Car dealers have always faced pressure to sell more vehicles, serve customers faster, and build long-term loyalty while operating with tighter margins. Artificial intelligence has been touted as a tool that can help them work more efficiently by streamlining marketing, sales and finance processes, as well as reducing administrative work. But when AI is implemented poorly or in a haphazard way, it can create compliance issues, customer dissatisfaction, and reputational damage, creating more work and financial headaches. 

How AI Is Being Used

AI has already found a place in U.S. dealerships. Marketing teams are using it to create vehicle descriptions and images that match buyer preferences in seconds. Dealers are also using AI-driven chat tools to handle customer inquiries, keeping potential buyers engaged even when the showroom is closed.

In the finance office, AI can speed up document review and help staff move deals through faster. Some dealers are exploring AI to analyze past sales and service records, asking it to predict which customers are most likely to buy, service or trade in a vehicle.

Those uses are not about replacing staff, or shouldn’t be. They are meant to free employees from repetitive tasks so they can focus on meaningful conversations with customers and closing deals.

Risks of Rushing In

But the rapid rise of AI brings real risks. Across industries, there have been high-profile disputes over how AI companies use data and content, and similar issues could easily reach automotive retail.

 Are dealer staff 100% sure that copyrights are covered for all of the images they are creating and using across all channels, like social, advertisements, websites and email campaigns? AI content tools continually face copyright and intellectual property concerns, so make sure the tool you’re using is built for compliance. That means fully rights-cleared, restriction-free, and safe to use in any commercial context. 

Another concern is accuracy. AI tools easily produce incorrect vehicle details. As a result, the dealership could face complaints or even legal action under state laws or Federal Trade Commission rules. There is also the risk of misleading marketing content. Businesses are responsible for any claims made in their advertising, regardless of whether the content was created by humans or AI.

Data privacy is another factor. Dealers must know exactly how customer data is being stored and used by any vendor providing AI tools. Without strong controls, there is a risk of breaches or noncompliance with privacy regulations.

AI can sound authoritative, even when it is wrong. The tendency to produce convincing but inaccurate information means every AI-generated output needs to be checked by a knowledgeable member of staff before it reaches a customer.

Building a Safe Approach

Dealers should take a measured approach to AI adoption. Rather than rushing and introducing it everywhere all at once, it is better to focus on one area, such as marketing content or customer communications, and build from there. Staff need to be trained not just to use AI but to understand its limits and its risks and to recognize when to step in.

Make sure to ask the right questions of AI vendors. Dealers should know how a system was trained, which – licensed – data it uses, and the safeguards that are in place to prevent errors or bias. This understanding builds confidence and helps avoid surprises later.

Finally, staying current with FTC guidance and state rules is critical. Laws around digital retailing and advertising are evolving quickly, and what is acceptable today may not be tomorrow.

In time and with due diligence, AI has the potential to save time, cut costs, and improve the car-buying experience. But it’s not a replacement for human judgment. The dealerships that succeed will treat it as a valuable assistant, adopting it gradually, reviewing outputs carefully, and maintaining strong oversight. By doing so, they can benefit while avoiding the missteps that could harm their reputations and their bottom lines.

ABOUT THE AUTHOR: Martijn Versteegen is cofounder and CEO of IMAGIN.studio.

EDITOR’S NOTE: This article was authored and edited according to F&I and Showroom editorial standards and style. Opinions expressed may not reflect that of the publication.