The automotive industry is in the midst of a major transformation, with changes in electrification, digital retail, and dealership operations shaping the future of car buying. In a recent episode of the Car Dealership Guy podcast, Brian McDonald, CEO of CDK Global, shared his insights on these shifts, touching on the biggest friction points for consumers, the impact of artificial intelligence, and how the dealership model is evolving.
A Changing Market: The Shift to Online Car Buying
Car buying has traditionally been an in-person process, but consumers are increasingly comfortable handling more aspects of the transaction online. While few people complete the entire process digitally, McDonald noted that this trend is only growing. The number of buyers who start and complete more of the transaction online will continue to increase, even if most still want to visit a dealership before finalizing a purchase.
McDonald pointed out that this shift is something dealers must prepare for, not resist. While the traditional dealership experience remains valuable, incorporating digital retailing options gives consumers the flexibility they expect. This transition is being driven not only by consumer demand but also by technological advancements that streamline the process.
The Impact of AI and Data on Dealerships
One of the most significant developments in the auto industry is the growing role of artificial intelligence. McDonald explained that CDK Global is investing heavily in AI, spending more than $250 million on product development and technology innovation. He emphasized that AI without data is "just artificial," highlighting the importance of leveraging CDK’s vast dataset to drive better decision-making and consumer experiences.
CDK is embedding AI into its systems to help dealers make smarter inventory decisions, suggest optimal pricing, and improve service recommendations. For example, an AI-driven vehicle inventory tool could analyze trade-ins and market trends to predict repair costs and assess whether a car will sell quickly at a dealership. AI can also be used to enhance customer interactions, helping dealers better understand their customers’ preferences and buying behavior.
Electrification and Policy Changes Under the Trump Administration
With the Trump administration rolling back Biden-era EV policies, manufacturers and dealers are adjusting their strategies. McDonald anticipates that manufacturers will receive some relief in meeting aggressive EV mandates and will likely pivot toward producing more hybrids rather than fully electric fleets.
Several automakers have already begun shifting their strategies, scaling back EV production and focusing on hybrid technology instead. While EV adoption is still expected to grow, McDonald sees a more gradual transition, rather than the rapid electrification targets set by the previous administration. This policy shift could provide breathing room for manufacturers who have been struggling with EV losses and infrastructure challenges.
The Role of Dealerships in an Evolving Market
The dealership landscape is also changing, with more consolidation expected in 2025. Before the election, McDonald spoke with several large dealership groups that were cautious about expanding, uncertain about the regulatory and economic environment. However, with the election outcome now clear, he expects an increase in dealership acquisitions and consolidation. Many dealership groups that were waiting for more clarity may now move forward with expansion plans.
The consumer side of the market presents a mixed picture. Many car buyers are still dealing with negative equity on their trade-ins, and high interest rates have made financing more difficult. While McDonald expects some rate cuts in the near future, he does not anticipate a return to the near-zero interest rate environment of past years. Inflation and wage increases across various industries suggest that rates will likely remain higher than what consumers had grown accustomed to.
Despite these financial pressures, McDonald remains optimistic about 2025, believing that both manufacturers and dealers will navigate these challenges successfully.
Technology’s Role in Improving the Buying Experience
Dealerships are investing in technology to create a more seamless experience for customers. McDonald noted that modern retailing tools allow consumers to complete parts of the car-buying process online, reducing the time spent in the dealership. While some dealers still prefer to bring customers into the store as quickly as possible, offering a more flexible and streamlined process can improve customer satisfaction.
One area where technology is already making a difference is financing and insurance (F&I). According to CDK’s data, consumer satisfaction with F&I has declined, in part due to affordability concerns. With rising car prices and higher interest rates, consumers are more resistant to additional costs during the financing process. McDonald believes that improving transparency and using AI-driven insights can help make F&I discussions more efficient and customer-friendly.
Beyond the sales process, technology is also transforming dealership operations. Many dealers are exploring mobile service options, where technicians perform maintenance or repairs at a customer’s home or workplace. McDonald sees potential in these services, particularly for brands with customers willing to pay a premium for convenience.
Looking Ahead: The Future of Automotive Retail
The automotive industry is in a period of transformation, with digital retailing, AI, and evolving consumer expectations reshaping how cars are bought and sold. McDonald believes that dealerships that embrace these changes will be better positioned to succeed in the future. He emphasized that technology should enhance—not replace—the dealership experience, allowing dealers to provide better service while maintaining profitability.
As the industry adapts to shifting market conditions and regulatory changes, the balance between innovation and tradition will be key. Dealerships that integrate digital tools, use data-driven insights, and adapt to consumer preferences will be best positioned to thrive in the years ahead.
At Charged Up!, we keep businesses and individuals informed about the evolving automotive landscape. For more updates and insights, subscribe to our newsletter at chargeduppro.com/subscribe.
Comments