You’ve likely heard about AI a lot lately. Frankly, it’s hard to not hear about it, right? Sifting through the noise is no easy task, and trusting internet info is risky, especially when it’s something so unfamiliar.
Whenever I’m faced with something that’s overwhelming, I try to take a brief toe-dip in the water to see what comes of it. Just that one action can be huge. It’s the same tactic I take when cleaning up dealership accounting messes. Months and sometimes years of neglect creates chaos, which is never a word you want to hear when describing accounting records…because it’s actual money.
Even the thought of how to cleanup a mess can be daunting, but if you take just one small step or action, which is usually identifying what’s happening with the cash, you feel the pressure cooker release a little. Each step gives you more information, which relieves more pressure, and soon you’ve replaced the bewilderment with a sense of control and confidence.
Discovering AI, ChatGPT and how it can help you
I originally discovered AI when I was just looking for some ideas to update the copy on the Kruse Control website. I signed up for ChatGPT (the free version at first, then migrated to $20/month subscription). I gotta say, it was so helpful that it felt like cheating! Hours spent coming up with words that sell, were reduced to minutes. As time went on, I got better at creating prompts, which are the key to getting the best answers out of ChatGPT (or any other GPT).
If you’re curious about it, I encourage you to sign up for ChatGPT here at OpenAI then click on “Try ChatGPT.”
- Do you have a website that needs new copy like I did? Try it.
- Need to write an email to a prospect, vendor or client? See what ChatGPT says.
- Got a contract that needs review or need to write one? Give AI a try.
- Need to write a pay plan for a sales manager or service advisor? Ask ChatGPT.
- It will even help you create social media posts.
We are all creative beings and sometimes we get spend too much time in the left-brain, analytical world. Start small and witness how your brain comes up with different ways to use it.
AI prompts for car dealership financials
As I mentioned, writing prompts that get the best answers is key and I learned the hard way – many hours over several months – just testing what worked and what didn’t. I eventually found a awesome tool called Prompt Perfect, which works with ChatGPT.
During my investigating, I realized AI/ChatGPT could be used for auto retail/car dealership operations. I even wrote an ebook about it “A Beginner’s Guide to AI for Auto Retail,” and if you haven’t downloaded it yet, go get it because it’s free.
Part of my journey was testing the use of AI in car dealership financials. Controllers and CFOs have been using spreadsheets for years and some use more advanced techniques to extract data for forecasting and/or trend analysis. I’ve been testing it as the next generation in data analysis and I thought I’d share some examples of what’s possible to see if you’d like to try it.
The secret is to use effective AI prompts when analyzing car dealership financials.
When you ask AI the right questions, you can get valuable insights into the store’s performance, highlight areas for improvement, and help in decision-making. I can even get it to tell me the data I need to extract, which in franchise dealerships is either from the monthly financial statement or a custom report that the DMS provider can create.
AI is like having a super smart friend who is always there to help.
There are so many use cases, which is why I recommend starting with something simple like asking it to write a job description, a job placement ad or even an email to vendor or customer, especially if it needs to have a specific tone (ie: professional, informal, urgent, etc). Get a feel for how it works and how much less time you yourself have to spend writing it.
As you get more comfortable, you can load reports into ChatGPT4 (the free version doesn’t allow uploads), and soon you’ll be dazzling everyone with your amazing prowess, supported by your super smart friend called AI.
AI for car dealerships is not meant to replace employees.
AI is to be used as a tool by employees to enhance their productivity, their communications and ultimately, your customers’ experience.
While AI can handle some basic dealership accounting (think spreadsheets and reconciling), dealing with complex accounting scenarios requires human attention and expertise.
AI can’t identify new legislation that benefits dealers nor can it make decisions for you. Human oversight is essential for interpreting financial data accurately, but using AI to extract information from your financial data will give you a strategic advantage and support your decision making process.
You will not lose your job to AI. You may, however, lose a job opportunity to someone who knows how to use AI proficiently.
When you’re ready to explore AI further, here are some interesting AI prompts tailored for car dealership financials.
8 thought-provoking AI prompts or car dealership financials
1. Profitability Analysis
“Analyze the gross profit margin for each car model sold in the last quarter and compare it with the same quarter in the previous year.”
“Generate a report on the net profit trend for the past five years and identify any significant fluctuations.”
2. Expense Management
“Break down the dealership’s operational expenses for the last fiscal year and identify the top five expense categories.”
“Compare the advertising and marketing expenses against sales revenue to determine the cost-effectiveness of marketing campaigns.”
3. Revenue Streams
“Identify and compare the revenue generated from new car sales, used car sales, and fixed ops for the current financial year.”
“Analyze the month-on-month growth in revenue from for Service Customer Pay Labor Sales.”
4. Inventory Turnover
“Calculate the inventory turnover rate for the past six months and provide insights into the dealership’s inventory management efficiency.”
“Assess the impact of inventory holding costs on overall profitability and suggest optimal stock levels for different car models.”
5. Cash Flow Analysis
“Provide a detailed cash flow statement for the last quarter and highlight any periods of cash flow shortages.”
“Analyze the dealership’s working capital cycle and suggest strategies to improve cash flow management.”
6. Customer Financing and Loan Portfolio
“Evaluate the performance of the dealership’s customer financing options by analyzing the default rates and profitability of the loan portfolio.”
“Summarize the trends in customer financing preferences and their impact on dealership sales and financing income.”
7. Sales Performance
“Compare the sales performance of different car brands and models over the past year and identify the best and worst performers.”
“Analyze the effectiveness of sales promotions and discounts in driving sales volume and profitability.”
8. Income Statement Analysis
“Compare the dealership’s financial performance over the last twelve months to identify trends or patterns in revenue, costs, operating expenses, and profitability.
“Show each expense line on the income statement as a percentage of total gross profit and compare each expense line to our region’s average.” (You’ll need a report from your manufacturer or 20 Group showing your area/regional averages).
Note: It’s crucial to ensure that the financial data fed into the AI system is accurate, comprehensive, and well-organized for the AI to generate meaningful and actionable insights (so, clean books are a must). Most every DMS has the ability to convert reports into spreadsheets and this is the best solution I’ve found to organize the data.
The secret to using AI for car dealership financials is to start simple and be inquisitive.
The effectiveness of these prompts largely depends on the quality and structure of the data available, which will improve with time as you become more accustomed to using AI. Some people will think it’s fun, some may cringe, but most will admit that it’s helpful when used effectively.
I wrote an ebook: “A Beginner’s Guide to AI for Automotive Retail.” Download your free copy today!