The e-commerce giant expands its presence in the car-buying industry with a new partnership.
Amazon has announced that it will soon allow auto dealers to sell cars through its website, starting with South Korean automaker Hyundai. While the company has previously offered digital showrooms for research and comparison purposes, this new feature will enable consumers to purchase vehicles directly on Amazon. This move marks a significant expansion of Amazon’s presence in the car-buying industry and aims to provide convenience and accessibility to customers.
Amazon’s Slow Entry into the Car-Buying Business
Over the years, Amazon has gradually entered the car-buying business by offering digital showrooms on its site. These showrooms allow shoppers to research and compare vehicles, but not make direct purchases. Additionally, consumers have been able to buy car products such as replacement parts through Amazon’s platform. However, the ability to purchase a new car directly on Amazon has been absent until now.
The New Car-Buying Experience on Amazon
Starting in 2024, Amazon will enable shoppers to purchase new cars online and have them delivered or pick them up at their local dealership. This feature allows consumers to search for available vehicles in their area, make a selection, and complete their purchase on Amazon using their preferred payment and financing methods. Amazon’s CEO, Andy Jassy, believes that this partnership with Hyundai will revolutionize the ease with which customers can buy vehicles online. As part of the deal, Hyundai will also integrate Amazon’s Alexa voice assistant into its cars starting in 2025.
Impact on the Automotive Industry
The announcement of Amazon’s foray into car sales had a significant impact on the stock market, particularly for used car dealers and large new car dealerships. Shares of companies like Carmax, Carvana, Lithia Motors, and AutoNation experienced a decline of 5% to 6% following the news. This reaction reflects the potential disruption that Amazon’s entry into the car-buying industry could have on traditional dealerships.
Challenges and Workarounds in the Auto Sales Landscape
Traditional automakers, including Hyundai, have complex relationships with dealerships, often governed by state laws that make it difficult or illegal to bypass franchised dealers and sell new vehicles directly to consumers. However, electric vehicle manufacturers like Tesla and Rivian have found ways to sell vehicles directly to consumers by originating sales in states that allow it or challenging restrictive laws in court. The landscape for used vehicle sales is less stringent, making it easier for companies like Carvana to sell preowned cars and trucks directly to consumers online.
Conclusion:
Amazon’s decision to allow auto dealers to sell cars on its platform represents a significant step in the company’s expansion into the car-buying industry. By partnering with Hyundai and integrating its voice assistant, Alexa, into Hyundai vehicles, Amazon aims to provide customers with a seamless and convenient car-buying experience. However, the move also raises concerns among traditional dealerships and has led to a decline in the stock prices of major players in the industry. As Amazon continues to disrupt various sectors, it remains to be seen how its entry into the automotive market will shape the future of car sales.
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