AI Is Coming to Your Dealership — Here's What Actually Matters

An AI summit at MIT 0:00

[Steve Shaw] Here we go. Welcome back. Dave Rogers, how are you doing? What's going on?

Dave Rogers: Fantastic, my friend. Everything's great here. We're getting a nor'easter starting Friday that's supposed to go all the way through Monday, but thank God I've got a roof on my house and the chickens have a coop. We're good. How are you doing, man?

Steve Shaw: Well, your nor'easter has made it down here, and it's been beautiful. Eighty degrees here in Florida. Beautiful. I might even have to turn the temperature back on in the hot tub, because the water's actually perfect right now. Beautiful weather here in Florida. So life is pretty good down here. Just working away, planning some seminars. I've got to hop a couple of flights in the next few weeks.

Dave Rogers: I just came back. I was in Boston for a couple of days. I went up to the AI Summit in Boston that Dave Foy put together. Fantastic conference. I've got to give him credit. I don't know who his party planner is, but they were awesome. The venue was at MIT. They closed the museum down for a day, which was pretty cool. They had a bunch of speakers from nine o'clock in the morning all the way to six o'clock at night. It was very interesting. There were a lot of vendors, but there were also a lot of dealers talking from their own experience about what they're dealing with on this AI stuff. It was very eye-opening. Shout out to David Foy and the gang up there. They did an amazing job putting it together.

Steve Shaw: I know of Dave. I don't know him very well. Maybe we'll have to spread our wings a little bit and see if we can have him on the podcast.

Pickup and delivery doubles the repair order 1:53

[Dave Rogers] Let's tag him on the post on LinkedIn and see if he notices. Like I said, he did a good job. As far as the AI summit goes, it was interesting, because they had some vendors speaking, but they weren't crazy salesy. And the dealers: Brian Benstock did his probably forty-five-minute rant about all different stuff. I think he's a little bit of a showboat, but he's right on with his dealership. He's talking about pickup and delivery, valet service, right? Not really AI driven. But they did make an app. They have an app now, just like an Uber app, that keeps track of the customer's car: "We're going to come pick up your car, we'll be there at ten o'clock," and so on.

He showed that he started pickup and delivery in 2017, and obviously it picked up after COVID. Two hundred and fifty thousand pickups. He had a little demographic dot map of where he's done them through the five boroughs of New York. It was pretty damn impressive how many friggin' pickups and deliveries they do. And I'm in the same mindset, and I've been trying to tell my guys it's just a matter of getting it done. One day you're going to pick up a car and it's just going to be an oil change. But the next time you pick up a car, it's going to be tires and brakes.

And he said people have a propensity to spend more money when you have their car at the dealership and they're not there with you. If they're in the waiting room, a lot of times they say no. They don't have the time, this, that and the other thing. You pick up the car, and it's almost like guilt. They feel compelled to spend money with you. He said the average repair order is double on pickup and deliveries. I don't understand why everybody isn't doing it.

I told somebody the other day, if they still believe dinosaurs are extinct, come spend a week with me and I'll introduce them to a half dozen. Because that's what I've got sometimes. These guys just don't want to change. They just want to do what they do. It's amazing, some of the things he's been doing. He just jumped on the RevolutionParts thing, and in his first couple of months out of the box he went from like ten thousand a month to five hundred thousand a month. And he's showing where they're selling parts around the country, which is great. So it was pretty good. He's animated. He's just a little showboaty.

Steve Shaw: Well, I've heard about him since I first started traveling and training. I know he was big on pickup and delivery, and that was pretty amazing. Like you said, even back then, in 2017, 2018, when that really got popular on LinkedIn, he'd been on social media doing that for years and being wildly successful, right? And I know some Honda stores that are friends with him or know him and have sort of copied that model. But like you said, why are these other dinosaurs not doing that? It's that change mentality: "I'm happy where I am. I don't want to change, I don't want to do anything." But what you just said that I love is they created their own app.

Will dealers build their own AI? 5:12

[Steve Shaw] We were talking offline about dealers and their own apps. What's it going to take? If I was in the software business right now, at what point am I worried? I was talking to an AI company maybe two or three years ago. They wanted to buy my company, right? I was like, wow, that'd be awesome, because AI this, AI that, and my old line was I don't ever want to be bothered with it. They're out of business now. Completely out of business. And we are in the AI space.

So all of a sudden I have to think about it. We interviewed Jimmy, talking about the model he's creating for himself. One of your guys is creating something on his own. I think that's the future. Somebody from these third-party vendors is going to go to work at a car dealer, and it's just going to be in-house, right? And then the secret is how do you integrate with the DMS, and are they going to allow us to integrate with the DMS? That might be something you negotiate in your next contract: "We have our own AI platforms, and we want to make sure they can go into your software."

Dave Rogers: That was one of the things they were talking about when I was at the Reynolds and Reynolds summit: open APIs, giving the dealers that access. That's one of their next phases. And I think that's kind of where Fortellis is with CDK. That's what they were trying to do. And I know Tekion, PBS and some of these other guys in the DMS world offer that service, where you can have your own IT person doing that integration, a free flow. It's your data. Why isn't it?

Buyer beware: the tools nobody uses 6:58

[Dave Rogers] I think one of the things that was very obvious throughout this whole thing was buyer beware. Go back to your store and look at all the AI you have already. Let's look at your tech stack. Let's see how much money we're spending. Let's see what the ROI is. Is it working? I was looking the other day at one of the tools we use. It's data mining the database, going after customers. I had a Zoom call with them, I think Friday night. The service manager's leaving, and I have a new GM coming in. The last GM is the one who signed up for it. The existing service manager is leaving now, and good luck to him. He's going to work for the factory. That's where he belongs anyway.

That's his mindset. He hasn't done one thing. He hasn't logged in, he hasn't looked at it, there are no notes in the system. I don't know how the handoffs are going from AI to human beings, because they're just checked out, right? They don't believe in this stuff. I asked them what kind of maintenance schedule we're running. We're running the factory maintenance. After I've been talking about not running the factory maintenance for twenty friggin' years, I've got a guy behind my back doing the factory maintenance, right? Because they don't want to work. They don't want to listen.

But one of the things that really did come out was to open your eyes. Should you hire somebody in-house and just do it? Because I've seen a lot of success with that, as opposed to buying these bolt-ons. And with every one of these AI things, I feel bad for some of the guys and some of the companies. I met this really nice young guy from England. He's got a nice product, Revian. I think he's a little expensive, but it's really good. And there are people trying to copy bits and pieces of his stuff already. He doesn't even have market share. There were two kids at the conference just trying to copy his shit. They were running around nosing into people and everything else. You look at this stuff and you go, Jesus, the guy hasn't even really gone to market. He's still demoing and enhancing it, and people are already trying to steal his shit.

So I feel bad for some of these guys, and that's probably why some of these companies are going to be short-lived. The funding's going to dry up. That's really what this is. They're getting venture capital and private equity funding, and it's going to dry up, and it's going to consolidate. And I think the long-term thing is to hire somebody who knows what the hell they're doing, or hire one of these kids, and go from there. But these young kids all want to be bazillionaires, and the only way to become a bazillionaire is not to work for the dealership. It's to go private equity, get your stock sold and have somebody big buy you up. That's how you're going to make your millions.

The platforms are easy now 9:36

[Steve Shaw] Right. You'd better hurry up. One of my neighbors built his own AI, and this guy's brilliant. He was telling me, "I think I have a year left in this space before it's all gone," right? There will be no need for even AI engineers. And with the stuff we created... We're a behavior company, and we've always been behind the times. I've never made any bones about it. There are software companies out there that have great platforms, but they have zero content on their platform, right? We've made our name based on our content. Other people made their name based on their platforms. But now the platforms are easy. Literally, the platforms are easy to create.

One of the questions I asked Claude over the weekend, because I was building one, was, "Why wouldn't I just give my code to a dealer and let them put it on their website themselves?" At some point, that's what's going to happen, right? Because I can build the platform, which I have. But then would you want to pay me for it? Couldn't you just build your own? Why couldn't you? I had lunch with a guy Friday, super smart, big into AI, doing the same thing for his dealer, and we had this exact conversation. I'm actually meeting with him again next week to talk about the university and the platform. They could literally have my code and put it onto their platform, and I'd be back to licensing my content.

Why would I want to go out and spend what these companies have spent in the past, millions of dollars, when it can be done almost instantaneously, and it works? It works just by having your vision and understanding the AI. And if you've got an engineer, or somebody with an engineering or IT background, they can set it up and do the back end of it. What do you need all that software for? It's almost ancient. Archaic, dinosaur, whatever you want to call it.

Technology has never replaced people 11:44

[Dave Rogers] It is. The first speaker at this conference was a guy named Aaron Strout. He'd written a book called Wired for Purpose. Unfortunately for him, he was the first guy to speak. It was nine o'clock in the morning. He was very good, but it was one of those things where he said, "Hey, good morning, everyone," and nobody was answering, right? People had flown in the night before, or whatever. It wasn't the most lively crowd. But I took a lot of notes, and he was very gracious. He had a bunch of books there, and he signed one for anybody who wanted a book, no charge, which I thought was really cool. We only paid ninety-nine bucks to go to this thing. You got breakfast, you got dinner, it was a cash bar, but so what? And you got these speakers and a free book, so it was pretty good. I looked the book up on Amazon, and it's not a free book. So somebody spent some money, or he donated them.

He was an interesting speaker, because he was talking about business itself, going back to the sixties and seventies, and how the same stuff has come up over and over again since, I guess, technology. "It's going to replace people. It's going to replace people." You had the digital age, when the internet was coming up and computers were going to replace people. Then you had the mobile era: people are going to lose their jobs, you can do everything on a phone. Then we had the social media thing. Everything was social. And now we have the AI thing, and it's the same stuff. We're going to replace people.

And like I said to you earlier, I think the car business is always going to be people selling cars and parts and service to people. It's people buying it, right? So I anticipate the changes are going to be behind the scenes, kind of like what you're doing. You have a people business, but there's a lot of technology behind the scenes. And I think the technology for car dealerships is using AI behind the scenes, for the mundane tasks.

I don't have a problem with it answering internet leads. It's a boring job. It's redundant. One out of every ten people replies to you. They sit up at night, drunk on their computer, sending out mass pricing requests to buy a car, and half the time they don't mean it. So you're wasting a human being's time to reply. Do I need my BDC people scouring my DMS to try to find people to call, or would AI be better for that? Well, AI is much better for that. It can go through it twenty-four hours a day and say, "Hey, Steve Shaw hasn't been here in six months, let's send him a text," right? Can it do the connected car stuff? That's AI stuff. Now, when the phone rings, I really want a person answering my phones. I don't want AI. I don't think people like it. After hours, I think people are okay with it. There's a certain time and place. Maybe some young people want it answered that way.

I started reading the guy's book when I got home. It's actually a real book, not a Kindle, so it was kind of difficult to get used to flipping pages, but it was good. He skimmed through it in his talk, because he only had forty-five minutes or so. He talks about how if you couldn't make it in the analog days, you're probably not going to do really well in digital. And I've been saying that for years, right? If you add technology to an existing process that sucks, all the technology is going to do is report to you how bad you suck. If you can't do a manual process in the real world, digital is not going to help you. It's just not. I don't care what anybody says.

That was one of the big takeaways from reading the book. He got into it early on, about the analog time, and it's so true. We want to say technology's going to take jobs. I don't think it's going to take as many jobs as people think, and it's going to take the jobs nobody wants to do anyway, right? Look at garbage trucks. You used to have two people hanging off the back picking up cans. Now there's one guy with a robo can. That's two people without jobs, right? I don't hear anybody screaming about that. That's technology. But you know what they probably did? They probably took those two guys and gave them each a truck, and now there are three people picking up garbage. I think that's the same thing that's going to happen with technology.

AI takes the mundane work 16:22

[Steve Shaw] Well, I think so. Look, I eliminated two jobs in a very short period of time. But I eliminated the mundane part of the job: download this, upload this, send this over here, add an intro, right? Mundane stuff that Claude just does, boom, boom, boom, and it's done. It's done in the time the video is rendering. So that entire step got eliminated, and I retasked those people onto other projects that are actually making money, versus the transactional type of thing, that mundane job. Nobody got fired, but I was able to make them productive instead of unproductive.

And if we look at that from the dealer's perspective, the IT people's jobs, or some of those things, could be refocused into a totally different situation, where the dealer can save money on all that goofy software they've had. Now all of a sudden they can do this themselves, and they can use that money for good instead of evil, as they say.

Dave Rogers: One of the speakers was talking about the circle, as he called it. AI handles the routine work. It frees up the existing crew's time, your bosses' time, managers, leaders, team leaders, whatever it is. It gives you a little more time to spend with the people who are working. It gives you a chance to actually say thank you, instead of short little emails because you're running and gunning all the time. And then it gives you time for the long-term planning stuff. Because I think a lot of times what we're doing is level-three tasks. If you remember the old Franklin Planner days, with A, B, C and one, two, three, we're doing a bunch of Cs and threes all day, right? We're not doing A1 stuff. That's not the quadrant we're working in. We're answering the phone, putting out fires, doing stupid shit, where AI could be doing some of this for you. I think that's what you're really finding. You go to sleep at night, and Claude's working, right?

Steve Shaw: For the last week of my life, I've got a set of tasks, my computer's plugged in over on the wall, and I'm out doing something else, napping or sleeping, and Claude's going to work, right? Then I wake up, it's done, I hit the button, "Make it organized," and it's pretty much organized. I just have to review it. That's the big thing. You just have to review it, make sure it's correct, make any adjustments and move on. But those eight hours of my life that I would have spent...

I've sent proposals. I've done so many things where I'd otherwise have had to hire a graphic designer or an artist, positions that were very coveted. Those guys did a great job, beautiful designs and beautiful pieces. But when AI can do it for you instantly... I sent off a four- or five-page proposal, custom branded, and it was beautiful. It was done. All I had to do was review it to make sure the punctuation was correct. We're done. If I'd had to send it to my graphic designer, I'd have been waiting a week. "Hey, Dave, can I give you this proposal in a week, after my graphic designer does it?" Of course not, right? They want it tomorrow, or fifteen minutes from now.

That's what it's done. I get off the phone: "Yeah, what's your dealer name? Okay, boom." I can switch the proposal and it's sent out almost immediately, fully branded, my brand and their brand, fully customized in moments. And even if I didn't have to brand it, I would still have had to go back and rewrite it. So those mundane tasks are gone. They're eliminated. And I'm much more productive in my world. I'm working on the things that actually make money, versus the nonsensical things or the mundane things.

Dave Rogers: You look well rested too, so you must be getting your sleep. That's good.

Steve Shaw: I am sleeping well. I do have a couple of seminars coming up. I'm going to Detroit, and I'm going to, of all places, Waco, Texas. I've never been to Waco, so we could talk about that sometime. Why don't you give us a GM tip of the day around the AI conference?

GM tip: audit your tech stack 20:53

[Dave Rogers] The GM tip of the day would be one of the biggest takeaways I had from the conference: you really have to sit down and go over your tech stack. I really believe this. Each store, each GM, can do it more easily than a platform manager or a vice president. Take the initiative, go over the tech stack. What's using AI, what's not using AI, how much am I spending a month on this? And then really get into the dashboard. Don't make a decision until you look to see what everybody's doing with it, and whether it's working or not.

We might have these different platforms. How many of them overlap? How many of them are just being ignored? Because that's the one big thing everyone has to realize with AI. It's not plug and play. It's not like playing your music online with a playlist. It doesn't work that way. When you sign up for AI, you've got to be in there, you've got to teach it. There are going to be times when it hands off to a human. Is someone taking the handoff?

I had a vendor call the other day. Their tool does this handoff. So I asked him, "How come there are no notes on what happened with the handoff?" And he goes, "Well, one of your employees picks up the phone and calls the customer." "Well, how do I know that?" "Or they email them." "Well, how do I know that? Isn't your AI capable of screening the email to see that they at least replied to the customer, and then closing it out and saying this handoff was done?" "That's a good idea." I get it, you're taking everyone's word that it was handed off. But how do I know what happened with the handoff? Now I've got to go chasing my tail to figure out who got the handoff and who did something with it. So not all this stuff is fully baked.

Like I said, get a list of your tech stack, find out what you're paying for it, find out what it's supposed to be doing, see how much is redundant, and then have a Zoom call with all these vendors and make them pony up on what's changed since you signed up and what's changing in the future. None of this stuff should be stagnant. If you signed up for something twelve months ago and it's still the same, at this rate of change you're wasting money on something that's not doing its job. So that's my takeaway, because I'm going to do that too. I'm going to start grinding everyone's butt on this stuff. Unfortunately, I'm probably going to lose some friends and some vendors, because it's bullshit that some of this stuff hasn't changed in twelve months. You look at it and you're like, "Well, what am I paying for?"

Steve Shaw: Absolutely. Awesome. I'm glad you had a good trip. Let's get out of here, and I will catch up with you next week.

Dave Rogers: All right, brother, talk to you.