AR for Car Dealerships: Skyrocket ROI with Zero Inventory Costs

As dealership owners, general managers, and automotive marketing directors, you often struggle with poor sales numbers, inefficient operations, and high expenses associated with running a car dealership. In this blog, we’ll offer a practical solution to overcome these challenges by cutting costs, enhancing sales, and increasing conversion rates.

In this article, you’ll learn how augmented reality (AR) cuts dealership inventory costs by up to 70%, improves conversion rates by 5–10 percentage points, and reduces the sales cycle time by 30%. This blog demonstrates how utilizing augmented reality for car dealerships is an effective approach to increasing ROI and restoring profitability. We’ll support this with reliable data and statistics from reputable benchmarks.

Devastating Financial Risks of Unsold Inventory and How AR for Car Dealerships Can Address This Issue

The average customer may not realize that every unsold car costs money. However, car dealers know that every single day a vehicle isn’t sold, its expenses rise due to various factors, such as insurance, depreciation, and opportunity cost.

According to NADA 2025 Formulas, each car costs $6 to $8 per day for a $40,000 vehicle at current rates of floorplan interest. Dealerships also pay daily costs for insurance, storage, and protection, which further increase their overall expenses.

Another crucial factor that adds to inventory holding costs in dealerships is the frozen capital. This term refers to the money that’s not generating returns and is locked in the inventory. It can reach millions of dollars each month, potentially ruining numerous opportunities for generating income.

Lastly, Kelley Blue Book claims that an unsold car will lose its value over time. Specifically, a new unsold car loses 1 to 1.5 percent of its value each month simply because it remains unsold. If it’s a vehicle worth $40,000, the loss value is $400 to $600 per month.

Considering all the above, if a car dealership is holding 150 unsold cars in its inventory, it’s losing $3,000 to $6,000 every day, simply because the cars remain unsold.

This highlights the need for new dealership profitability strategies. Fortunately, new technology has proven helpful, and you can utilize augmented reality for car dealerships to enhance sales numbers.

How AR-Powered Virtual Showrooms Help Eliminate Inventory Costs

A zero-cost inventory model is no longer a myth, thanks to the advent of augmented reality. Car dealerships no longer need to hold various colors and configurations of the same display model, and this significantly decreases the costs associated with unsold cars.

With a virtual showroom solution, dealers only need to scan a model once, and then display it to customers with AR-enabled devices. This way, potential buyers can explore different colors and configurations of a model without having to see them in the real world.

This translates to lower holding costs, reduced frozen capital, and improved conversion rates, all of which help dealers enhance their profitability.

Note that, as Cox Automotive claims, cars remain unsold for an average of 2.8 months. This means that over this period, holding a car costs a dealership between $1,700 and $3,400 in 85 days.

From another perspective, if a dealership holds 100 units of a model in its inventory, at the end of the 85-day period, between 40% and 65% of the stock will remain unsold.

Therefore, the overall expenses of this model for the dealership are $170,000 to $340,000. As mentioned earlier, AR for car dealerships offers an opportunity to sell more without requiring dealers to hold 100 units of the same car in different colors and models, allowing them to save significant costs.

As you read this, an increasing number of dealerships are adopting digital solutions to reduce costs and boost conversion rates. Reports on a CDK blog indicate that salespeople using digital retail tools increase sales by 5.2 percentage points, from 10.8% to 16%.

This trend is on the rise and is expected to continue this way in the upcoming years. Dealer adoption of digital solutions has doubled over the last two years, confirming the momentum behind this shift.

Car dealers benefit from reducing heavy expenses, and customers benefit from an immersive experience that helps them decide whether to purchase a car.

We mentioned better conversion rates twice in this section. But how can AR generate higher-quality leads that actually convert into paying customers? Let’s discuss this in the next section.

Better Leads through Augmented Reality: Quality that Converts

By offering an immersive experience, augmented reality gives shoppers a clearer, more confident understanding of what they’re assessing. This is the primary reason why AR leads are higher quality, which, in turn, enhances car dealership sales efficiency.

AR’s impact on generating high-quality leads isn’t limited to the automotive industry. Many brands in various fields are adopting this new technology and achieving notable results. For example, a case study done by AR Insider on CB2, a brand in the furniture and home goods industry, reported a 7% increase in conversion rates, 21% higher revenue per visit, and a 13% higher average order value.

These numbers also apply to car dealerships that use AR-powered tools to create a memorable experience for potential buyers.

It’s good to know that NADA industry benchmarks show that if a salesperson at a car dealership cannot sell more than 12 units each month, they’re not performing well. On the contrary, if someone consistently sells more than 15 units per month, they’re outperforming the average. Utilizing AR for car dealerships is a practical approach to support underperforming employees.

Augmented reality excels at increasing engagement, a crucial factor in satisfying customers in the modern era and generating high-quality automotive leads. The more a customer engages with what a dealer offers, the more likely they are to make a vehicle purchase.

These are other reasons that contribute to the fact that AR-generated leads have higher quality:

• Reducing risks and uncertainty
• Forming a stronger emotional bond
• Creating an enhanced visual connection
• Educating customers about the product more effectively
• Managing expectations

In other words, AR enables salespeople to do their job by showing more and talking less. People who use AR tools are interested in finding out more. By offering experiences like virtual test drives and close car inspections, dealers can make them more eager to buy the car.

Let’s examine the process of a lead becoming a paying customer, step by step:

1. Entry point: A potential customer taps an AR button, whether from a QR code, SMS link, or ad, without needing to download an official app.
2. True-scale placement: They can drop the vehicle in their driveway or garage to ensure it fits in their space. They can also explore the car from various angles. Usually, changing colors and models can be done with ease.
3. Configuration: It’s possible to make instant changes to the virtual car, from tires and wheels to interior design and accessories.
4. Real-time pricing and payment: The customer can access the vehicle’s price right next to the virtual model they’re evaluating. Moreover, with any modifications, prices are promptly adjusted, allowing customers to make the best choice considering their budget.
5. Check availability and ETA: After configuring the car in the desired way, the customer can check its availability at the car dealer’s location or determine whether a model with the same attributes is en route to that store. If not, this potential buyer will be informed how long it takes to get the exact model.
6. Request a Test Drive: The customer can schedule a test drive while viewing their ideal model using AR technology.
7. In-store continuation: After driving the car, if the customer is satisfied with everything, an appointment will be scheduled at the car dealership for signing the deal and proceeding with the payment.

According to a Cox Automotive study, digital buyers can save 42 minutes at the dealership, plus an additional 10 to 15 minutes by eliminating waiting time for viewing other colors and models. Time efficiency is valuable to both buyers and dealers simultaneously.

Let’s move forward and discuss other advantages of augmented reality for car dealerships.

AR for Car Dealerships Guarantees Fixed Absorption in Service and Parts

AR-powered tools can help car dealerships achieve the ideal 60% fixed absorption rate. How’s that possible?

With augmented reality, mechanics can overlay step-by-step repair instructions onto a vehicle, resulting in reduced diagnosis errors, lowered rework, and allowing less-experienced technicians to handle complex tasks with fewer errors.

In simpler terms, you can repair more cars, which translates to a higher service gross profit.

Furthermore, the Fleet Maintenance report says AR guidance speeds up routine jobs, such as oil changes and brake services, by 15% to 20%. This also means that a dealership can process more repair orders per day without additional bays or staff, increasing revenue.

Additionally, communication with customers during car repairs can be enhanced through transparency, thanks to AR-powered tools. The head of staff can show the car’s worn parts in real-time on each vehicle, reassuring customers that the issue has been correctly identified and that they are not planning to charge them more than usual.

If technicians aren’t present, workers can contact them and share diagnostics through AR devices, asking for their help, which eliminates the need to wait for them to come and inspect the car. This reduces wasted time and increases productive hours.

In fact, if AR technology can add 5% to 10% more billable hours per month and upsell conversion rates increase by 10% to 20%, the service department’s gross profit margin will grow, reaching 60% over time. This ensures that service and parts coverage can mitigate most losses, even when the market is down and sales numbers are at their lowest.

How AR-Enabled Sales Transform the Customer Journey

According to data from an article on the Cox Automotive Insight Club, the average buyer spends more than 14 hours purchasing a vehicle. This time included researching, comparing, visiting dealerships, and other activities. Predictably, reducing this average would benefit both car dealers and buyers.

As mentioned earlier, augmented reality for car dealerships enables customers to explore various options and models in a short time, simply by using their smartphones, smart glasses, or AR/VR headsets.

Interestingly, providing buyers with AR-powered services increases the likelihood that they will become paying customers. We’ve discussed the numbers earlier in this blog.

Canvas Logic reports indicate that empowering sales processes with AR can help shorten the sales cycle time by up to 30% across all industries. Simply put, the average time between generating leads and signing a deal would be shorter, eliminating several frustrating and mood-changing factors that could influence a customer’s decision to buy a car.

Additionally, AR users spend approximately 8 minutes viewing cars. In comparison, non-AR users spend just 30 seconds, showing that AR users are far more engaged. These statistics indicate that AR-generated leads have higher quality than other leads, as discussed earlier in this blog.

Lastly, by providing salespeople with a digital blueprint, they will have the necessary data about each customer’s likely concerns, without needing to ask them questions such as “What did you like about the vehicle”?

This shows that automotive customer journey optimization not only saves time but also significantly increases the conversion rate, contributing to higher sales numbers.

Now, let’s shift our focus to the fact that AR-powered tools enable sales teams to gather valuable data about each customer in real-time.

AR for Car Dealerships Helps Gather Real-Time Buyer Intent Data

An automotive digital retailing platform can gather more information on each potential buyer’s intent compared to competitors that work traditionally or whose use of technology is limited to a website.

AR configurators and virtual showrooms capture interaction depth, measure engagement intensity, and behavioral preferences. This information is necessary to optimize the customer journey and conversion rates, and can be achieved by leveraging augmented reality for car dealerships.

Generic websites only provide data on clicks, page views, form submissions, and similar shallow information. A car dealership owner, for example, can understand that a user viewed a page of an SUV model.

AR configurators, on the other hand, give information on the favorite color and trim, desired wheels, and preferred options. Moreover, they can indicate the seriousness of each customer’s interest in purchasing a car. For instance, someone who places the vehicle in their driveway is more likely to purchase the car than someone who only clicks through the link.

In addition to these, augmented reality can reveal emerging demand trends. Assume that more than 70% of users switch to black interior design after testing the red option. This indicates a high demand for black interior design, which enables car dealerships to focus on options that sell more easily.

In summary, with the help of real-time buyer intent data, which can be achieved by empowering sales processes with augmented reality, car dealers can attract high-quality leads and provide the information needed to support their purchase decisions.

If you’re unsure how to get started with AR for your dealership, we can guide you.

Immexive: Your AR Partner in Driving Dealership ROI

Using augmented reality for car dealerships through AR configurators brings key benefits: cutting losses from unsold cars ($20 to $40 per day, $1,700 to $3,400 over 85 days), boosting purchases (AR users buy 20% to 40% more often, with Shopify reporting up to 94%), and improving service efficiency (10% to 30% more jobs, 10% to 20% more upsells). Virtual showrooms also cut costs, as one demo car with AR can replace 10 to 20 real vehicles.

Key Takeaways

• Average buyers spend over 14 hours in the car-buying process; AR helps cut this by up to 30%.
• AR users engage for longer, spending around 8 minutes exploring cars, compared to 30 seconds for non-AR users.
• 40–65% of inventory remains unsold after 85 days, highlighting the urgency for digital retail tools.
• Real-time AR data reveals demand trends, such as customers consistently preferring specific colors or trims, which guide smarter inventory decisions.

What to Do Next

• Do now: Book a free consultation with Immexive to explore how AR car configurators and virtual showrooms can cut your unsold inventory costs and improve operational efficiency.
• Learn: Visit Immexive’s Virtual Tours page to see real examples of how immersive solutions transform dealership ROI.
• Decide: Fill out the form on the Contact Us page so we can call you to discuss your project.

FAQ

1. Can AR virtual showrooms completely replace physical car showrooms?

Not entirely. Dealers still need demo units for test drives. However, AR reduces the need to stock every variant, lowering frozen capital and inventory costs.

1. Is AR only useful for new car sales, or can it also benefit used car sales?

AR can support both. For used cars, 3D/AR views enable customers to inspect vehicles remotely, reducing the time wasted on low-interest leads.

1. What devices do customers need to access AR showrooms?

AR experiences are compatible with common smartphones and tablets through browsers. This means customers don’t need special headsets or apps.

1. Do car buyers really trust AR experiences when making purchase decisions?

Yes, AR builds confidence by letting shoppers visualize cars in their own space. This reduces uncertainty and makes them more comfortable committing to a purchase.