Last month, the company officially launched its pilot program to allow a small number of Hyundai dealers to sell vehicles through the Amazon platform to employees only. The pilot is similar to others Amazon has previously conducted in travel, grocery and healthcare.
“Cars are among the most sought-after products among Amazon's approximately 150 million Prime customers,” said Jeff Dyke, president of Sonic Automotive, one of the country's largest publicly traded dealer groups.
According to Chris Sutton, vice president of automotive retail at JD Power, about 25% to 30% of car buyers want to complete some or all of the car buying process online. When you get to the small but growing segment of electric vehicle buyers, that number jumps to 40%.
A small portion of automakers, particularly electric companies like Tesla and Rivian, bypass dealers entirely and sell new vehicles through their websites. Companies like Carvana have made selling used cars completely online. However, online purchasing still accounts for a small portion of total sales.
And most of the new car market, made up of franchised dealers protected by strict state vehicle sales laws, has been unable to replicate the click-and-buy purchasing process that consumers can increasingly use everywhere else.
So far, Amazon's program is small, but retailers are watching. Some are skeptical that Amazon will be able to overcome the challenges that have hampered other companies.
Dyke said concerns that the program would jeopardize the future of franchised dealers were “absurd,” although understandable.
“Amazon, in my opinion, brings a level of sophistication, a level of technology and a level of strength in terms of the headcount that they have working on this project that is unlike anything I have seen before,” he said.
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