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Smarter Decisions: How AI Is Transforming Inventory Management at Dealerships

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In a recent Automotive News webinar, Derek Hansen, Vice President of Operations at vAuto (a Cox Automotive brand), joined host Emma Hancock to explore how artificial intelligence (AI) is reshaping inventory management in automotive retail. 

Here are some key highlights from the webinar, which you can view in full here.

The Evolution of AI in Auto Retail

AI in automotive retail has come a long way. Dealers no longer need to rely on past sales and service histories to guide today’s decisions. With AI, the decision-making data for today’s dealers  has evolved into predictive analytics that offer recommendations for specific acquisition, pricing, appraising and merchandising decisions. In addition, we’re entering the era of “agentic AI,” which incorporates automation of task completion without further instruction.

Hansen cautions: “AI is only as good as the data it’s fed.” Clean, structured data is the foundation for accurate predictions and effective automation.

Why AI Matters Now

Hansen shares three reasons why dealers’ adoption of AI-powered predictive data science and tools is fast becoming an operational necessity:

  1. Market Volatility: With pricing shifts happening faster than ever, AI helps dealers stay ahead of market fluctuations that create risk or opportunity. An example from the pre-tariff surge in sales and vehicle values this spring: A California dealer used AI-powered insights to raise the price of a 30-day-old vehicle, a decision that ran against conventional wisdom for a 30-day-old unit, and sold it for a significantly higher gross.
  2. Changing Workforce: AI-powered tools are helping dealers bring less-experienced team members up to speed through real-time insights and decision support that helps them perform like seasoned pros.
  3. ROI Pressure: Dealers today are earning front-end grosses comparable to pre-Covid, even though the cost of inventory is significantly higher. The dynamic creates gross margin pressure and the need for greater urgency to move vehicles.

5 Ways AI Is Reshaping Inventory Management

  1. Predictive Pricing: AI models analyze market supply, consumer behavior, and dealership history to recommend optimal price ranges for vehicles. The always-on nature of AI helps dealers keep ahead of market volatility while maximizing both turn and gross while staying aligned with their strategy.
  2. Appraising: AI enhances appraisals by incorporating real-time vehicle condition data from tools like UVeye and Next Inspect. This leads to more accurate valuations and better decisions on whether to retail and its true reconditioning costs.
  3. Acquisition: AI filters hundreds of potential vehicles across channels—auctions, private party, service appointments—down to the 20–30 most relevant based on dealership strategy and market demand.
  4. Merchandising: AI-powered tools automate background removal, generate 360° spins, and extract key features to create a modern e-commerce experience. This accelerates time-to-market and improves online engagement.
  5. Operational Oversight: AI tracks KPIs, flags off-strategy behavior, and supports group-wide inventory optimization. It acts as a digital coach, helping managers ensure their teams are executing the dealership’s strategy effectively.

Final Thoughts: Embrace the Shift

Hansen urges dealers: “Start testing AI now—personally and professionally. Learn how to structure prompts. Get comfortable with the tools. Because in three months, we’ll be having a different conversation with the next generation of models.”

Watch the Full Interview

Want to hear it straight from the source? Watch the full interview now.