Automotive retail sales are booming despite a tumultuous market, frequent disruption, and abundant economic uncertainties. In fact, the National Automobile Dealers Association (NADA) reports US-based franchised car dealerships grew to 16,936 in 2024 (.5% YoY increase), reporting a record $613 billion in first half sales.
Modernization has become imperative as traditional dealerships struggle to stay competitive with digital auto retail platforms and direct-to-consumer automakers.
In this article, we will dig into how dealerships are transforming to keep up with the times, explain operational challenges for evolving auto sales businesses, and detail how dealerships can use tech like dealership management systems and digital adoption platforms to facilitate modernization efforts.
What Is Dealership Transformation?
Dealership transformation is the strategic, digital overhaul of an automotive sales business’s systems, processes, and customer experiences. This strategic effort to stay ahead of the curve is vital for dealerships trying to stay competitive in today’s digital-first, post-pandemic market.
At the core of dealership transformation is the implementation and modernization of a business’s dealer management system (DMS), which functions as a tailored enterprise resource planning (ERP) software, inventory management system, POS, CRM, and an analytics suite all rolled into one. However, dealership transformation isn’t so simple as procuring a DMS.
Key Areas of Dealership Transformation
There are many other important aspects to digital transformation and IT modernization, spanning front-end, back-end, and operations, including:
- Customer Experience (CX) Transformation: Modern dealerships must transform both in-person car-buying and customer service operations to deliver exceptional CX. Many are adopting virtual showrooms, online purchasing, after-sales personalization, and call center software to ensure consistent service. According to a 2023 CDK Global and NADA Academy study, CX enhancement is dealers’ top strategy. Dealers who integrated digital retail tools throughout the sales journey increased average unit sales per salesperson from 10.8 to 16.
- Operational Efficiency: Dealerships leverage AI automation and data analytics to streamline processes and make informed decisions. They also invest in dealership management systems, inventory management, and back-office technologies to eliminate waste and improve performance.
- Business Model Transformation: Many dealerships are rethinking their business models by expanding services, launching new products, and embedding digital tools into traditional retail. This can include developing EV offerings, enhancing service centers, or shifting toward direct-to-consumer sales.
Examples of Dealership Transformation
The automotive industry is no stranger to digital transformation, and dealerships are no exception. Dealerships can leverage digital solutions to enhance every part of the customer sales experience while streamlining internal operations to keep employees motivated and business objectives on course.
Here are some key examples of how dealerships can transform their operations ot keep up in 2025:
Dealership management systems
Many dealership teams cling to manual procedures, from tracking customer interactions to managing inventory. Others use outdated versions of dealership management systems, content to get by without enhanced features like AI insights and cloud computing.
In smaller organizations, especially, auto sales professionals can be hesitant to modernize despite the difficulties associated with maintaining a legacy DMS, such as overly complex integrations, siloed data, poor UX, and low usage of key features. To transform dealership management activities, businesses can invest in modern, cloud-based DMS like CDK Global, Tekion, and Reynolds & Reynolds as a transformation lever.
Paired with a digital adoption platform (DAP) like Whatfix, teams can optimize DMS user training, accelerate software adoption, and enable users in the flow of work for shorter time-to-productivity and higher user engagement levels.
Hub-and-spoke operational models
Many modern dealerships have begun operating with a hub-and-spoke distribution model, in which a central entity serves as an operational hub for distribution and services, with ‘spokes,’ in the form of more localized retail units and different initiatives like after-sales facilities extending from that center.
The business remains flexible and stable even as new projects and locations are added to the mix by centralizing and consolidating administrative functions like finance, HR, and marketing within the hub. This centralization requires digital transformation in the form of a highly intercommunicative and integrated tech stack that can support the flow of information and resources across channels at scale.
Service center transformation
In recent years, consumers have started keeping their vehicles longer before buying new ones. This has translated to a drastic jump in service center revenue. Between 2019 and 2023, dealerships saw an increase of 30% in average revenue per service visit, also in part due to rising costs of parts and labor.
To navigate this customer service transformation, dealerships are using predictive maintenance to increase service turnaround time and create more opportunities for upselling. Digital transformation facilitates the expansion of after-sales and service activities through optimized technician workflows, user-friendly service advisor apps, and automated service reminders. By using operational software with AI-powered streamlining and smart data insights, service centers can provide better customer experiences, leading to strong customer loyalty and continued patronage.
New buying experiences for customers
The automotive sales landscape today is a world away from the days before COVID-19. Since 2020, dealerships have evolved to match consumers’ needs and preferences. Cox Automotive’s 2023 Car Buyer Journey Study shows that modern car buyers embrace a hybrid approach to car buying: 80% of customers use third-party websites while shopping, yet they typically visit two different dealerships and consider two vehicles before making a purchase decision.
To stand ahead of the competition, dealerships need to embrace digital transformation and offer more online aspects to the vehicle purchasing experience, like virtual showrooms and test drives, personalized service and recommendations, and generally streamlined operations.
Here are some examples of the buying experiences modern dealerships offer consumers:
Direct-to-consumer models
Today’s dealerships operate across in-person and virtual channels. When a customer visits a dealership in person, they have often done most of the legwork online, from comparing vehicles to getting trade-in quotes, and even seeking financing approvals.
Some manufacturers entirely eliminate the franchised dealership format, selling cars directly to consumers via online platforms or company-owned showrooms. This streamlined model eliminates some of the opaqueness in pricing and gives consumers greater control.
Virtual showrooms
Many modern dealerships have created virtual showrooms that allow customers to experience features of different cars ahead of an in-person visit. While they can’t completely replicate the in-person test drive experience, 360° views, AR and VR experiences, and live-video demos help consumers get a feel for what they’re looking for in advance.
By incorporating virtual experiences into the purchasing process, automotive sales companies are better equipped to meet the user experience expectations for both sales staff and customers and stay competitive in the evolving market.
Operational Challenges Facing Dealerships
Automotive sales, while important, are not the only area transforming in dealerships. Behind the scenes, auto dealers are also adapting to new operational challenges, from supply chain disruptions, inflation and economic issues, and the impact of AI.
Here are some of the most common dealership operations challenges:
- Low user adoption of new DMS platforms: Investing in new technology is only part of the journey to digital transformation. Many organizations fail to incorporate adequate training and adoption activities to help employees properly utilize new dealership management systems to actualize software benefits.
- Inconsistent workflows across locations: When dealerships scale up to multiple locations, it can be challenging to enforce consistent execution of vital processes and procedures. Without digital adoption, managers struggle to ensure that all employees in a given role receive the same information and workflow instructions.
- High onboarding time for new employees: Many dealerships are stuck practicing traditional approaches to learning and development. Old-school classroom-based training and over-reliance on peer-to-peer training can result in inconsistent messaging, confusion, and a failure to personalize information for maximum knowledge retention.
- Limited visibility into system usage and feature ROI: Without product analytics to track user actions, dealership managers have difficulties assessing the impact of change projects like software implementation. Observation alone isn’t adequate for understanding how employees use new software and whether it is living up to projected benefits.
- Compliance and regulatory friction in workflow execution: Dealerships must follow various laws and regulations that protect employees and customers from unethical business practices. As these rules change, it can be hard for dealerships with weak L&D to keep up and help employees adapt.
- Difficulty enforcing process changes at scale: As dealerships implement new workflows for digital processes, leaders often struggle to ensure that employees across teams, business areas, and physical locations are moving forward consistently. Without modern L&D software, managers don’t have the resources necessary to provide continuous support for employees as they adapt to change.
- Lack of insight into where users struggle within applications: Resistance to change and productivity issues often stem from inadequate change management, user training, and support practices, but it’s nearly impossible to zero in on particular pain points without a robust product analytics solution.
How Dealerships Can Accelerate the ROI of DMS Systems
As a central component of most dealership transformation projects, DMS system implementation requires thoughtful planning from the initial stages of digital transformation, all the way through software rollout and change assessment.
Many dealerships make the mistake of skimping on user adoption after implementation. No matter how thoroughly you plan or how smoothly your rollout goes, success really depends on user adoption.
Here are some essential steps to take for optimal DMS adoption.
1. Align transformation goals with business painpoints, workflows, and outcomes
Dealership modernization casts a wide net, but digital transformation efforts should remain strategic. From the very beginning, establish the goals of your project within the context of their impacts on different aspects of business at various resolutions – from long-term success to individual workflows.
Map out these objectives and use them to create benchmarks and KPIs that your team can monitor throughout the project and assess after implementation.
2. Involve frontline teams and end-users early with testing and feedback
In the early stages of digital transformation, loop in stakeholders to provide a range of perspectives and opinions on the goals and intended impacts of your change projects. As your team begins making decisions and developing workflows, bring them back to test different configurations and settings ahead of rollout.
This will ensure that the transformation project will meet their practical needs and that you have an invested source of feedback as digital transformation moves forward.
3. Enable end-users with hands-on training and guided onboarding to accelerate time-to-value
One of the biggest challenges in dealership transformation is helping employees quickly adapt to new tools and processes. Traditional training methods—like classroom sessions or PDF manuals—are often too generic, time-consuming, and disconnected from day-to-day tasks. As a result, staff may take weeks or even months to become proficient, slowing down the dealership’s ability to realize ROI from modernization initiatives.
With a digital adoption platform like Whatfix DAP, dealerships can replace passive training with interactive, role-based onboarding that happens directly inside the applications employees use. Flows, Smart Tips, and Task Lists guide staff step-by-step through new workflows in real time, while Self Help provides instant, context-aware answers at the moment of need.
Whatfix Mirror enables simulated training environments where employees can safely practice tasks, while interactive assessments gauge readiness and highlight areas that need reinforcement. Mirror also provides AI-powered roleplay and simulation training, enabling employees to learn in a safe environment and prepare themselves for real situations by building problem solving muscle.
By equipping end-users with hands-on training and embedded support, dealerships accelerate time-to-proficiency, reduce errors, and drive faster time-to-value from their technology investments.
4. Support users in the flow of work with self-service experiences
Employees at modern dealerships are expected to juggle multiple systems—from CRM platforms and financing applications to inventory management tools and service scheduling software. Constantly switching between platforms or pausing to seek support slows productivity and frustrates both staff and customers. Without accessible, real-time support, dealerships risk stalled workflows, increased errors, and inconsistent customer experiences.
Whatfix solves this by embedding support directly into the flow of work. With in-app guidance, employees receive step-by-step instructions tailored to their role and context, helping them complete tasks without leaving the application.
Self Help surfaces answers instantly at the moment of need, reducing reliance on IT teams and minimizing downtime. This combination empowers dealership staff to resolve issues independently, maintain service consistency, and focus more on building customer relationships—all while driving higher adoption and ROI from digital tools.
5. Maximize ROI by driving adoption of advanced capabilities and new features
Dealerships often invest heavily in advanced software capabilities—such as AI-driven pricing, predictive inventory, or customer analytics—but these tools only deliver value if employees know how to use them effectively. Too often, advanced features remain underutilized because staff default to familiar workflows, leaving significant ROI untapped. According to Forrester, companies that prioritize user adoption see up to a 112% higher return on technology investments compared to those that don’t.
With Whatfix, dealerships can ensure new features are not only introduced but fully adopted. In-app Flows and Smart Tips spotlight advanced capabilities at the right moments, while contextual Pop-Ups highlight updates and encourage experimentation.
Mirror provides a safe environment for hands-on practice with new tools, and Product Analytics tracks adoption trends to identify where employees need more support. By actively driving adoption of advanced features, dealerships unlock the full value of their technology investments, accelerate ROI, and strengthen their competitive advantage.
6. Use analytics to identify user friction and optimize iteratively
Digital transformation is not a one-time rollout—it’s an ongoing process that requires continuous monitoring and refinement. For dealerships, even small points of friction, such as confusing workflows in financing systems or slow adoption of new CRM features, can cascade into lost sales opportunities and weaker customer experiences. Without visibility into where employees struggle, leaders are left guessing about which changes will truly move the needle.
Whatfix Product Analytics gives dealerships the insight they need to measure how employees engage with digital tools and identify the exact steps where friction occurs. By tracking adoption metrics, event-level behavior, and workflow completion rates, leaders can pinpoint bottlenecks and intervene with targeted in-app guidance or additional training. This iterative, data-driven approach ensures that dealership processes are continually optimized, driving higher productivity, faster service, and measurable ROI. Over time, analytics-driven optimization enables dealerships to stay agile and competitive in a rapidly evolving auto retail landscape.
Dealership Transformation Clicks With Whatfix
Without the right tools, the road to dealership transformation can be a bumpy one, but with Whatfix as your digital transformation partner, the path is freshly paved.
Whatfix empowers your team to provide highly timely and relevant in-app support for faster, more effective training on new software and workflows. Beyond L&D support, it also includes strong AI analytics for data-informed insights, improved decision-making, and better business outcomes.
Mirror for simulated training and hands-on learning
Whatfix Mirror enables leaders to create simulated software environments that give users a realistic, risk-free environment for training and experimentation. This tool empowers managers and L&D team members to create interactive sandbox software environments that help developers test user journeys in DMS environments before go-live, and help employees safely engage with applications afterward.
Mirror integrates AI into its platform, allowing end-users to roleplay with a conversational AI that simulates customer issues, common problems, and end-user workflows. After completing training, measure the impact of your training and understand if employees are ready for the floor with interactive assessments.
By encouraging experimentation and learning by doing, Whatfix Mirror gives employees the resources and freedom necessary to improve their training experience and outcomes. Combined with smoother UAT and change validation, Mirror can help your team reduce rollout time.
DAP for in-app guidance and embedded workflow support
The Whatfix Digital Adoption Platform helps teams onboard and upskill employees on new mission-critical enterprise software. Whatfix DAP makes it easy to create and deliver real-time guidance through Flows, Smart Tips, and Pop-Ups.
By sitting on top of everyday dealership software, like your dealership’s DMS, this application provides intuitive instruction for better learning engagement and outcomes. Use Whatfix task lists to deliver clear learning expectations and a more straightforward and streamlined training process. Trigger pop-ups to inform employees as policy changes, recalls, and compliance updates emerge. And embed step-by-step tutorials right into the user interface of different applications for even more learning opportunities.
With this tool, dealerships can create and deliver uniform training content to employees across teams, business areas, and geography. This way, the benefits of your digital transformation project can sink in across all the unique entities of your automotive retail business.
Product Analytics to track user engagement, identify friction, and optimize workflows
Tap into the full potential of your team’s tech stack with AI-powered user engagement insights through Whatfix Product Analytics. Whatfix’s no-code event tracking enables a fuller understanding of user journeys in document management systems and other applications on an action-by-action basis for a comprehensive understanding of user behavior.
As behavioral data flows through our advanced data analytics platform, Whatfix Product Analytics will deliver data-driven insights to help you identify surface friction points like drop-offs in service workflows. With these insights, your team can improve training content for underused features and verify process compliance across stores or service teams, enhancing long-term operations.
Ready to get started? Request a Whatfix demo today!
