Amazon (NASDAQ:AMZN) has taken a step into the automotive industry with its introduction of used vehicle sales on its Amazon Autos platform, initiating with Hyundai dealerships in Los Angeles. This development signifies a new chapter for the e-commerce giant, broadening its reach into the vehicle market. Consumers can now conveniently explore and purchase used cars alongside their usual online shopping routine.
Hyundai has long partnered with Amazon, marking itself as the inaugural car manufacturer to collaborate with the online retailer for vehicle sales. Previously, Amazon facilitated vehicle research and directed users to dealers but did not engage in direct selling. This strategic partnership reflects a broader trend in the auto market aiming to integrate digital platforms for sales purposes.
What Does Amazon’s Move Mean for Consumers?
Shoppers can now enjoy browsing and purchasing used and certified pre-owned Hyundai vehicles directly on Amazon. The newly launched service includes an enticing 3-day, 300-mile return policy alongside a minimum 30-day, 1,000-mile limited warranty for used car purchases. All necessary fees are included in the displayed price, ensuring transparency and eliminating unexpected costs. Additionally, customers have the option to visit a participating dealer for a test drive.
How Will This Affect Car Dealers?
According to JPMorgan analyst Rajat Gupta, Amazon’s initiative serves as a supplementary lead generation channel for car dealers without reducing their intermediary role.
“There is a minimal risk of disintermediation of the dealer channel due to franchise regulations,”
explains Gupta. The complexities involved in vehicle sourcing and service requirements reinforce this perspective.
Dealers are expected to maintain a critical role, focusing on cultivating personal relationships with customers during vehicle handoffs.
“Dealerships remain integral given the complexities involved,”
underscores Amazon. The vendor-buyer relationship management during the handover remains pivotal, especially when combined with the competitive industry practice of finance and insurance commissions.
Back in March, Hyundai forged a partnership with Avride to build a robotaxi fleet, highlighting Hyundai’s openness to collaborating on innovative technology. This alliance centered around self-driving technology, further diversifying Hyundai’s mobility endeavors. The Hyundai-Avride collaboration exemplifies the automotive industry’s ongoing pivot towards autonomous and digital technologies.
Amazon’s foray into the automotive sales space introduces a new dynamic to an already evolving market. The integration of traditional dealer networks with a digital purchasing model presents logistical challenges but also offers convenience to consumers. As more cities and brands join the platform, the broader impact on dealer networks and consumer behavior will become clearer. Amazon’s model could potentially reshape how automotive transactions are approached, though the success largely depends on maintaining seamless consumer-dealer relations and adhering to market regulations.
