In this transcribed episode of the Used Car Dealer Podcast, Zach talks with Paul J. Daly, Founder and CEO of ASOTU, about AI-powered car buying, the future of dealerships, and what independent dealers should be thinking about as automotive retail heads into 2027.
Paul shares his journey from starting a reconditioning business that was acquired by Dent Wizard International to building Automotive State of the Union and More Than Cars. Drawing on his work with dealers across the country, he explains why transparent pricing is becoming a baseline expectation and why dealerships need to give buyers certainty through their brand, website, and in-person experience.
The conversation covers AI agents researching vehicles and negotiating for consumers, the importance of customer reviews and consistent online information, and how smaller dealerships can use AI tools to compete with larger retailers. Paul also previews ASOTU CON West on November 18 in Los Angeles, where the focus will be on profitability through used EVs, mobile service, and AI voice technology.
Whether you’re an independent dealer with a small team or part of a larger dealership group, Paul’s perspective offers practical takeaways on learning AI tools, building buyer confidence, and communicating a clear value proposition. He also shares why he believes more of the shopping process will happen between AI agents, making the human experience at the dealership even more important.
Zach: We’re having you back for a second time, so some people listening may already be familiar with you. For those who aren’t, give us a quick overview of who you are and what you do in the automotive ecosystem.
Paul: For sure. I go by Paul J. Daly these days, and I get the privilege of traveling and working with dealers all across the country. My first business was a reconditioning business I started in 2003. I was working on used cars throughout service departments across the Northeast, and that company ended up being acquired by Dent Wizard International. From there, I leaned into the marketing and brand side.
During COVID, I started a livestream called Automotive State of the Union so dealers could be more connected as things and laws were changing. Everyone seemed to be in a different position depending on their state, and everybody remembers those moments. Thousands of people showed up to that LinkedIn Live when LinkedIn Live was just getting started, so I did another one and another one. It became clear there was an appetite for this type of thing.
I partnered with Kyle Mountsier, who is my business partner now. We formalized it, raised a little money from seven dealer investors, and over the last five years built this media company called Automotive State of the Union, or ASOTU, along with the umbrella brand More Than Cars. We pay attention to what’s on the cutting and bleeding edge and what the best operators are doing, always through the lens of how we can cultivate the people in the industry. Our mission as More Than Cars is to make retail auto an industry that people fight to join. We have a long way to go, but that’s what we’re swinging at.
Zach: As you travel the country talking to dealers, what’s the biggest shift you’re seeing in how dealerships are operating right now?
Paul: If you had asked me that question last year, there was a big split between who was adopting new technology and who was clinging to the way they had always done things. That seems to have largely disappeared in 12 months. Very few people now would say, “We don’t have to approach everything with a new lens.” I would say 90-plus percent of the industry understands that deploying the right technology in your dealership is essential to being competitive and surviving in the future.
Layer on top of that the FTC conversation and other third-party players in the marketplace. I’m thinking of CarEdge, and Tommy Mikula and Delivered, putting additional pressure on dealers to do what the FTC is saying we need to do. As that happens, transparent pricing and being upfront are commoditizing pricing across the board. That is now table stakes to be in the game. Dealers have to ask what they can layer on top of transparent pricing to distinguish themselves. Why should someone do business with you, and what is the benefit of doing things at your dealership? That’s what I’m seeing right now.
Zach: When you talk to successful dealers, whether independent or franchise, what are they doing differently to stay competitive in this market?
Paul: The core playbook, strangely enough, shouldn’t have changed much. I had the privilege of rebranding Sun Auto Group, which was the largest independent used-car brand in the Syracuse, New York, market, so I have very distinct experience working strictly with used-car dealers. The playbook is the same: you have to differentiate yourself by building a brand that people understand, are familiar with, and begin to trust.
The difference between used and new cars is that I can buy the exact same new car from somebody down the street. That’s not the case with used cars. No two used cars are the same. Each one has its own story and combination of mileage, trim, location, and condition. But the bottom line is that people have to understand and trust that buying a used car from you is a sure bet.
I was doing a live event for a bank, and somebody asked what dealers should be doing to their websites right now. I think everyone expected a technology answer. In that moment, I was thinking about Carvana and why it is so successful, including why people are willing to buy new cars from Carvana. Your listeners might not know this, but they have six CDJR stores, maybe seven; I can’t remember. Those stores are spread across the country near their reconditioning hubs, because that is their distribution method for getting cars to people around the country. Carvana was number two for CDJR in the Philadelphia market and number three in Tampa. Customers buying something like a Ram 2500 from Carvana paid an average of $4,500 more than average. Why is that?
I believe it’s because Carvana delivers certainty. There’s so much uncertainty that when you give people a taste of certainty, they move toward it. They relax, their guard goes down, and they’re willing to spend more because they trust you. Think about the Carvana website: you have two options, buying a car or selling a car. I can click and know what I’m doing. If I’m selling or trading my car, they give me a value with certainty. They’ll pick it up and hand me a check. If I’m buying, the vehicle’s condition is clearly established, and I believe that’s the actual condition. If it isn’t, I have another layer of certainty because I can send it back. Every used-car dealer should focus on how to deliver certainty through the website experience, the brand they portray, and what happens when people walk onto the lot.
Zach: Totally. I was doing a presentation at the Ohio Dealer Conference last weekend about this very thing: how focused they are on the customer’s buying experience, including their photos. Think about all the detail they give customers to build confidence. A customer can look at a Mercedes with 60,000 miles online, sight unseen, and feel confident enough to buy, especially with the return policy.
AI has obviously become a big buzzword and a big part of technology in the automotive ecosystem. How close are we to a world where an AI agent does most of the car shopping on behalf of a consumer? Think about Muse, which has recently come out, for instance.
Paul: I think we’re very close. Look at services like CarEdge. They’re using AI agents to go through the shopping process on behalf of buyers. They’re reaching out on vehicles and negotiating deals based on price and condition. They’re negotiating additional fees and warranties. The era when an AI agent acts on behalf of the consumer, instead of you actually talking with that consumer, is here. I don’t think the question is how long it will take. It’s how often it will happen and when it will happen in your store, because it is happening across the country right now. The growth curve is going to be exponential.
One conversation I’m hearing from people on the bleeding edge is how to make the buying and shopping process friendly to an AI agent. AI agents are very efficient, and the companies building them optimize their models to use as little compute as possible and create as little friction as possible.
Zoom out for a second. Why are memory chips and electronics getting more expensive? There’s this insatiable appetite for the chips that process AI. Then you look at data centers: there isn’t enough space for the servers, so we need more space. What powers all of that? Electricity, and there is a squeeze on electricity. What do companies like Anthropic and OpenAI do? They try to make compute efficient. They don’t want their agents wasting time. They want the agent to deliver the result as fast as possible with the least amount of compute.
If your dealership, website, or process is compute-heavy, that agent is going to prioritize other options over yours. That’s why the most savvy dealers are focusing on having an ecosystem that is friendly to agents. The next step is that my agent as a dealer negotiates with the consumer’s agent, and the deal gets worked out based on preset parameters. That brings us back to the commodity question: why would anybody come to you? You have to do the work to become a familiar place that delivers certainty. Then, when your dealership’s name comes up or a consumer starts the journey, maybe they start with you before going into that big top of the funnel that could go anywhere.
Zach: One of the challenges for used-car dealers is that every vehicle is unique. There are differences in mileage, condition, accident history, reconditioning, and pricing. How do you see AI-powered shopping tools evaluating those differences? Could that create an advantage for dealers with better websites and merchandising?
Paul: The one thing a dealer can focus on right now that will influence that is review data, because an AI agent is constantly going to try to validate who is telling the truth. When you go into Gemini and search for used cars, what these tools are doing when they surface results is comparing what a dealer says on the website and in marketing with what consumers say the experience actually was.
There’s nowhere to hide. The agent can say, “You say this, but your reviews say something else. We’re not going to surface you as a result.” It can also look through your website for contradictory information. If the pricing contradicts itself or there are multiple calls to action such as “Call for price,” “Ask for price,” “Get qualified,” and “Get today’s price,” that comes back to reliability, certainty, and how much compute is required.
Dealers need to validate that they do a good job. They should focus on getting reviews, responding to reviews, and producing content that puts customer sentiment onto the public internet so agents can consider it. An agent can say, “Based on what I can see, this dealer is probably trustworthy,” or, “This dealer has a very trustworthy reputation in the industry.” It could also say that the dealership is active in the community with firefighters and teachers. That context can help a shopper decide whether to trust the business.
Zach: As we head into 2027, how do you see the balance between independent dealers, franchise dealers, and digital-first retailers like Carvana evolving? Could AI give smaller dealerships a meaningful competitive advantage, or will larger organizations benefit most because of their access to data and capital?
Paul: Data and capital are always tough to compete against. You either have them or you have some level of them, but you can’t get out of the game just because someone has more. There has never been a better opportunity for a one- to five-person operation that is willing to learn how these AI tools work to compete with somebody who has more data and capital. Right now, the world is shifting.
There’s a racing analogy about not being able to pass 12 people on a sunny day, but being able to do it when it’s raining because of the driver’s skill. If a smaller dealer or group is willing to research how to use the new tools and technology to get ahead of competitors, there has never been a better chance.
You can build tools with Claude without being a coder or developer. You can say, “Here’s the size of my store. Go research it. Here are my competitors. Research them. Help me come up with a top-tier strategy that uses your capabilities to get me ahead of them while I still can.” You can use plain language like that.
Don’t use the free version. Get the paid version and use the highest model and setting you can. You might pay $20 a month, but I would suggest using a frontier model. If that means paying $200 for a month to get this strategy, tell it exactly what I just said. You can take this transcript, put it in, tell it who your store is and what market you’re in, and let it cook. It can think about that for 30 minutes or an hour. Then ask, “What tools can you build to help me do that? Here’s the technology I use.” I think you’d be floored by what it will build and how it will help. Even an imperfect strategy gives you an opportunity to get ahead like you haven’t had before. My optimism for the small dealer is higher than it has ever been.
Zach: Let’s move on to ASOTU CON West. What inspired the decision to bring it to the West Coast, and what are the biggest conversations you want dealers to walk away thinking about?
Paul: Our main ASOTU CON event is always in May. It’s three days, just south of Baltimore, and it’s a big deal. We asked how we could take a slice of that and make an event available out West, because we know it’s hard for people to travel from coast to coast. We decided to try one in Los Angeles at the headquarters of Plug, a used-EV marketplace founded by Jimmy Douglas, who used to be Tesla’s used-car and delivery director. He knows used cars and e-commerce.
The conversation is all about profitability. How do we stay profitable? We picked three topics we thought would help dealers most and found partners who are all in on them. The first is using used EVs to help solve the affordability problem. These EVs are coming off lease, and people are unfamiliar with how to sell them. The charging network has never been better, people have never been more open to trying an EV, and these off-lease vehicles are very affordable. Dealers need more education on how to acquire and merchandise them.
The second topic is mobile service. Mobile service might be the new fixed-operations department, and I think there’s an opportunity for independents too. It requires much less upfront investment than building service bays, and you can go to the customer. It’s a major retention opportunity and a way to get more used vehicles into your ecosystem.
The third topic is deploying AI voice in your operations. Everybody added “AI” to the end of their company name, and dealers are confused about whether they actually have AI in the dealership. We narrowed the focus because we’ve seen major progress from dealers effectively implementing AI voice solutions, whether for service calls or sales outreach.
We’re also including team dynamics and leadership. Jack Hollis, the former president of Toyota North America, is coming. Vic Keller, who was a direct report to Warren Buffett as director of operations after Berkshire Hathaway purchased Van Tuyl Auto Group, will be there. We also have Alex Lawrence, who many people know as EV Alex. He sold $100 million worth of used-EV inventory over the internet, and he’ll share how he does it.
It’s a fly-in, fly-out event. We designed it so people, especially those in the western half of the country, could fly in and out. It’s November 18 in West Los Angeles.
Zach: You’re also having Steve Greenfield speak.
Paul: Steve Greenfield is kicking off the event with a new talk he developed called The Profitability Stack. We were asking what would be new and fresh. He talks a lot about global mobility and Chinese EVs, which don’t have a ton of immediate relevance for a used-car or independent dealer, and won’t for a good number of years.
We wanted to talk about something beyond global economics, and profitability is the name of the game. He’ll give his perspective on how that profitability stack is growing, and there will be a lot of technology in the conversation. Steve is very savvy in software and as an investor with Automotive Ventures. He’s coming from Used Car Week to speak, and then he’s going back.
Zach: Amazing. He must be a two- or three-million-miler with Delta by now.
Paul: They roll out the red carpet. He’s always sending us pictures of the Porsche picking him up at the Atlanta terminal.
Zach: If you were sitting down with a smaller dealer and they asked what three things they should be paying attention to right now, what would you tell them?
Paul: Number one is your understanding of current technology. Rate yourself from zero to 10 on your understanding of the AI technology in the market, and have an honest conversation about it. I think if you’re not at least at a seven, you’re destined to fail.
Second, watch what Carvana is doing. Study the site and see how you can make your own ecosystem develop certainty. With modern AI tools, you can build a website, integrate an inventory platform, and mimic what they’re doing. You could be operating from a trailer on a gravel lot in a small town, and your website can look as good as theirs today.
Third, audit how you’re communicating. What is your message and your core value proposition? If you can’t write your value proposition in one sentence right now, you have work to do. And that sentence should have something to do with bringing people certainty. It’s tempting to be the lowest price, but I think everyone has to move toward delivering the highest value and understanding how to communicate that value to the consumer.
That conversation depends on who your core customer is. Buy here, pay here is very different from used highline, so there isn’t a blanket statement. How do you bring your buyer certainty? For some customers, it’s, “We can get you approved and into a vehicle that works for you.” For others, it’s, “This car is going to be in the exact condition you expect at the level you’re buying.” Those would be my three priorities.
Zach: What is one thing about the car-buying experience you think will look completely different in the next three to five years?
Paul: The shopping experience, for sure. There will be plenty of information about what the buyer’s real needs are, and the majority of the transaction is going to happen agent to agent. That means we need to focus as an industry on the in-person part of the transaction and make it great.
Zach: Extremely well put. Paul J. Daly, it’s been a pleasure having you on the podcast. For dealers thinking about ASOTU CON West, where can they find more information?
Paul: Very easy. Go to asotuconwest.com. That’s A-S-O-T-U-C-O-N, asotuconwest.com.
Zach: Thanks for being on the podcast today. Appreciate it.
Paul: Awesome conversation. Thank you so much, Zach.