Amazon’s Automotive Ambitions: How Will Online Sales Impact Traditional Dealerships?
Hyundai recently announced it will start working with Amazon to sell some of its vehicles. No, that doesn’t mean you’ll be able to haggle with Alexa to get the best price or return the car at your local Kohl’s, but it will make the car shopping experience much easier.
Buyers will be able to pick up their new Hyundai at a local dealership or have it shipped to them – one-day Prime shipping may not apply. Jokes aside, this move is the next step in online car shopping, which eschews the traditional dealership model. In that case, how will online sales impact traditional dealerships?
How will Amazon’s expansion into car sales impact the automotive landscape?
It’s no secret that car shoppers want the easiest buying experience possible. Fortunately, dealerships have made the process a little easier since the pandemic, but buying a car online with a few clicks sounds much better. In that case, buying a car through Amazon will likely change the automotive landscape, but how?
Lawrence Pier, the Director and Automotive sector lead at ComCap, a premier boutique investment bank focused on the intersection of commerce and capital, told us:
“For years, we have been hearing consumers demand the “Amazon experience” in the car buying process, and now they will get exactly that, starting with Hyundai. Since the pandemic particularly, online vehicle aggregator platforms and dealerships directly have added digital retailing capabilities to sell vehicles online for at-home delivery or to pick up at the dealership. Amazon’s expansion into the car-selling business will add another well-known e-commerce channel already familiar to consumers to create an easier buying experience to drive increased vehicle sales.”Lawrence Pier, Director and Automotive sector lead at ComCap
Considering we’ll have to wait until next year to see how well the public responds to buying cars on Amazon, the future remains to be seen. Another potential factor to explore is how buying a car on Amazon will affect dealership service and distribution services.
Amazon may be able to sell cars, but dealerships will still play a key role
Although consumers will be able to buy cars on Amazon, it doesn’t mean the dealership business model will go away. Customers can pick their cars up from dealerships, which means dealers will still keep their inventories stocked. Obviously, the dealerships will continue to sell cars on their own and service them as well.
“As major e-commerce players like Amazon advance in vehicle sales, they will see national dealer groups with the most advanced technology platforms that can more quickly and easily fulfill their customer orders and provide a large, convenient platform for service, which will continue to put pressure on local dealers to exit to such consolidators,” Pier says.
Ultimately, Amazon’s step into the automotive space is a positive one
Although the process of selling cars on Amazon is new, the concept of it isn’t. Automotive retailers like Carvana have been selling cars online for years, so buying a car with a few clicks on Amazon shouldn’t be much different. The more positive part of the process is that there will be OEM dealership support to assist with any issues or warranty repairs needed after the sale.
Pier added, “The overall outlook for the automotive sector is positive despite some current headwinds and EV-related uncertainty, and investors remain optimistic. Both in the vehicles and across the sales and ownership life cycle, technology is removing pain points and making the drive more enjoyable.”
In the end, a more enjoyable buying experience is what everyone wants, and if Amazon can provide it, this new car sales model could be a permanent fixture in the automotive future.