By Solange Velazquez, Managing Director in Technology
From investment to dealmaking, AI was, unsurprisingly, the main topic of conversation at the National Automobile Dealers Association (NADA) Show, the largest gathering of franchised new car and truck dealers in the United States, held in Las Vegas last month.
Investors remain bullish on a specific segment of the market: companies that have specific use cases with strong data, rich history, and knowledge of industry regulation and nuance. This mirrors what we are seeing across the broader technology landscape, where businesses that solve unique barriers to entry can integrate AI to strengthen their products without fears of growing obsolete.
Here are three trends we are seeing within the auto sector:
- Companies are using investments to build out their AI capabilities. Case in point: MyKaarma, a leading provider of end-to-end service lane solutions for auto dealerships, which is earmarking a strategic investment from Warburg Pincus to accelerate its portfolio of AI-driven fixed ops and payments solutions.
- Investors are targeting fraud prevention and compliance solutions. This critical department protects sensitive customer information, prevents employee mistakes and wrongdoing, and cuts down on fraudulent practices.
- Cars are getting harder to afford. Between tariffs and high-interest rates, cars are becoming more expensive and harder to afford. The average new-vehicle transaction price is now $50,326, with used-car prices up 3.3% YoY in Q4 2025. As a result, carmakers are moving away from stuffing their vehicles with the latest gadgets.
Dealership software is a growing segment within the $600-billion-plus global AI market. Even with some lingering questions around the future of AI, there continues to be significant investor interest in auto-related software companies with strong, proprietary data and regulatory knowhow.