How AI is driving innovation in the automotive industry

AI in the automotive industry: an automotive worker wearing a hard hat and smiling at a tablet in his hands

AI is transforming every aspect of the automotive industry, from manufacturing to driver experience to insurance claims reporting. In fact, 83% of automakers plan to increase their AI spending in the next fiscal year, according to the ServiceNow Enterprise AI Maturity Index 2025.

As AI continues to revolutionize the sector, modern vehicles are evolving into intelligent partners rather than mere modes of transportation.

AI in the automotive industry

The profound impact of AI in the automotive industry through smart vehicles, back-office automation, and predictive maintenance cannot be overstated. As AI technologies become more sophisticated, automakers are exploring new ways to enhance customer experiences, streamline operations, and drive innovation.

As an example, 51% of the automotive companies we surveyed plan to embrace agentic AI in the next year. The advanced technology is designed to autonomously help predict maintenance needs, manage inventory, and optimize supply chains.

"AI has become a critical tool in enhancing customer loyalty and retention,” says the chief information officer of a leading Canadian automaker. “By leveraging AI-powered personalization and predictive maintenance, we've seen a significant increase in customer satisfaction and repeat business."

By leveraging AI-powered personalization and predictive maintenance, we've seen a significant increase in customer satisfaction and repeat business.

From plans to practical implementation

One of the most significant hurdles facing the automotive industry is the gap between AI strategy formulation and execution.

Although more than half (55%) of the automakers we surveyed have rolled out more than 100 AI use cases in the past year, only 36% strongly agree they’re operating with a clear, shared AI vision. And only 18% of automakers are currently using agentic AI.

This disconnect leaves auto businesses at a significant disadvantage, unable to fully harness AI's potential.

Compounding these challenges are talent shortages and governance misalignments. A mere 31% of automakers report having sufficient AI talent, and only 44% have made necessary updates to their data governance frameworks.

To transition AI projects from testing phases to transformative initiatives, industry leaders must confront these obstacles head-on and bridge the gap between planning and practical implementation.

As the CEO of a leading European automaker notes, "Investing in AI talent and establishing clear governance frameworks have been game changers for our organization. We've seen a dramatic increase in operational efficiency and have been able to make more informed, data-driven decisions across the board."

Investing in AI talent and establishing clear governance frameworks have been game changers for our organization. We've seen a dramatic increase in operational efficiency and have been able to make more informed, data-driven decisions across the board. -CEO, European automaker

Steering the industry forward

Despite the challenges, a group of automakers are excelling in AI maturity. We call them Pacesetters.

These organizations prioritize talent development, robust governance, and scalable AI approaches. By focusing on these key areas, Pacesetters have seen improvements in efficiency, and 74% have reaped increases in gross margins.

For automotive companies to get the most out of AI, they must develop cohesive strategies that combine AI technology with operational and workforce transformation. Aligning AI strategies is crucial for organizations wishing to scale beyond pilot projects and achieve meaningful results.

To advance their AI maturity, automotive leaders should consider following Pacesetters’ proactive steps:

  1. Break down silos and connect the enterprise
  2. Prioritize scalable AI approaches, such as embracing an AI platform
  3. Invest in AI talent development and acquisition
  4. Establish a clear data governance framework
  5. Foster a culture of innovation and experimentation

Accelerating AI maturity

Ready to accelerate your AI maturity journey? Start by gauging your organization's current standing with the Enterprise AI Maturity Benchmarking Assessment. This valuable resource will provide insights into your strengths, weaknesses, and opportunities for growth so that you can make informed decisions and drive meaningful change.

As the automotive industry continues to evolve, embracing AI will be crucial to staying competitive and meeting the ever-changing needs of customers. The future of the automotive industry is smart, connected, and powered by AI.

Find out how ServiceNow can help you put AI to work for automotive.