Amazon to Sell Cars Online, Hyundai is the First Dealer

It’s unbelievable. Amazon, which began by selling books, is expanding into the automobile industry.

The online retailer announced Thursday at the 2023 LA Auto Show, alongside new partner Hyundai, that it will begin selling vehicles on its website in the second half of 2024. Hyundai vehicles will be the first to be sold on Amazon.com’s US store, with other brands to follow later this year.

Customers will be able to shop for vehicles in their area based on a variety of preferences, such as model, trim, colour, and features, and then check out online with their preferred payment and financing options. According to Amazon, customers will be able to buy a vehicle online and then pick it up or have it delivered by their local dealership.

Amazon already sells car accessories and has a site called “Amazon Vehicle Showrooms” where manufacturers can advertise. Customers could not, however, purchase the car, truck, or SUV they were researching until now.

What is the purpose of Amazon behind this initiative?

According to Amazon, this shopping experience “will create another way for dealers to build awareness of their selection and offer convenience to their customers,” implying that dealerships support this move. Unlike direct sales models, which completely bypass the business model, the structure still rewards dealerships. When vehicles go on sale on Amazon, the seller of record will be the local Hyundai dealer.

While on stage at the LA Auto Show, Mike Sullivan, the president and owner of several LA-area dealerships, including the Hyundai Santa Monica location, publicly supported the news.

“We’re now partnering with one of the world’s leading digital retailers,” Sullivan said. “They’ve led the way in delivering customer convenience, and now they’re going to help us take our customer experience to the next level. Amazon also brings massive reach and marketing power to connect to more customers. We can’t wait to get started.”

Hyundai and Amazon are also working together on other projects, the companies announced on Thursday. Hyundai stated that Amazon Web Services will be its preferred cloud provider, and that Alexa voice assistant will be integrated into the automaker’s next generation of vehicles beginning in 2025.

Japan Mobility Show….

What is the effect on market after this announcement?

Shares of used car dealers such as Carmax and Carvana as well as the country’s largest publicly traded new car dealers Lithia Motors and AutoNation fell following the announcement. Shares of those companies closed down between 5% and 6% on Thursday.