Welcome back to the latest episode of The Future of Automotive on CBT News, where we put recent automotive and mobility news into the context of the broader themes impacting the industry.
I’m Steve Greenfield from Automotive Ventures, and I’m glad that you could join us this week.
Hertz this week announced it will start selling pre-owned vehicles on Amazon Autos, a move meant to bolster the car rental company’s retail operations as it looks to generate more profit. Twenty years ago, Hertz was exclusively using Manheim to remarket the vehicles coming out of their fleet. Historically, they sold all of their vehicles to car dealers.
But since then, they’ve experimented with different ways to sell directly to consumers, in an attempt to increase the prices that they’re able to achieve at sale.
Hertz now has 68 physical retail locations in the U.S.
They also operate the consumer-facing “Hertz Rent2Buy” program, which gives consumers three days to drive the car before they decide whether they want to buy the car.
If you remember, it was back in 2021 that Hertz announced it would start selling cars to consumers via Carvana.
And to underscore their philosophical shift from the wholesale to retail channel, Hertz says the first quarter of this year marked its strongest-ever quarter for retail vehicle sales.
So, given this recent history, it’s not surprising that Hertz is now partnering with Amazon.
Under the new partnership, customers can browse from thousands of used Hertz vehicles on Amazon Autos, e-sign the paperwork, complete their purchase online and pick up their vehicle at Hertz locations.
Customers who live within 75 miles of the four initial cities — Dallas, Houston, Los Angeles and Seattle — can start browsing on Amazon next week, and Hertz eventually plans to expand the arrangement to 45 locations nationwide.
This news is a significant expansion for Amazon’s nascent autos business, which it launched in December through a partnership with Hyundai. Before that, shoppers could browse digital showrooms and compare prices on Amazon, but not purchase cars directly through the e-commerce giant.
Amazon Autos added used and certified pre-owned vehicles to its selection of offerings earlier this month, starting in Los Angeles, after previously selling only new vehicles.
Hertz Car Sales is Amazon Autos’ first fleet customer and will offer used vehicles from brands including Ford, Toyota, Chevrolet and Nissan.
What are the implications for the industry? I think the answer is really in three different areas. First, many fleets will be keenly watching this to see if Hertz gets traction. If a fleet can bypass wholesale channels and achieve retail pricing, it has huge implications for their economics and might prove to be a viable alternative to the wholesale auction channels. I’m certain that the big wholesale auction companies are watching intently.
Second, if more of the two- and three-year-old fleet cars that would typically be fed into the wholesale channel begin to dry up, dealers may start feeling the pinch. The three-year-old off-lease or off-fleet car is sort of “bread and butter” inventory for both franchise and independent dealership lots. If more and more of this highly coveted inventory ends up being sold directly to consumers, dealers are going to scramble to find sources of lightly used, low-mileage used inventory.
Lastly, Amazon’s sole source of inventory since launching Amazon Autos a couple of years ago has been Hyundai dealerships. Hertz will effectively be the second customer selling on the Amazon platform.
So, in addition to the recent expansion from new to used vehicles, the news this week does signal that Amazon is finally prepared to start expanding its sources of vehicles.
The industry will be watching to see how quickly Amazon is ready to expand to other sellers.
So, with that, let’s transition to Our Companies to Watch.
Every week, we highlight an interesting company in the automotive technology space to keep an eye on. If you read my weekly Intel Report, we showcase a company to watch, and we then take the opportunity here on this segment each week to share that company with you.
Today, our new company to watch is Kinetic.
Today’s modern vehicles have more technology in them than ever before. Repairing them is an urgent need and an extraordinary opportunity.
All new vehicles have at least three sensor modules, with most modern vehicles having 30 or more. New capabilities such as camera, lidar, radar and ultrasonic-based technologies are exponentially increasing the complexity of repairing today’s vehicles.
Kinetic offers a solution to repair modern vehicles at scale with effortless speed and precision.
Kinetic Hubs leverage robotics, proprietary AI, and specialized expertise to automate digital collision repair across all makes and models.
Kinetic helps its customers adapt to the evolving automotive landscape by repairing digital collision damage in minutes rather than hours, increasing capacity, and growing revenue with unparalleled speed and precision.
Kinetic Hubs fill a significant gap in the collision repair aftermarket, providing digital repair solutions for a wide range of businesses from national collision chains to dealerships and fleets.
If you’d like to learn more about Kinetic, you can check them out at www.kinetic.auto
So that’s it for this week’s Future of Automotive segment.
If you’re an AutoTech entrepreneur working on a solution that helps car dealerships, we want to hear from you. We are actively investing out of our DealerFund.
Don’t forget to check out my first book, “The Future of Automotive Retail,” and my new book, “The Future of Mobility”, both of which are available on Amazon.
Thanks (as always) for your ongoing support and for tuning into CBT News for this week’s Future of Automotive segment. We’ll see you next week!
