E-commerce giant Amazon will begin selling vehicles on its platform in 2024, starting with offerings from South Korean automaker Hyundai.
The company announced its plans to join the retail automotive sector during November’s Los Angeles Auto Show. Amazon will allow car buyers to search by model, color, trim, and other elements and will provide financing options through its website. However, many of the services needed to complete the car-buying process will still be furnished by local dealerships, such as delivery, customer communication, and service, in accordance with state laws governing vehicle sales. How Amazon and Hyundai dealers will share profits is unclear, although a spokesperson for the automaker told Axios that “there won’t be a cost” to retailers. In return for selling its models through the e-commerce platform, Hyundai will incorporate Amazon’s Alexa voice assistant into its vehicles starting in 2025.
Given the company’s massive reach and customer base, the partnership has the potential to upend the retail automotive sector’s transition to digital retail. Dealers have largely embraced e-commerce as a means of driving sales, but many are struggling to implement the multitude of tools necessary to care for online customers. Amazon, with its resources and expertise, may help standardize the digital car buying journey, removing some of the pressures felt by retailers. On the other hand, dealerships and their vendors may find themselves in the unenviable position of competing with the e-commerce platform’s online audience. The scale, accuracy and simplicity of the Amazon platform could also spell trouble for storefronts with outdated websites or ineffective tools.
While it is impossible to predict the outcomes of this partnership, the move underscores the need for better digital retail proficiency among the automotive community. While Hyundai dealers can choose whether to join the company’s partnership with Amazon, other manufacturers may be forceful toward their own franchisees. Should the e-commerce platform manage to marry the online and in-store sales process more effectively than dealers, the retail automotive sector’s control over the car market may be jeopardized. Following Amazon’s announcement, online vehicle sales platforms, including Carvana and CarMax saw sizable declines in share value.