria, whose title is chief AI evangelist. 'It's like a dentist reaching out to you via texting, except that there's no person behind it — it's an AI,' he said. 'But the experience is the same.' Mo Zahabi, associate vice president of product consulting for Cox Automotive Inc., said many car retailers have already implemented these types of generative AI solutions like chatbots, which can create their own content, reach out to customers, or write a salesperson's email in a nicer tone. The next phase, Zahabi said, is using the technology to analyze shoppers' online behavior data to help drive sales. AI can tell businesses when and how to tailor a message to a potential customer after studying their activity on a dealer's website or surfing a larger marketplace such as Autotrader. It can see how much the customer wants to pay per month, or how much they believe their trade-in is worth. Essentially, Zahabi said, AI tools can create a targeted sales strategy that can read someone's 'digital body language' — using technology similar to that of Inc.'s product recommendation engine, or Spotify's music recommendation system. 'Bots are good if they're done right, communicating with customers, nurturing leads,' Zahabi said. 'But (as a retailer) I need to know, and I need to understand, who I need to reach out to, when I need to do it, and what type of dynamics go on behind the scenes.' Dealers and AI company executives say the increasing use of the technology has, in some cases, meant fewer staff are needed. But overall Zahabi said dealers he's spoken with aren't using it to cut jobs, but rather help bring in more customers and sell cars. 'I don't think it eliminates jobs,' he said. 'I think it just makes different work for people in the dealership.' The future of AI in the dealership might mean more image recognition software — estimating damages from a collision, for example, or determining if a trade-in has been repainted before, which could suggest it has been in a wreck. AI avatars, or digitally-generated representations of a person, might help answer basic car questions in the future, Zahabi said. And AI also could help automate more of the dealers' finance and insurance department. One company already using AI for its auto financing business is Boston-based Lendbuzz, which caters to customers who lack credit history. Its 'artificial intelligence risk analysis' technology gleans borrower data that traditional credit scoring ignores. That means the AI searches through an applicant's bank account and scrutinizes spending habits, income level, and whether they are paying bills regularly, said Ariana Brogan, marketing brand manager for the firm. 'There's a massive underserved population,' Emir Erden, Lendbuzz dealership success manager, said of those with little credit history, noting the company originated $1.5 billion in loans last year. Dealers are also starting to lean on AI to help them decide if it's a good time to sell their business or expand. A new tool from the dealer mergers and acquisitions firm Dave Cantin Group, called Jump IQ, has 'inferred millions of data points on all 18,000 dealerships in the continental U.S.' to show how much each dealer is worth and their other key financial metrics, CEO Dave Cantin said. 'We're utilizing that data to help them understand the value of their business,' he said, 'but also, more importantly, how to help them strategically go acquire new stores.'
