You Can’t Automate the ‘Up’: Finding the Balance Point in the Modern Dealership

It’s 7:40 on a Tuesday morning, and a customer eases into the service lane with a warning light he doesn’t understand and a meeting he can’t miss. What happens in the next four minutes — whether someone meets him at the car, whether anyone explains what happens next, whether he leaves feeling handled or helped — will shape not just this visit but where he buys his next vehicle. Nobody at the dealership thinks of this as a marketing moment, but it, and others that are easy to overlook, are the most important ones the dealer will get all day. 

Running a dealership has never been harder. Front-end margins on new vehicles have fallen by nearly half from their peak. Turnover across the store runs 40 to 60 percent, and customers walk in with expectations set by the most frictionless retail experiences ever built while carrying legacy baggage from historical dealer experiences. So it makes sense that dealers are looking to technology as a rapid fix to this mounting series of challenges. But the industry now faces two temptations of equal size. The first is to let the decades-old legacy customer frustrations persist: the hold music, the handoffs and the afternoon lost to paperwork. The second is to overcorrect; to automate so aggressively that humanity drains out of the one retail experience where it still decides loyalty. 

There should be no debating the need for technology inside the dealership. It’s a key competitive advantage. However, there should be a more informed conversation as to how that technology is applied and just how automated the experience should be.  

Customers have already figured it out and are waiting for most dealers to catch up; technology is for friction, people are for meaning. Here is how they’ve mapped it out for us in our prior work: 

Dealers who aim each at the right target will discover that efficiency and humanity were never actually in tension. They will also find there are critical moments where technology and personal service come together to exceed expectations. 

The Tensions at the Service Bay 

Technology investment is entirely rational from the dealer’s perspective. Net margins run one to two percent of revenue, and the service drive now generates roughly half of a store’s gross profit — in some stores far more. Dealers track this as absorption: the share of total overhead covered by parts and service gross. The national average runs in the mid-60s, but the best stores exceed 100 percent — service pays every bill, and each vehicle sold is profit on top. That is what’s at stake in the service lane, and staffing it is a constant struggle. Automating a routine, hard-to-staff action often becomes simple arithmetic. 

Online scheduling at midnight is removed effort. A bot standing between a customer and the one person who can answer her question is added effort. The research is strikingly consistent here: what customers most want digitized are the paperwork mechanics — credit applications, F&I selection, price finalization — while dealership personnel and the delivery experience rank at the very top of what drives their satisfaction. Neither ledger is wrong. But only one of them decides whether that customer comes back. 

The Cost of the Nine-Minute Hold

The frustrations aren’t entirely new. What is new, however, is the standard they’re measured against and the price of missing it. Sixty-one percent of service appointments are still booked by phone, with average hold times of over nine minutes (CDK Global Research, 2026). When callers can’t get through, roughly two-thirds never call back. This translates into millions of high-intent calls that simply evaporate every six months. Meanwhile, the independent shop down the street books appointments a day out; the average dealer books four.  

The same clock runs on the drive: customers greeted at their vehicle immediately rate the experience “extremely positive” 92 percent of the time (a number that reduces to 67 when they wait), and yet immediate greeting only happens in about half of visits (CDK Global 2025 & J.D Power 2025). A warm handshake after a nine-minute hold isn’t warm anymore. The human advantage does not survive being slow to arrive. This is particularly true for in-store technology. The data tells us that in-dealership technology should exist to get people to people faster, not replace them altogether.  

J.D. Power’s service data puts hard edges on what “relationship” is worth. When a store delivers all ten of the behaviors that drive service satisfaction — nearly all of them human: met at the vehicle, kept informed, work explained — satisfaction averages 979 out of 1,000. Deliver only three, and it craters to 632. Keeping that same score above 950 means close to nine in ten customers saying they will definitely return for paid service. And returning is the whole game, since about three-quarters of customers who service at a dealership say they’ll buy their next vehicle there. Conversely, servicing elsewhere cuts repurchase odds roughly in half. Yet industry service retention has slid from 72 to 54 percent in just two years, and every customer who walks away represents roughly $12,400 in lifetime service value — before accounting for the vehicle she buys somewhere else (Cox Automotive 2025).  

Well-trained, well-equipped staff that leverage technology to expedite service and reduce uncertainty are a loyalty and revenue multiplier. 

What This Calls For 

Dealers need to start where technology and people multiply each other. The strongest signal in the research isn’t technology versus staff. Rather, it’s what happens when one amplifies the other. Service departments that send inspection photos and videos from the shop floor see spending jump from roughly $410 to $640 per repair order, a 56 percent lift (Cox Automotive 2026). This isn’t because a machine replaced the advisor but because it made the advisor easier to believe. The pattern holds beyond the drive: the landmark NBER study of AI in customer service found agents working together with AI assistance were 14 percent more productive — 34 percent for the newest hires — with happier customers and lower staff turnover. This is in a business running 40 to 60 percent staff churn. Technology, when applied correctly, makes a new hire perform like a veteran. The tech-equipped employee beats both the unaided employee and the standalone tool. 

Right-starting the customer’s visit is just the start. Dealers must also monitor the handoff — it’s where the substitution trap springs. Mystery-shop data shows AI now handles routine service calls successfully ~90 percent of the time, often outscoring average human staff. But when the AI can’t handle a request and passes the caller to a person, that transfer fails 56 percent of the time — and the staff picking up behind the AI score 14 points below industry average (Pied Piper STE 2025). This is a sign that stores deploying AI as a substitute quietly de-skill the staff of last resort. Anecdotally, the financial technology company Klarna ran this experiment at scale, replacing the equivalent of 700 agents. It reversed course within a year with the CEO admitting, “We went too far. The result was lower quality.” The lesson is the same in both instances: automate the routine with conviction and staff the exceptional moment like the profit center it is. 

Summing this all up, dealers should measure performance from the driver’s seat. Deflection rates and labor savings will tell a store its technology is working right up until the customers stop coming back. Customer effort, return intent and service retention are the instruments that register whether the balance is right.

About Material 

Material is a research, strategy and experience consultancy. We work with automotive retailers to map where meaning actually lives in their customers’ journeys, quantify the loyalty economics attached to each moment and design the orchestration between technology and people: which experiences to automate, which to staff and how the two hand off without dropping the customer in between.  

You can’t automate the up. But you can make sure your best people, carrying the best tools, are standing there when it walks in.