In November, Hyundai announced it would partner with Amazon to sell new vehicles online, opening a proverbial Pandora’s box for the retail automotive sector. Dealers are anxiously awaiting additional details from the two companies, hoping to learn what the collaboration will mean for the future of car sales and whether their businesses will be forced to compete with the largest e-commerce platform in the world.
On this episode of Inside Automotive, host Jim Fitzpatrick is joined by Jim Ziegler, president of sales, management, and marketing training firm Ziegler Super Systems. Ziegler is an auto dealer veteran and an outspoken advocate for the car business, with connections and ties across the retail and manufacturing sectors of the industry. Now, he shares his perspective on the Amazon-Hyundai partnership and how he thinks it will impact dealers.
Key Takeaways
1. Ziegler is concerned that the Amazon-Hyundai partnership may be a sign that automakers are looking to change their relationship with franchised dealers by adopting an agency system similar to the one in Europe.
2. Ziegler notes that the U.S. has franchise laws that would prevent such a transition from occurring. It is possible that these laws may also prevent Amazon from selling cars in certain states.
3. Although some dealers may prefer an agency system, Ziegler urges them to remember that manufacturers do not have the dealership community’s best interest in mind.
4. Ziegler notes that the Amazon-Hyundai partnership presents the biggest threat to automotive e-commerce platforms.
5. Although Amazon may have advantages over other digital retail platforms, it will likely operate as another lead aggregator. If so, dealers have already been competing with aggregators for years and can utilize F&I, trade-in, and service strategies to raise profits even if they are forced to cut prices.
"Dealers have dealt with the aggregators in the past. I view Amazon as another aggregator. They're gonna have a price point; we can beat that price point. I know dealers that'll lose money to beat the price point just to get the finance." — Jim Ziegler
